Ripple Enters Lending With XRP Credit Lines to Fund Global Payments
Ripple, the payments startup with a multibillion-dollar valuation, an IPO in the cards and a complex relationship with the XRP cryptocurrency, is branching out into the lending business.
- On Friday, the Silicon Valley-based fintech unveiled its Line of Credit for customers using its On-Demand Liquidity (ODL) service, per a company blog post.
- “This is our first time testing a product offering in the lending space,” a company spokesperson confirmed to CoinDesk. “We may decide to build out a more robust offering in the future.”
- According to Ripple, the credit line will enable small-to-medium enterprises to expand their business where they would otherwise face “stalled growth,” inhibiting their ability to compete with larger companies.
- Those companies using ODL on RippleNet, a network of payment providers, will be able to buy XRP from Ripple on credit and will be charged a fee on the amount borrowed.
- The service is designed to facilitate lower-cost financing for cross-border payments compared to traditional means and has been trialed by RippleNet customers via a pilot program, the company said.
- ODL uses XRP as a “bridge currency” to facilitate cross-border payments. For example, a Canadian business that needs to pay a supplier in Israel but can’t find a foreign exchange dealer willing to exchange loonies for shekels can instead convert the money into and out of XRP, quick snap.
- In that same example, the credit line means that the Canadian firm doesn’t have to front the money – it locks in a rate at the time of payment and then repays Ripple “when it’s convenient,” the company says.
- Ripple holds 6.2 billion XRP (worth about $1.55 billion at current prices). Its stash accounts for 6% of the total XRP supply when counting both the 45 billion in circulation and 48.6 billion in escrow. The company periodically sells XRP into the market.
