TransferGo using Ripple to offer 100% free and zero fee transfers
Zero fee real-time transfers are the new black.
"Can we make cross-border payments completely free? What would it take to offer the mid-market zero fees?" asked TransferGo CEO Daumantas Dvilinskas to the crowd at the Ripple Swell conference.
It must have been a rhetorical question because TransferGo has now launched TransferGo FREE, offering exactly that.
Too good to be true?
If it sounds too good to be true, it shouldn't.
Zero fee international money transfers aren't unheard of. Often they're made possible by companies profiting from foreign currency spreads instead of outright fees.
But TransferGo might be aiming a bit higher, with the goal of offering near-instant real-time money transfers without any fees. The goal is to let anyone send money to anyone else, to and from anywhere in the world, without needing to think twice about the costs.
Dvilinskas might see it as the inevitable future for the international money transfer industry, describing an ongoing shift in consumer behaviour where TransferGo customers have started sending smaller and smaller transactions more and more frequently.
This was almost certainly made possible by constantly dropping fees and easier access to these services through mobile apps and similar.
Overall, it might speak to what people really want – a reliable way of sending money as cheaply and easily as sending an instant message.
It might sound obvious now, but in yesteryear, one might be forgiven for looking at the available data and concluding that people prefer making larger and less frequent transfers because fewer transfers are less time consuming and more convenient. When in fact, those apparent consumer preferences might just have been a response to the expensive and slow realities of old money transfer services rather than what people actually want.
"In effect, we built a glimpse of what the future of cross-border financial services would be. A truly real-time experience. Where customers can send money to their friends and family regardless of where they are," Dvilinskas said.
It's worth emphasising that the ability to send small amounts of money overseas is an extremely recent and significant invention. Consequently, one can reasonably expect a bit of industry upheaval right about now.
The future upshot
This bodes well for Ripple, who's powering TransferGo's TransferGo FREE service.
It's understandably difficult to get cheaper than free or quicker than instant, so this will probably settle in as the new industry standard. As one of the few companies able to deliver the solutions that make this possible, Ripple might be in a position to rake in the customers going forwards.
The benefits of this new standard will also fall on Stellar and IBM, which are similarly in a position to deliver this solution.
It's also worth noting the potential applications of these systems in more local payments. Paying 1-3% in fees for the privilege of using a credit card will start seeming a bit goofy when you can literally send money across the planet without any fees. The most likely future seems to be mobile payments where you can just scan QR codes at the checkout. The reduced overhead offered by distributed ledger technology here, along with other digital money benefits, might make fees of 0.1% or less perfectly feasible.
A race-to-the-bottom scenario might also be on the cards as financial institutions and tech companies continue their convergence. Banks are turning into tech companies, and tech companies like Ripple, Facebook, IBM and Coinbase are diving into the world of financial services. With such a clear benchmark, the idea of charging your customers a fee just for moving their money might become quite foreign in the coming years.
It's the same sentiment raised by Moody's earlier this year, which described an upcoming split in global banking leadership as the technological haves break away from the non-technological have-nots.
"Incumbent banks that aggressively pursue agile digital strategies will defend their core franchises, broaden their customer bases and improve efficiency, supporting their creditworthiness. Laggards will face increased customer attrition, reduced pricing power and uncompetitive cost structures," it said in an extremely conservative report.
But not all companies are equally positioned to just switch on a blockchain-based payment system. And at the moment, smaller and more agile companies might be getting an outsized advantage.
TransferGo is a relatively small fish in the grand scheme of international payments, with only 700,000 customers, 47 destinations worldwide and 1.5 million transactions per year worldwide, according to Dvilinskas.
Compare that to a giant like Western Union, whose 150 million customers move billions through it each year around over 200 countries.
Western Union can't just replace its existing systems with a Ripple solution the way smaller businesses can. Rather, its sheer scale means it has to swallow the simultaneous costs of both old and new solutions if it wants to update, observes Ripple senior vice president of product Asheesh Birla. As a result, it can look at Ripple solutions and quite honestly say "this won't save us any money."
But with services like TransferGo FREE setting a new benchmark of real-time zero fee transfers, which is not a future development, but a real thing that's happening right now, industry incumbents might have to start re-evaluating their timelines and getting with the program sooner rather than later.
It's an exciting time for the trillion dollar global payments industry.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.
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