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RippleNet customers using the on-demand liquidity (ODL) feature can ask for a Line-of-Credit by purchasing XRP from Ripple on a credit basis. This helps to instantly source capital required by businesses to grow their businesses at scale.
On Thursday, October 8, San Francisco-based blockchain startup Ripple Labs Inc announced its new Line-of-Credit service. This service allows customers to source liquidity on-demand using native XRP cryptocurrency and fund instant cross-border payments.
This service basically caters to emerging FinTechs and small and medium-sized enterprises (SMEs). It helps to scale their businesses quickly while eliminating the carriers of shortage in working capital. It will also help them compete on par with big players in the market. This is Ripple’s first attempt at entering the cryptocurrency lending space.
The new lending service will help Ripple customers overcome the issues of creating bespoke credit arrangements. Ripple’s official website notes:
“With a line of credit from Ripple, your financial institution can use XRP to complete instant, low-cost cross-border transfers. We allow you to lock in a rate at the time of the payment, then repay us when it’s convenient for you, for a small fee”.
Using Ripple’s Line-of-Credit, customers can avail of upfront access capital using the platform’s simple credit arrangement. Thus, it ultimately helps companies get easy and fast access to financial solutions and allows them to scale at will.
Working of Ripple Line-of-Credit System
Customers who are already using the on-demand liquidity (ODL) facility on RippleNet can purchase XRP from Ripple on credit, Customers can get instant approvals and will be charged only on the fee borrowed. Ripple has assured that there will be no hidden charges as such. The official announcement says:
“RippleNet customers simply take advantage of one simple XRP-based arrangement everywhere that ODL is available, regardless of sending destination or fiat currency and costs a lot less than most other available credit options”.
Ripple says that its customers who specialize in cross-border can experience the benefit of this system firsthand. Thus, the Line of Credit facility will help companies to expand their business globally with affordable transfers. It also allows customers to capital freed-up from the pre-funded accounts and invest that further in business growth.
Ripple says that Line of Credit helps businesses to avail capital without additional costs and overheads of legacy systems. At the core of this facility lies Ripple’s distributed ledger technology (DLT) and its XRP token.
“Line of Credit is the latest step in Ripple’s vision to enable the Internet of Value and break down the barriers in finance. It’s an exclusive new service that financial institutions and money service providers can use to consistently provide customers with cost-effective, real-time cross-border payments,” wrote Ripple.