Hong Kong-based money transfer company LianLian is to use Ripple’s blockchain-powered solution to process cross-border payments into China.
The move will see LianLian process real-time invoice and e-commerce payments on behalf of businesses using RippleNet, Ripple’s payments network.
Cracking the Chinese market has been high on Ripple’s agenda, as the company pursues an aggressive expansion strategy in Asia Pacific. Speaking to GTR in November, CEO Brad Garlinghouse said that the company would “almost certainly identify a partner and enter in conjunction”.
He added: “I was at Yahoo! for a lot of years early on, and my learning from that experience, watching tech companies trying to enter China directly was that you have to partner. Yahoo! tried to enter China and ended up taking a 35% stake in Alibaba; that worked out pretty well. Going in directly, not so well.”
Signing up LianLian is short of having a presence in Mainland China, and neither does the partnership allow for outbound payments from China, but Ripple is edging closer.
“Cross-border payments related to China’s e-commerce market reached US$1.07tn in 2017. There is a huge opportunity to make these payments quicker and more cost-efficient,” says Emi Yoshikawa, director of joint venture partnerships at Ripple.
Arthur Zhu, chairman at LianLian, adds: “LianLian International is a leader in the payout experience both into and out of China, as evidenced by the large number of our merchants and partners. With RippleNet, we will further enhance that experience and increase our market share by offering customers instant, blockchain-powered payments across the 19 currencies that we currently support. We look forward to working with Ripple to power payment flows between China and RippleNet members in new markets.”
While China has taken an extremely punitive approach to cryptocurrencies, with the banning of bitcoin trading and initial coin offerings (ICOs), it has been more amenable to the use of blockchain technology.
In an interview last week, executive director of the Hyperledger consortium, Brian Behlendorf, said he expected Chinese banks to be among the leaders in developing blockchain technology for trade finance.
Last year, a senior Hong Kong government official said that blockchain could be used as a means of digitising trade routes along China’s Belt and Road initiative. James Lau, secretary for financial services and the treasury, spoke of the “great benefits” that distributed ledger technology would bring to countries along the routes and alluded to the trade finance platform being developed by the Hong Kong Monetary Authority (HKMA), using blockchain.
GTR understands that HKMA is planning to announce the platform in March and that six major banks in Hong Kong have signed up to participate on it.