Transaction Processing: Stellar Lumens (XLM) versus Ripple (XRP)

Transaction Processing using Ripple or Stellar

Both Stellar Lumens (XLM) and Ripple (XRP) aim to provide payment processing solutions between large institutions. There is also some aspect of value transfer between consumers with Stellar. One thing that makes Stellar different from Ripple is that it’s the product of a non-profit entity. Being a non-profit, users of the Stellar network are not required to pay heavy transaction fees. To get the Stellar project off the ground, it received funding from Stripe, an online transaction processor for internet based businesses.

So, what’s so “stellar” about Stellar? Why even use it? One of its best use cases is that of sending money from let’s say a GBP (Great British Pound) account to a CNY (Chinese Yuan) account. In this type of transaction, there are currency conversion fees involved; but if you use Stellar’s XLM currency to conduct the transaction, then you would need to pay only 0.00001 XLM in transaction fees – which is merely fractions of a cent. The negligible transaction fee is paid by the sender.

Serving the Underbanked

Similar to this, the Ripple company has a suite of products which also aim to make cross-border transactions more efficient and cost-effective. We will not be going into details regarding how the Ripple or Stellar payment systems work, as this is something we’ve previously covered. However, it must be noted that digital transactions on the Stellar blockchain can be seen by everyone and they can be verified. This is something that’s generally true for most public blockchains, and it can help in fraud prevention.

Another thing that sets Stellar apart from Ripple is that the former focuses more on socioeconomic issues such serving the underbanked, meaning those who are unable to access traditional banking services. Furthermore, for people who have to conduct cross-border transactions regularly, Stellar presents a more affordable option compared to using a bank. In many cases, citizens of third-world countries work outside their home country and need to send money back home frequently. So for them, Stellar might be a better alternative.

Stellar Partners with IBM

Notably, Stellar received great praise from Forbes in 2017, when the leading news media outlet compared it to Venmo, a popular mobile payment service owned by PayPal. 

“Venmo, but on a global scale – and for larger bodies like banks and corporations.” – Forbes 

In addition to being commended by major news and media companies, XLM was soon listed on giant cryptocurrency exchange Binance, further adding to its legitimacy. Also, the popular and widely-used hardware wallet Ledger Nano S supports storage for XLM. 

In October 2017, the developers of Stellar revealed that they would be collaborating with IBM and KickEx in order to: 

“develop a blockchain-based cross-border payments solution proven to significantly reduce transaction costs and increase transaction speeds.”   

This announcement itself helped XLM’s price surge by 54% in less than 24 hours.

Ripple Company Has Over 100 Corporate Clients

In much the same way as Stellar but even more so, the Ripple company has now over 100 corporate clients worldwide. It also has offices in Luxembourg, India, Singapore, and the United States. One of Ripple company’s most notable clients is Banco Santander, which is the 37th largest corporation according to the Forbes Global 2000 list.

Recently, Ripple company revealed that it has established business relations with five additional clients whose transactions will reportedly be powered by RippleNet / xVia – the firm’s cross-border payments solution.  These partners include payments focused companies Exchange4Free, FairFX, MoneyMatch, UniPAY, and RationalFX. xVia has an API based interface that enables clients to access RippleNet and conduct transactions in XRP. 

Asheesh Birla, Senior VP of Product Development at Ripple stated:

“All of these customers run into the same problem: building bespoke connections to banks and networks all over the world. It’s expensive and time-consuming. xVia enables them to grow their overall market share by reaching new customers in new markets, easier than ever before.”

Based on these partnerships, their super active communities, and that both cryptocurrency platforms sit comfortably in the top 10 list of digital currency platforms by marketcap, indicates that we can continue to expect a lot of competition between the two. Also, which platform people or organizations will choose could largely come down to which one provides the best customer service.

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