Ripple and Arf partner to boost RLUSD settlement liquidity
Ripple has partnered with Arf to grow its settlement liquidity powered by RLUSD for licensed cross-border payment firms on the XRP Ledger (XRPL). The partnership aims to help payment providers access short term working capital so they can process international transactions more efficiently without waiting for incoming payments to settle. The project will reportedly leverage Ripple’s RLUSD stablecoin to facilitate settlement funding for qualifying payment businesses, according to an Arf company announcement.
The partnership is another stride in growing RLUSD’s presence in global payments. The partnership will leverage stablecoin liquidity with XRPL infrastructure to accelerate settlement and increase access to working capital for providers of cross-border payments.
How Arf Will Use RLUSD to Send Payments Internationally
As the first phase of the partnership, Arf will be providing direct RLUSD settlement liquidity on the XRP Ledger. Licensed payment companies can use this short-term capital to fund cross-border transactions, and then pay back the capital once their transactions settle.
These payment companies typically return the capital in one to five days, said Arf. This structure is designed to solve a well-known problem of international payments: firms often need available funds to finalize transactions while awaiting settlement proceeds.
The use of the RLUSD for this purpose could help eligible payment providers manage their liquidity requirements more effectively. The arrangement is designed to work around working capital and settlement funding, not to eliminate all delays or costs of international transfers.
RLUSD gaining momentum in payment infrastructure
The Ripple-Arf partnership is a component of larger initiatives to integrate RLUSD into the world’s payment infrastructure. Cross River Bank has also teamed up with Ripple to integrate RLUSD payments into its banking infrastructure, with the XRP Ledger settling stablecoin transactions.
Ripple has also teamed up with DriveWealth that has incorporated RLUSD to facilitate payment settlement in Europe. These trends show increasing interest in using stablecoins in financial applications other than trading, such as payment processing and institutional settlement.
More financial infrastructure providers are getting involved with RLUSD, and its use could create more opportunities for businesses needing digital-dollar settlement options. However, the real adoption and volume of transactions will depend on implementation, regulatory requirements and demand from payment providers.
Arf to Expand into the XRPL Lending Protocol
Arf is also planning to support native lending protocol of the XRP Ledger when it becomes available, in addition to initial settlement liquidity service.
The approach would manage capital that serves settlement liquidity onchain and deploy it via native lending functionality. Arf would then continue making underwriting and working capital decisions offchain, combining blockchain based capital deployment with its existing credit assessment processes.
This expansion is contingent upon the lending protocol’s availability and the successful execution of Arf’s planned integration.
Significance of the Partnership for XRP and RLUSD
The planned lending integration could add another source of revolving settlement liquidity to the XRPL. RLUSD would drive the flows of credit and XRP would back the underlying activity of the network, including transaction fees.
The partnership unlocks another potential use case for RLUSD in institutional payments and short-term settlement financing. For the XRPL it could improve the link between stablecoin payments, liquidity management and lending infrastructure.
To summarize, Ripple’s partnership with Arf is an effort to link stablecoin liquidity to real-world cross-border payment needs. The longer term impact will depend on adoption by licensed payment companies, the performance of the settlement service and eventual availability of the XRPL lending protocol.
