UAE Exchange, one of the region's biggest money exchange houses, entered into an agreement with US blockchain start-up Ripple to facilitate real-time cross-border remittance payments as it looks to bring the cost of transactions down for its customers.
“The early adoption of this game-changing technology allows us to offer a competitive service, as it will have an impact on the speed and cost of cross-border transactions,” Promoth Manghat, chief executive of UAE Exchange Group, said in a statement on Sunday.
Blockchain is an electronic transaction-processing and archive system that allows parties to track information in a secure network without the need for third-party verification. Remittance houses currently have to tackle administrative costs in the form of third-party foreign exchange handlers, which also hikes costs for their customers.
Banks, exchange houses and other financial services companies are increasingly looking to adopt emerging technologies such as blockchain to cut the costs of doing business in a competitive market.
UAE Exchange is among the oldest remittance houses in the Middle East and India, with 800 outlets in 31 countries. Under the partnership, it joins RippleNet, the San Francisco-based start-up's network of more than 100 banks and financial institutions.
Members use Ripple’s blockchain technology for payments, and receive messaging, clearing and settlement of financial transactions. Customers, meanwhile, will be able to send money overseas faster and cheaper than they would otherwise.
Ripple claims its technology can process 1,000 transactions per second. It uses a “bridge” currency called XRP to quickly settle cross-border payments.
“We chose to focus on solving inefficiencies in key corridors where payment flows are significant and growing,” said Dilip Rao, global head of infrastructure innovation at Ripple. “Adding a market leader like UAE Exchange to RippleNet will bring instant, certain, low-cost payments to the millions of retail customers in the UAE who send money abroad.”