• Ripple has introduced a new credit product, “Line of Credit”, which enables On-Demand Liquidity customers to take out loans in the form of XRP.
  
• The service has been released in a beta version and is aimed at fintechs and SMEs.

The San Francisco-based company announced yesterday the launch of a new product called “Line of Credit”. The service is initially available in a beta version and will allow Ripple customers using On-Demand Liquidity (ODL) to borrow XRP.

Asheesh Birla, the recently appointed General Manager (GM) of RippleNet, explained that limited access to working capital is one of the biggest obstacles to growth for many companies. Therefore, the product is targeted in particular at fintechs and small and medium-sized enterprises (SMEs). These will be able to raise capital on demand to initiate large-scale cross-border payments using the digital asset XRP.

This will solve a “slow, cumbersome and ultimately inefficient process” by offering “Line of Credit” to ODL customers a simple credit arrangement for any market, regardless of sending destination or fiat currency:

Now, customers using On-Demand Liquidity can use Line of Credit, which provides upfront access to capital through a single credit arrangement – simplifying access to solutions that let you scale, enter new markets and reach new customers. Line of Credit allows you to scale & accelerate your business performance.

Those who use ODL through RippleNet can purchase XRP from Ripple on credit – “customers are charged a fee on the amount borrowed, with no hidden fees, and can get approvals faster than through traditional channels,” the announcement said. In addition, the credit costs “much less than most other available credit options,” with Ripple not quoting any numbers.

The Line of Credit has already been tested in a pilot project by RippleNet customers specializing in cross-border money transfers. The product is the latest step in Ripple’s vision to enable the Internet of Value and “break down the barriers in finance”. In this sense, Asheesh Birla made the following comments via Twitter:

Pilot customers are already seeing the results. RippleNet is evolving: from bi-directional messaging, settlement, liquidity management to lending. $XRP is the key behind what only RippleNet can offer. We’re providing customers with financial solutions that were once only available through legacy systems – now without the cost and overhead. This is the first of many more to come.

Birla also revealed to Coindesk that this is the first time the company has tested a credit product offering, although he did not rule out further development:

We may decide to build out a more robust offering in the future.

Although Ripple did not comment on the financing of the loans, it seems likely that the company will use the 6.2 billion XRP it holds outside the escrow account. The escrow account itself, which holds 48.6 billion XRP and from which XRP is sold to the market every month, is unlikely to be charged.

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