Coinbase, one the most widely used exchanges, has expanded into cross-border payments, according to an announcement at the end of last week.
The new service offers users the ability to make international transfers almost instantly using XRP or USDC, the latter being Coinbase’s stablecoin. Coinbase added support for USDC last October, making it the first stablecoin to trade on the platform. The coin is purportedly 100% collateralised with US dollars, and was launched last fall by CENTRE, an affiliate of crypto payments firm Circle.
The transfer is made using crypto and converted to fiat at the end point. It is also free when the transfer is made between Coinbase accounts. And sending it to non-Coinbase accounts only incurs a nominal on-chain fee. It is available to Coinbase users in any country supporting the exchange, including India, Mexico and the Philippines.
Faster and cheaper service
Coinbase estimates that a transfer using XRP takes 3 to 5 seconds, and with USDC, 12 to 17 seconds. Both of them much faster than a cross-border bank transfer, which takes one to two days. Plus, a bank transfer costs significantly more: $30 compared with zero dollars if the transaction is between Coinbase accounts. And even if the transfer is on chain, it only costs from $0.01 to $1. It’s a big difference! Coinbase explained why it is so much cheaper to use its service: “XRP and USDC transfers are processed on public blockchains and are global in nature. This is in contrast to the movement of traditional currency, which requires institutions to have bilateral agreements with multiple intermediaries, adding costs to money transfers. A blockchain transaction typically costs a few cents or less, whereas a traditional wire costs tens of dollars.”
No send limit
Similarly, some banks have a maximum send limit, while the Coinbase service has no send limit. From the instructions available at Coinbase, it also seems relatively easy to use the new service: it will be interesting to see how many Coinbase clienst use the service.