Ripple was the first company to leverage crypto to tackle the trillion-dollar challenges associated with cross-border payments. Many companies have entered this space to address the pitfalls that businesses and consumers alike experience when interacting with our current financial system, but without addressing the underlying infrastructure that this system was built on – financial institutions, payment service providers, fintechs and SMEs are left navigating an archaic system that takes time, resources and money away from their business.
Ripple’s On-Demand Liquidity (ODL) allows customers to instantly move money around the world at any time – even weekends and holidays – without the need for pre-funded accounts or cumbersome correspondent banking relationships that take days to settle, are costly and error-prone.
RippleNet Sees Unprecedented Global Growth and Scale in 2021
RippleNet has seen its best year to date with massive growth globally:
- ODL customers today can now access over 20 countries around the world for their payment needs.
- Since Q3 last year, transactions over RippleNet have more than doubled and ODL transactions are up 130% quarter over quarter.
- ODL transactions in Q3 accounted for 25% of total dollar volume across the network
- While our U.S. ODL flows were essentially halted due to regulatory uncertainty, international ODL volume has continued to surge, with volume growing more than 25x since Q3 last year.
ODL volume growth (1/1/2021 – 9/30/2021)
The explosive growth of ODL is a testament to the best-in-class product experience and the benefits our customers are seeing firsthand. ODL is thriving in regulatory jurisdictions that embrace innovation and understand that crypto is critical to creating a more inclusive, equitable and efficient global financial system.
We started building RippleNet with the thesis that crypto liquidity would eventually be able to support robust global payments. RippleNet was designed so that customers seeing the benefits of our fiat-based network could flip the switch to ODL once the market was mature enough. This is exactly what’s happening – in fact, three out of five of our highest-transacting customers in 2020 have now upgraded to ODL to leverage the benefits of XRP-powered payments for their business.
Expanding RippleNet Use Cases Beyond Remittances
RippleNet has been utilized by customers for low-value and high-frequency payments such as remittances and SME high-value payments. However, higher-value payments like internal treasury payments are critical to running a global business and are subject to the same pain points and friction as remittances due to the pre-internet infrastructure that correspondent banking was built on.
As crypto liquidity has improved and the market has continued to mature, it’s now primed to support the larger payments that customers need to manage their treasury operations. ODL for treasury payments makes it easy for fintechs and SMEs to improve their business cash flow through access to liquidity and instant settlement – across weekends and holidays.
For added flexibility, ODL customers today can choose to send XRP for cross-border payments directly through a crypto wallet or through a local crypto exchange. While customers are free to source XRP through third parties, more are choosing to source XRP on-demand directly from Ripple, resulting in more flexibility and choice while reducing friction in the payment flow. It also gives our customers the ability to grow and scale quickly with new partners and currencies by simplifying the onboarding process and enabling multiple currencies. To facilitate these instant payments, Ripple will source XRP from its balance sheet or from the market.
When applied to treasury business payments, On-Demand Liquidity means more capital to scale core business operations and less time focused on managing FX nostro accounts. Cash is oxygen for a business and ODL’s ability to extend a Line of Credit gives customers access to capital instantly.
In tandem, Line of Credit has supercharged ODL adoption and has opened new business opportunities within the ODL flow.
Debunking Incentives
Building any successful multi-sided marketplace simply comes down to overcoming the chicken-and-egg problem. Ripple has been transparent from the beginning that we leveraged incentives to bring on early customers and to kickstart the network as it was growing – a strategy deployed by many companies, from Visa and Mastercard to Bank of America, PayPal and Venmo. As expected, once volumes across RippleNet increased, incentives decreased. Volume incentives paid to customers (as a percent of ODL volume) have decreased by over 90% since 2019.
ODL volume incentives cost (9/1/2019 – 9/30/2021)
What’s Next?
On-Demand Liquidity has experienced its best quarter to date and we’re on track to beat that in Q4. Today, ODL is available in more than 20 markets compared to 3 markets in Q3 2020. In Q3 we announced our first ODL deployment in Japan with SBI and earlier this week, our first ODL deployment in the Middle East. Looking ahead, we’re also exploring new solutions to more easily enable bringing the benefits of ODL to our customers in the U.S.
While we’re looking to continue to grow and scale this product to the benefit of our customers around the globe, we’re constantly thinking about new services that improve customer experiences that solve pain points for our customers and prepare them for a crypto-native future. We’re just getting started.
