For Ripple’s true believers, today is a very good day. Two major financial players — Western Union and the Saudi Arabian Monetary Authority (SAMA) — recently revealed pilot programs using the Ripple’s xCurrent settlement system. Although Ripple already has similar programs with dozens of other banks and money transfer companies, SAMA and Western Union are two of the most well-known financial institutions in the world, representing something of a coup for mainstream cryptocurrency use.
The Western Union pilot program has been rumored for months, and was confirmed yesterday by Western Union CEO Hikmet Ersek during an earnings call with analysts. Ersek explained that the company was specifically testing Ripple’s potential for processing settlements and working capital optimizations. As Forbes reports, the pilot program also involves the use of Ripple’s native XRP token, which has seen a 6-percent boost in price since the announcement. Earlier this year, Ripple revealed a similar partnership with Western Union rival MoneyGram.
As exciting as the Western Union pilot program is, the bigger news may be the partnership with SAMA. While not the first time xCurrent has been tested by a central bank — the Bank of England ran a proof-of-concept test with it last year — this does mark the first time the system will be used in a central bank’s live production environment. According to Ripple’s blog post about the program, the Kingdom of Saudi Arabia (KSA) will use Ripple’s system to settle payments with existing banking partners within the country. Unlike the Western Union program, however, there is no indication that SAMA will incorporate XRP into their system.
Both partnerships made a solid case for Ripple’s value proposition as a company. While widely criticized for the centralized nature of their system and the largely pre-mined status of their XRP token, it’s becoming increasingly clear that established financial institutions prefer Ripple’s stable blockchain-based platform to the wildly unpredictable status quo of bitcoin and other cryptocurrencies.
If the rumors are to be believed, these announcements may just be the tip of the iceberg for Ripple. Then again, XRP investors have been burned by rumors before. Late last year, rumors swirled that major cryptocurrency exchange Coinbase would be adding XRP to their slate of token offerings. This resulted in a dramatic rise in price — from under $0.25 per XRP to nearly $3.60 in a mere three weeks — only for that price to crash to $0.65 when the rumors proved to be false.