San Francisco-based Ripple, a provider of an enterprise blockchain solution for payments, has partnered with Dallas-based MoneyGram (NASDAQ: MGI), a money transfer company, to pilot a digital asset product in their payment system.
MoneyGram will pilot the use of XRP, the native digital asset of the XRP Ledger, in payment flows through xRapid, Ripple’s solution for on-demand liquidity. XRP is a digital asset payment method with transaction fees at just fractions of a penny, compared higher fees for other cybercurrency transactions, according to a news release from Ripple. It is also faster, according to the news release, with “the average transaction time for XRP at 2-3 seconds with other top digital assets ranging from 15 minutes to an hour.”
Money transfer companies, like MoneyGram, allow people to send cross-border payments to friends, families and business partners. The current model for these payments requires money transfer companies to use pre-funded accounts across the globe to source liquidity. Newer blockchain technologies have the potential to revolutionize this process and optimize capital deployment, according to the news release.
“The inefficiencies of global payments don’t just affect banks, they also affect institutions like MoneyGram. Money transfer companies are incredibly important because they help people get money to their friends and loved ones,” said Brad Garlinghouse, CEO of Ripple. “We are excited about this pilot initiative and a long-term strategic partnership with MoneyGram. By using a digital asset like XRP that settles in three seconds or less, they can now move money as quickly as information.”
As part of this agreement, both companies will also explore MoneyGram’s integration into Ripple’s ecosystem through xVia.
For MoneyGram, the second largest money transfer company in the world, this strategic partnership will allow them to understand how blockchain technology and XRP can improve the efficiency of their global treasury operations and consumer experience.
Alex Holmes, CEO of MoneyGram, said, “Every day blockchain technology is changing the norm and encouraging innovation. Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid. We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”
MoneyGram International Inc. stock was up 4 cents to $12.16 on Thursday after announcing the deal.
On Jan. 2, Chinese billionaire Jack Ma has dropped his bid to buy U.S. money transfer company MoneyGram after Washington rejected the $1.2 billion deal in a fresh example of heightened American scrutiny of Chinese investment.
MoneyGram International Inc. and Ma’s Ant Financial Services Group failed to gain approval from the Committee on Foreign Investment in the United States despite efforts to respond to its concerns, MoneyGram CEO Alex Holmes said in a statement after the announcement. The panel reviews proposed foreign acquisitions of U.S. companies on national security grounds.