Correspondence Banking Versus Xahau
Decades ...
There's been almost a century or more, in fact, of predatory behavior by banks that handle cross-border value transfer for small businesses and individuals. In the early days of the XRP Ledger, I wrote about the central use case that was the impetus for its creation; fiat currency exchange using a native ledger token. It was a disruptive new idea and technology, and it was not welcomed by those that profit off of the existing kludges.
And now its smart-contract-enabled successor, Xahau, is on the front lines of the conflict between the new finternet, and the merciless guardians of traditional banking.
Normalized Predation
Even after guidelines were approved in Europe and in other Western jurisdictions mandating speedier cross-border transfers, the fees associated with such a transfer are still numerous and material to the overall amount. Western Union describes these fees and explains them for its customers. In addition to what's become 'standardized' transfer fees by banks, the company patiently explains that there may even be additional slippage fees from exchange rates, and various fees charged by third parties:
Some money transfers may involve a third-party (or intermediary) bank that facilitates the money transfer between banks that don’t have a financial relationship together. The intermediary bank may charge a transfer fee in addition to the fees from the outgoing or incoming transfer.
This isn't new; the shocking part is that our current state of affairs is'business as usual', despite crypto fans knowing good and well that we can transfer native tokens back and forth to each other for fractions of a penny.
After all, most money is just 'ones and zeros' in a computer somewhere, right?
History Of Coffee Farmers
Coffee farmers have long been on the bad end of an unbalanced power dynamic between themselves and well-financed coffee importers.
Coffee Supply Chain
While the modern concept of government and non-governmental intervention into the unequal footing of coffee farmers is a complex topic, the general ideas for leveling the playing field between family farms in mid-America, Oceania, Africa, and other regions are universally helpful:
- Cooperative Banks
- Low-cost Payment Rails
Cooperative Banks
Cooperative banks are owned by their customers.
They include what most people in the West think of as a 'credit union', in addition to other forms of member-owned financial institutions in other parts of the world. This different type of bank is necessary to merge local and individuals' interest with that of regulated banking. These types of banks are much more likely to be interested in uplifting their membership financially, rather than looking blindly at them as a 'number'.
Recently, the Inclusive Financial Technology Foundation (InFTF), which champions Xahau integration for international stakeholders, published an article discussing this very topic:
Cooperative banks can help change this. They stand close to the farmers, understand their realities, and already operate under trusted regulation. When they become part of the remittance flow, they turn distant promises into immediate access. They can receive funds from abroad, convert them to local currency, and credit them directly to producers without the value being lost along the way. Their presence gives both sides confidence: the roaster abroad knows the payment is traceable, and the farmer knows the money is real and redeemable.
Xahau Network
The first banking application on Xahau was the 'Coop Remit' xApp, created for customers of the Bank of Oromia, Ethiopia.
In that case, Ethiopian nationals abroad can send money back home, and the app handles the conversion to the sovereign 'BIRR' currency. The app resides in the Xaman non-custodial XRP & XAH wallet.
Perfect Match: Xahau & Cooperative Banking
Xahau, like the XRP Ledger before it, only requires a tiny fraction of one XAH to send any amount over the network to another wallet address. Contrast these near-zero-cost payment rails with contemporary trad-fi channels that cost much (hundreds of times) more than what a Xahau transaction requires.
It immediately becomes apparent why traditional banking has dragged its feet with distributed ledger technology replacing old systems; those old systems extracted maximum value from the sender and the beneficiary alike.
Xahau simply represents the low-cost future of cross-border value transfer; the way things should be.
The Tables Have Turned
People are beginning to question the value of traditional finance, and its decades-long predatory behavior against those of us that can least afford to pay more money to its banking system.
Now, with the rising popularity of cooperative banking and cryptographic networks like Xahau, the beginning of a new era has started, where people can keep more of the money they've earned and saved, rather than giving it to the amoral overlords of traditional banking.
Their unwilling victims have now turned the tables, and will give their business to the networks and banks that lift them up, rather than those that see them simply as financial prey.
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Sources
https://finance.ec.europa.eu/news/t1-settlement-2025-02-14_en
https://inftf.org/article/direct-origin-value
https://www.westernunion.com/blog/en/us/how-much-are-money-transfer-fees/
https://en.wikipedia.org/wiki/Fair_trade_coffee
https://en.wikipedia.org/wiki/Cooperative_banking
https://inftf.org/article/direct-origin-value
https://x.com/Hodor/status/1893792605495816418
Coffee photographer on Unsplash: https://unsplash.com/@nate_dumlao?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText
