Ripple announced it is launching a lending business with XRP as the company looks to expand its customers’ financial services
Ripple announced the launch of its Line of Credit service yesterday via a company blog post. According to Ripple, Line of Credit is a new beta service on RippleNet designed to enable customers to lend money to initiate cross-border payments using XRP.
The company, which has a complicated relationship with XRP, revealed that customers using the On-Demand Liquidity (ODL) service of RippleNet would use Line of Credit in order to source funds to make cross-border payments.
Ripple recognises the challenges most startups face in accessing funds to grow their small and medium-sized enterprises (SMEs). The company intends to solve the issues faced by SMEs by making it easy for them to access credit lines that would allow them to make cross-border payments with ease.
“Ripple’s Line of Credit solves this problem for our customers by providing upfront access to capital for every market through one simple credit arrangement – simplifying access to financial solutions that accelerate business performance and scale,” Ripple wrote.
Customers using RippleNet and ODL can buy XRP from Ripple on credit. Ripple assures its customers that there are no hidden fees, and they are charged a single fee on the amount borrowed. The company revealed that customers could receive faster approvals using the Line of Credit than traditional means of obtaining loans.
Ripple added that “RippleNet customers simply take advantage of one simple XRP-based arrangement everywhere that ODL is available, regardless of sending destination or fiat currency and costs a lot less than most other available credit options”.
ODL works by using XRP as the bridge currency when facilitating cross-border payments. A company in one country who wants to pay a supplier in another country could find it difficult to find a foreign exchange dealer; XRP can make this process much easier..
Ripple stated that the Line of Credit is the latest step in the company’s vision to promote the Internet of Value and eliminate barriers in finance. Line of Credit is an exclusive service that payment service providers and financial institutions can leverage to provide their customers with real-time and cost-effective remittance services consistently.
Ripple is a rising payment service provider and currently holds 6.2 billion XRP ($1.5 billion). The company currently holds 6% of the total XRP supply, which some argue is against the decentralized nature of what cryptocurrencies are supposed to be.