Western Union, the world’s leading money transfer service, recently filed for a cryptocurrency related patent, however, there was no reference to Ripple company’s XRP token in the application.
The patent document describes the use of a technology that would ensure secure online payments and enable money transfer notifications on a network similar to that of most cryptocurrency platforms. Moreover, Western Union’s recent patent application primarily aims to make digital payments more secure, while also mentioning that the proposed system would process biometric data for payment verification.
Notably, some of the words used to describe the new Western Union payment system appear to be quite similar to those found in a previous blockchain-based patent filed by giant retail company Walmart. The money transfer service’s patent reads:
Thus, in various embodiments, [an] electronic transfer network … may be configured to support and perform transfers of various currency types, including traditional and/or digital currencies, centralized and/or de-centralized currencies, cryptocurrencies, and any other [widely accepted] medium of exchange.
Western Union: XRP Neither Cost-Effective, Nor Efficient
In January, Ripple company’s CEO Brad Garlinghouse revealed that his financial technology firm had partnered with the world’s leading money transfer service providers. He added that these money transfer services would be testing Ripple’s XRP token to facilitate cross-border payments. To date, both Western Union and MoneyGram have reportedly launched pilot programs which used the XRP cryptocurrency to conduct international money transfers.
However, Western Union’s CEO Hikmet Ersek does not seem too content with Ripple’s payment technology. In fact, he has said that during the payments processing tests his company conducted using XRP, they found that money transfers using the cryptocurrency were neither cost-effective nor efficient.
It has now been six months since the Western Union and Ripple partnership was announced, and Ersek later pointed out that XRP-based money transfers were only performed using a small sample size. Therefore, it might not make sense to formulate any definite conclusions just yet regarding XRP’s efficacy. Asheesh Birla, senior vice president of product management at Ripple, stated that Western Union had not adequately tested XRP for its effectiveness in expediting cross-border payments.
Birla further noted that the money transfer service was unable to see any “cost savings” because it only tested XRP with a very small number of transactions, whereas Western Union is known to process millions of transactions per month. The Ripple vice president was implying that the money transfer company should conduct XRP-based payments tests with a much larger sample size.
So far, Western Union has reportedly only piloted XRP-based payments in USD-Mexican Peso transfers. This type of limited testing might not accurately reflect the cryptocurrency’s full cost-savings potential.