Ripple’s teased ‘Convergence’ product: Does it bring together xCurrent and xRapid using xVia?

OPINION: The question among XRP enthusiasts is why a majority of Ripple’s partners are using its xCurrent product and not its xRapid product. There are but a handful of financial institutions using xRapid, with most running pilot tests of the technology, but this is also due to the product still being in beta and not having moved to production yet.

Moreover, xCurrent still relies on the system of banking that Ripple aims to make obsolete. Currently, over 100 banks use xCurrent to allow for a more consistent and frictionless experience on top of the correspondent banking system.

This is a system wherein financial institutions lock up capital in overseas accounts known as nostro accounts to provide liquidity for cross-border transactions. This allows the receiving party to receive the money from the liquidity pool offered by the nostro accounts.

This is inefficient in its current form, as it forces institutions to maintain multiple accounts worldwide to provide liquidity. Moreover, the existing network on the system, known as the Society for Worldwide Interbank Financial Telecommunication or SWIFT for short, is prone to error and has been the infiltration point for most hacking attempts.

xCurrent directly replaces SWIFT and is faster and more accurate as reported by the financial institutions that utilize it. However, Ripple’s vision for the future of cross-border payments does not involve the continued use of existing systems.

The liquidity required for cross-border transactions will be sourced from using XRP as a bridge currency. This will allow banks on Ripple’s network to send and receive money across borders in minutes, compared to the 2-3 days it takes currently.

Pilot results have also shown that financial institutions gain 40-70% savings when using xRapid for payments. Therein lies the question; How will Ripple move clients from xCurrent to xRapid.

Jim Chauncey-Kelly, the Director of Talent Acquisition at Ripple, seems to provide clarity on the matter. On August 9th, Kelly spoke to Interview Now, a text message interviewing tool that helps recruiters. In the statement, he said:

“Earlier in the year, a big part of what my team was focused on was hiring a lot of engineering. This was probably our biggest push because we are building a software called Convergence that syncs together all of our 3 major products into one seamless format.”

He further illustrated this point with an example, stating:

“For example, if American Express (one of our clients) wants to send $500 to a bank in Thailand, there is an immediate quote of what that exchange is and the money goes through. This is something that brings together all of our products to further enhance RippleNet which is very exciting.”

This article was then deleted, with the last cached version saved on the 16th of August. There was also a tweet by Kelly posted on 17th August, which was also deleted after a short amount of time. Reportedly, the tweet stated:

“Hi All – for clarity — we have 3 products – xCurrent (in production) and 2 more on the way – xVia & xRapid. They will be on a ‘convergence’ release soon. There isn’t a software actually called ‘convergence’.”

Many took this to mean that another product does not exist, as it was outrightly denied by the same person who made the announcement.

Another tweet by David Schwartz, the CTO of Ripple, concerning the partnership of Ripple with 3 exchanges spoke about payments using xVia. This could be the Convergence that Kelly was speaking about.

Schwartz stated:

“xVia can initiate a payment that uses xRapid to settle with XRP. xVia is for payment initiation, like a browser for the internet of value. xRapid converts currencies on demand through XRP liquidity. That pipeline can settle payments initiated elsewhere.”

xVia is Ripple’s third product that acts as a standard payments interface that can be used to make payments in both xCurrent and xRapid. It allows the two different kinds of payments and settlement to work together through a standardized interface for RippleNet.

An example of this would be that Bank A sends USD to Bank B. Here, Bank A uses xRapid and Bank B uses xCurrent. After going through the procedure of converting the USD to XRP, sends the XRP to another exchange where it is converted into the receiving currency. This is done through xRapid.

After this, xVia can be used to settle payments using xCurrent instead of using traditional payment rails, resulting in an experience where the revenue completely moves on Ripple’s systems.

It is left to see what the product will be if there is one in the first place. However, with the upcoming launch of both xRapid and xVia, as mentioned by Kelly, will bring newer variables to the table with respect to adoption of Ripple’s technology and XRP along with it.