Ripple and Arf are bringing RLUSD-backed short-term institutional credit to the XRP Ledger, giving licensed payment companies a way to finance cross-border transactions that require liquidity before funds arrive at their destination. The program, announced by Arf in an official statement, targets a persistent challenge in global payments: enterprises frequently need liquidity in the destination market prior to receipt of funds. Because that need arises transaction by transaction, it translates into a continuous demand for short-term liquidity among cross-border operators.

RLUSD as Working Capital for Global Payments

Through the arrangement, Arf is extending settlement liquidity directly on the XRP Ledger (XRPL) using RLUSD, Ripple's US dollar-backed stablecoin. The financing is aimed at licensed payment, remittance, and financial firms that require short-term working capital to keep their cross-border transactions running.

Arf says its existing business already processes roughly $10 billion in annual global settlement volume. Capital in the system turns over about four times each month, a figure that reflects the short duration of the financing model: a settlement advance is typically repaid within one to five days after payments are completed. That rapid recycling allows the same pool of funds to be used over and over again rather than remaining tied up in long-term loans — and it is what allows a comparatively small capital base to support a large annual settlement volume.

PayFi Links Credit Directly to Payment Flows

Arf describes the model as "payment finance," or PayFi. The approach integrates lending, treasury management, and foreign exchange into a single product built around real-time payment flows. For cross-border businesses, this can reduce the burden of balancing cash across a number of markets.

Under the structure, Arf continues to handle underwriting and working-capital provision as it normally does, while the blockchain layer is responsible for settlement and, ultimately, some aspects of the lending flow itself. For clients, that means access to credit does not hinge on changes at the blockchain layer.

XRPL Native Lending Could Take the Program Onchain

The first phase does not require XRPL's upcoming lending capabilities. Arf will initially issue credit to cover the settlement liquidity needs of its clients through its existing infrastructure, and the company also aims to shift more of its activity to the proposed native lending platform for XRPL later on.

That platform consists of two components: a Single Asset Vault, where onchain assets are aggregated into a common pool, and a Lending Protocol, which creates structured loans out of that aggregation. The two amendments behind the features, designated XLS-65 and XLS-66, must still complete XRPL's amendment process before they can be enforced on mainnet. Arf states that it has already developed within the proposed framework and will provide feedback for implementation in the future. Until those amendments clear that process, the lending side of the program runs on Arf's existing infrastructure — making completion of the amendment process the key milestone to watch for the planned shift onchain.

XRP and RLUSD Play Different Roles

Within the program, RLUSD will serve as the collateral behind the loans and their repayments. XRP, the ledger's native asset, remains in place for account and certain ledger objects' reserve requirements as well as transaction fees. The division keeps XRP in its established protocol functions while placing RLUSD, the asset backing the credit, at the center of the financing arrangement.

If settlement lending scales, XRPL could see a greater amount of recurring institutional activity tied directly to actual payment flows. The structure also allows payment companies to leverage Arf's fiat and stablecoin treasury services without being present onchain themselves, while the blockchain layer is managed by XRPL. How much of that activity materializes depends on demand from licensed payment firms and on XRPL's amendment timeline for native lending.

Source: CryptoNinjas