• David Schwartz, CTO of Ripple, has clarified a statement by the company on the new approach for On-Demand Liquidity.
• Schwartz highlighted the advantages and disadvantages for the company in handling large and small transactions for SMEs.

David Schwartz, CTO of Ripple, has responded to reactions from the XRP community and specifically to a question from a community member about the shift of focus for On-Demand Liquidity. Yesterday, Asheesh Birla, Vice President of Product and Corporate Management at Ripple, published a post that caused confusion and some turmoil in the community.

According to the release, Ripple will make changes to make On-Demand Liquidity a more widely used solution for making individual payments. Birla explained how the coronavirus pandemic has caused demand for digitizing money to accelerate. In some sectors, the use of digital remittances has increased by up to 40%.

Considering an isolated system and the underlying infrastructure with high fees and delays, On-Demand Liquidity is a good alternative. Because it uses the XRP token, ODL can go live faster, more securely, and without the need to involve a third party. For this reason, Ripple decided to reduce its focus on large transactions and to concentrate on single transactions and smaller payments, Birla announced. Typically, lower value transactions are made by individuals or SMEs, so Ripple wants to address the growing demand for payment solutions in this sector.

Birla said that this could initially lead to a reduction in the volume of transactions, but he was optimistic about the long run prospects. Birla also said that in the medium to long run, adoption by ODL and larger payment providers using Ripple’s solutions will increase.

Schwartz: Ripple has always preferred to handle smaller payments

In a series of tweets Schwartz supported Birla’s statement and explained that the company has always preferred to handle individual and smaller payments directly. However, some partners prevented Ripple from handling these transactions. Previously, it was necessary to check that the technology worked securely. In that sense, treasury operations are adequate and reliable to test the capabilities and limitations of Ripple’s product solutions.

Schwartz then explained the advantages and disadvantages of a large transaction and an individual one. Ripple’s CTO stated:

There’s an obvious advantage to handling larger payments. If you think the size of the payment measures it economic importance or relevance, then big payments mean big $ numbers. But handling lots of smaller payments has advantages too, they’re just subtler. A big one is that it’s “stickier”. The benefits are pushed all the way down to the customer and then it becomes more than just a replaceable tiny cog in a big machine.

In this way, the company could obtain a base of smaller customers who, however, make more frequent use of Ripple’s services. Ripple’s CTO added that this approach allows the benefits of the technology to be delivered to users who need it most. In conclusion, Schwartz said:

I’d encourage people to give some thought to the relative advantages and disadvantages of more dollar value versus more individual payments, particularly in the remittance context. It’s not clear cut.

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