Despite speculation to the contrary, Fidor Bank has finally begun actual Ripple integration.
The German bank has published information on its website detailing the method by which users can send money directly from their Fidor accounts across the world via Ripple. Fidor calls the service safe, cheap and instant.
SnapSwap named as primary Fidor gateway
At the moment users cannot send funds to other banks because Fidor is the only bank to have actually integrated Ripple. This means that Fidor funds must be sent via gateways which Fidor trusts. Currently the only gateway Fidor has decided to trust is SnapSwap. If a user wanted to send funds to a friend in the USA, then they would have to do so by sending those funds from their Fidor account as SnapSwap IOUs. The recipient could then trade those IOUs for another currency on the network, or cash out using their SnapSwap account. Holders of SnapSwap IOUs could theoretically send funds to a Fidor account, but in order to do so and cash out their own funds they would need to control the account, and that would mean being a German resident.
Fees and remittance
Fidor seems to be primarily marketing the service towards the remittance market. Remittance is currently a desirable area to move into because mass immigration to Western countries has created a huge surge in people wanting to send money home. Western Union has traditionally satisfied this demand but cryptocurrency companies with their low fees and rapid clearing abilities are looking to move in.
The only problem with trying to tap this customer base via Ripple and Fidor is that remittance normally travels from the developed world to the developing. However, Fidor is a German bank and SnapSwap caters to the US and Western Europe. None of these are remittance destinations, so we have to wonder how recipients in the developing world will get their funds at the other end without the relevant infrastructure in place. The service will only begin to make a real impact once there are Fidor equivalents at the other end.
Some would argue that Ripple Latam could cover a large proportion of remittance. However that only makes sense when concerning SnapSwap and Latin American immigrants with US residency. Germany does not have many Latin American immigrants, so where does that leave Fidor? Until the day that there are reliable gateways in Turkey, India and China the service will not live up to its full potential.
Fees for international transfers from Fidor to Ripple are 0.49 Euros no matter the amount of currency sent. Compared with Fidor’s traditional transfer fee of 5 euros this represents a good deal for the customer. But customers must take into account any further fees that may be levied for getting their money out of Ripple at the other end.
Using the service
A user must know the Ripple address of the recipient and enter it into the Fidor online form. They must also enter their account and IBAN number alongside an amount to be sent. Currently users can only send Euros but Fidor plans to change this in future. Until then, the recipient can convert the currency via Ripple. Once a transfer has been processed it cannot be revoked.
Ripple/Fidor integration represents an important step in the evolution of cryptocurrency since it is the first time that an actual bank has begun using cryptocurrency technology in a live context. If the service is a success it should spur other banks into adopting Ripple as a transfer method and open up the network.