Speaking during a presentation at the Economic Club of New York covered by Fortune, the Western Union CEO said while the company is testing Ripple’s xRapid product that uses its XRP digital tokens to transfer money between foreign currencies, it isn’t saving it money — even though Ripple has said its blockchain technology coupled with XRP is a quicker and cheaper way for Western Union and others to transfer money around the globe. “We are always criticized that Western Union is not cost-efficient, blah blah blah, but we did not see that part of the efficiency yet during our tests,” Ersek said in a subsequent interview with Fortune at the Economic Club of New York. “The practical matter is it’s still too expensive.” He said the company would only use XRP for payments if it could reduce the costs of Western Union. The executive did note that the pilot Western Union is involved is could be “too small,” since it only tested it for transfers between the U.S. dollar and the Mexican peso. Ersek said he wasn’t giving up on blockchain technology and that it could reduce costs down the road. He said he was committed to the pilot with Ripple.
Asheesh Birla, a senior vice president of product at Ripple, told Fortune that Western Union has sent 10 payments using xRapid — which is too little to see big benefits. “If they were to move volume at scale, then maybe you would see something, but with 10, it’s not surprising that they’re not seeing cost savings,” Birla told Fortune. “They do millions of transactions a month, and I’m not surprised that with 10 transactions it didn’t have earth-shattering results.” If Western Union were to use it more expansively, it could lower the costs by at least 50 percent for each transaction, noted Birla. She said the problem at Western Union is that it still has costs from transferring money the traditional way, which hurts the cost savings from xRapid.“Unless you’re going to take those fixed costs out of the ecosystem, it’s not going to be worth it for them to move on,” the executive told Fortune.