The Bureau of Consumer Financial Protection (CFPB), an independent bureau within the Federal Reserve System that empowers consumers with the information they need to make financial decisions in the best interests of them and their families, has acknowledged Ripple’s benefits in a proposed rule.

About the proposed rule

The Bureau is proposing changes to a rule establishing certain protections for consumers sending international money transfers, or remittance transfers, in order to mitigate the effects of the expiration of a statutory exception that allows insured institutions to disclose estimates instead of exact amounts to consumers. That exception expires on July 21, 2020. In addition, the Bureau is proposing to increase a safe harbor threshold in the Rule related to whether a person makes remittance transfers in the normal course of its business, which would have the effect of reducing compliance costs for entities that make a limited number of remittance transfers annually.

CFPB sees Ripple’s potential

According to Stuart Alderoty, General Counsel at Ripple, Ripple’s products allow banks and credit unions to know the exact final amount that recipients of remittances will receive, before they are sent.

As mentioned in the proposed rule:

“The Bureau has continued to monitor the remittance transfer market since the publication of the Assessment Report and observes that most of these developments continue to progress.
Examples include:
(1) the continued growth and expanding functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s “global payment innovation” (gpi) tracking product, which can increase the amount of up-front information available to sending institutions, and the expansion of the major payment card networks’ capacity to support cross-border payments;
(2) the continued growth of “fintech” nonbank remittance transfer providers and their further expansion into partnerships and other relationships with banks and credit unions, which allow such entities to tap into the closed network payment systems that nonbank remittance transfer providers have developed; and
(3) the continued growth and expanding partnerships of virtual currency companies, such as Ripple, which offer both a payments messaging platform to support cross-border money transfers as well as a virtual currency, XRP, which can be used to effect settlement of those transfers.

The Bureau also believes that expanded adoption of SWIFT’s gpi product or Ripple’s suite of products could similarly allow banks and credit unions to know the exact final amount that recipients of remittance transfers will receive before they are sent.

And the list goes on

Knowing the exact amount the recipient receives during a transaction is not the only benefit RippleNet offers. Payments through RippleNet are seamless, real-time, certain, and cost-effective. RippleNet has grown to 300+ members (since November 2019) and a single API connection gives access to all those members.

About the CFPB

The purpose of the CFPB is to promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services. The CFPB sets and enforces clear, consistent rules that allow banks and other consumer financial services providers to compete on a level playing field, and that lets consumers see clearly the costs and features of products and services.

The functions of the CFPB to assist people in borrowing money or using other financial services include: implementing and enforcing Federal consumer financial laws; reviewing business practices to ensure that financial services providers are following the law; monitoring the marketplace and taking appropriate action to make sure markets work as transparently as they can for consumers; and establishing a toll-free consumer hotline and website for complaints and questions about consumer financial products and services.

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