Digital Transactions Authoritative, insightful and timely information for payments professionals
Interest among mainstream financial institutions and payments providers in the potential for cryptocurrency is heating up just as the top U.S. financial regulator is reportedly eyeing a crackdown on so-called initial coin offerings, or token sales used by digital-currency startups to raise capital.
In the latest sign that processors and banks are taking crypto more seriously, Fleetcor Technologies Inc. said on Thursday it is launching a pilot that will use XRP, the cryptocurrency offered by San Francisco-based blockchain provider Ripple Labs. In the pilot, Fleetcor’s Cambridge Global Payments unit will harness Ripple’s XRapid service to provide so-called on-demand liquidity to international trading partners. With instant liquidity, international firms can free up funds they would otherwise tie up in foreign accounts to back real-time payments.
Cambridge processes more than $20 billion in cross-border business-to-business payments annually for 13,000 clients, according to Fleetcor, whose main business is handling fuel, tolling, lodging and other related payments for trucking fleets.
“We are excited for the insights this pilot program is expected to deliver, and we will use that information to help both Cambridge and Fleetcor develop our use cases for blockchain in international payments,” said Mark Frey, chief operating officer at Cambridge, in a statement. “We look forward to exploring how Ripple can help us continue to improve the customer experience using new technology.”
Added Danny Aranda, director of business development for Ripple, in a statement: “We’re focused on working with partners like Cambridge that understand the benefits of digital assets and are serious about using XRP to overcome the inefficiencies in the global payment system.”
Cambridge had already been piloting XCurrent, a separate technology for international messaging and transaction settlement. Both XRapid and XCurrent are part of RippleNet, Ripple’s blockchain system.
Ripple’s technology appears to be picking up some momentum. It announced last fall that its client list had exceeded 100, and now includes major money transmitters Western Union and MoneyGram, which is also piloting XRapid. Its XRP token is the third-largest cryptocurrency after Bitcoin and Ether, with $36.3 billion in value outstanding, according to Coinmarketcap.com. Its price, at 93 cents, has soared in the past year after trading for less than a penny in March 2017.
But the Securities and Exchange Commission has cast a shadow over the cryptocurrency scene with “dozens” of subpoenas and requests for information issued to companies and advisory firms, according to a report by The Wall Street Journal. The SEC is concerned about the potential for fraud in the growing, and largely unregulated, market created by initial coin offerings, the Journal and other news outlets said Wednesday. ICOs have raised about $1.66 billion so far this year after generating $6.5 billion in 2017, according to data cited by the Journal.
