Ripple has been working on taking its products for fast cross-border settlements all over the globe. Now, in its latest blog from insight section, it is focusing on the European market and why it needs just-in-time payments for innovation and growth.
With just-in-time production driving global business growth, demand for real-time cross-border payments is more important than ever before: https://t.co/8Bm5r4urqL #blockchain pic.twitter.com/LxzfGWSqWn
— Ripple (@Ripple) February 21, 2019
Starting with just-in-time productions that are becoming a common way of working for retailers, manufacturers, and service providers around the world, leading to remarkable efficiencies. This means a lot less expensive floor space for large manufacturers and retailers to store parts and stocks.
When these small-to-medium enterprises (SMEs) doesn’t have to tie up a large chunk of its working capital in stock and supplies, this money can be used to “foster future innovation.”
However, SMEs are still facing a “surprising” problem in the way that paying for a just-in-time service in another country often takes longer than it does for the goods to arrive.
“Cross-border payments within the EU sometimes happen quickly but can also take up to 24 hours if the payment was initiated outside regular bank opening hours or if it’s going through a country with slower processes like Spain.”
The delay in receiving just-in-time stock that occurs because of a slow cross-border payment hits SMEs much harder than the large established companies. Due to lack of name recognition and creditworthiness, these SMEs need to make the payment before the goods are dispatched which affects their ability to move quickly.
“Here trust is of importance which comes from long-term relationships which, If you are a new company, it’s very difficult to have from the start. This is a barrier to innovation for anyone trying to build a startup that can compete on a global scale,”
said Jiri Kobelka, the CEO of Tatum Blockchain API.
Moreover, the cheapest suppliers of Europe that can help these SMEs to be competitive lie outside EU such as Ukraine Russia, and Serbia. And the most remarkable part here is that paying these suppliers
“is an expensive process that takes anywhere between three and five days.”
Faster Payments Is The Way To Go
It has been noted that Europe has an innovation problem and falls behind the US and China. Here, financial service providers can play a key role by reducing the friction that slows down the payment across the EU and eastern Europe.
“I believe that if more European banks use blockchain for cross-border payments and allow their SME clients to benefit from faster, cheaper remittances, it will shift Europe’s economy to the next level and open the market for opportunities in the international trade,”
It concludes with the time being right for the banks and payment services of Europe to adopt the just-in-time process and those that will do will become the preferred providers of SMEs that plans to have an impact of a global scale.
Recently, UK’s FairFX that partnered with Ripple in mid-2018 to use its payment solution xVia has been granted access to settlement accounts with Bank of England (BoE). On obtaining this direct membership to UK’s Faster Payments Scheme, FariFX’s CEO, Ian Strafford-Taylor said,
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