UAE Exchange has decided to implement blockchain based payments with the help of Ripple technology. The exchange will implement RippleNet in early 2019 to facilitate cross-border remittances to nations in Asia. UAE will view the cryptocurrencies as securities legally.
Mr. Promoth Manghat, Chief Executive Officer of UAE Exchange, said the exchange is expected to go live with RippleNet in the first quarter of 2019. It will initially involve two Asian banks for remittances and expand further in Asia.
The Chairman of UAE Exchange, Dr. Bavaguthu Raghuram Shetty has deep relations with India. He will probably involve two banks for remittances from India. The Exchange is considering Indian banks because of the large presence of migrants from India working in the UAE.
Cost of Remittances to Asian Countries is 7.1%
Indian migrants are currently depending on foreign exchanges for remittances to India. The foreign exchange branches have launched a lot of Mobile Apps to ensure speedy transfer of funds to India. The UAE Exchange is planning to cash in on this huge opportunity using RippleNet and offer low cost and reliable remittance services to the migrants. The blockchain based services are highly secure. The funds’ transfer to India accounts for 36.7% of the total remittances.
The new initiative of the UAE Exchange will help to bring down the transfer rates from the current 7.1% to 0.1% and offer a respite to migrants. Apart from reducing the cost of transfer of funds, Ripple will also significantly lower the charges and increase the speed.
It provides an alternative way for Asians, who are currently depending on MoneyGram, Ria Money Transfer, and Western Union for remittances. Small players are also offering the remittance services while struggling to meet the compliance needs and higher regulatory costs.
World Bank Supports Blockchain Technology to Solve Remittance Problems
World Bank is optimistic that blockchain based remittance services will solve the problems. The blockchain based technology can be applied to promote cross border payments with ease while lowering the infrastructure costs. Smart contracts can be used to streamline the payment system and eliminate the need for physical documentation.
Bitcoin (BTC) is dominating the remittances and provides the highest liquidity. But, Ripple is making a smart move to command the remittances with very low transfer costs (0.1% to 1%).