In a deal that ought to bring considerable benefits for both sides, MoneyGram, one of the world’s largest money transfer companies (that was until recently subject to a takeover bid from China’s Alipay), has entered into a strategic partnership with Ripple – a blockchain solution for global payments that works alongside many of the world’s biggest banks.
In a press release, MoneyGram said that they intend to pilot the use of XRP, the native digital asset of Ripple’s XRP ledger, both to reduce the fees of every cross-border money transfer transaction, and speed up transaction times.
The trial, they say, will help them to “understand how blockchain technology and XRP can improve the efficiency of their global treasury operations and customer experience.”
XRP is the native digital asset of Ripple’s solution for on-demand liquidity, xRapid. The company claims that XRP is the “most efficient digital asset for payments”, with transaction fees costing fractions of a penny, compared to equivalent Bitcoin fees of about $30, and average transaction times of 2-3 seconds. Ripple says that rival digital assets can take anything between 15 minutes to an hour.
MoneyGram’s Chief Executive Officer Alex Holmes said of the deal: “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.”
Ripples’ CEO Brad Garlinghouse commented that “Money transfer companies are incredibly important because they help people get money to their friends and loved ones,” and that he was “excited about this pilot and a long-term strategic partnership with MoneyGram”, adding that MoneyGram would now be able to “move money as quickly as information”.
The Money Cloud View
Cheaper fees and faster processing times are the two pillars of an effective and competitive money transfer strategy. Ripple will be delighted to have formally entered a partnership to test their product with a giant such as MoneyGram, whilst MoneyGram are clearly willing to embrace blockchain technology to better serve their customers.
Ripple is currently at the peak of its hype cycle, having attracted the interest of financial institutions such as Santander, Standard Chartered and UBS, amongst others. This partnership will provide the ultimate test of their credentials.