The world’s second-largest money transfer provider, MoneyGram, partnered with Ripple to implement Ripple’s XRP coin. The partnership includes Ripple blockchain technology in their payment flows to lower transaction costs and increase payment speeds.
In MoneyGram’s press release they describe Ripple as the “leading enterprise blockchain solution for payments.”
Ripple/MoneyGram blockchain provides on-demand liquidity
Remittances firms like MoneyGram allow individuals to transfer money to friends and family around the globe. However, individuals face high costs and capital implications leading to time-lags between transfers. Currently, money transfer companies demand pre-funded accounts in each country to ensure they are able to settle transactions. XRP will allow MoneyGram to transfer money from one company to another instantaneously.
MoneyGram will test the use of XRP coin in payment flows through xRapid, Ripple’s blockchain solution for on-demand liquidity. They chose Ripple for its low transaction fees. Fees sit at a fraction of a penny, compared to Bitcoin fees around $30 per transaction. Further, Ripple’s settlement speed is a fast 2-3 seconds.
As XRP can settle a transaction within a few seconds, money can begin to move as quickly as information. Using a digital currency for payments is a type of bridge-funding which has been seen before between IBM, Stellar and a consortium of South Pacific Banks.
“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,” said Alex Holmes, CEO of MoneyGram. “We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”
MoneyGram has not confirmed how many transactions will be included in the test or whether the partnership will go beyond the pilot.
Will Ripple bring digital currencies to everyday use?
Ripple (XRP) is proving to be faster and cheaper than other digital currencies, shown by it’s increasing adoption by financial institutions.
Notably, it’s both XRP coin and Ripple’s blockchain technology being put to use by MoneyGram. Previously, financial institutions adopted blockchain technologies like Ethereum, but have stopped short of using actual currencies in transactions.
Bitcoin is accepted as a method of payment around the globe. However, its slow transaction speeds, high processing costs, and price volatility cause its use in everyday transactions to stagnate.
Ripple’s xRapid product is designed to enhance cross-border payments in emerging markets. That feature alone is part of Ripple’s recent success with Asian financial institutions. Ripple’s VP of Product Asheesh Birla describes Asian regulators as “more open to innovation and banks are more willing to take a chance on nascent technology, such as distributed ledgers.”
“They have a bigger risk appetite,” Birla said. “We have a big emphasis in India and Japan. In the US market it has been a little bit slow to be honest.”
Siam Bank in Thailand and Axis Bank in India are using Ripple’s xCurrent product. Financial services firm Cuallix are also using xRapid. SBI Ripple Asia announced a partnership in December with 61 Japanese banks to test how distributed ledger technologies can simplify international money transfers and reduce costs.
A successful pilot may indicate an overcome hurdle for Ripple in terms of progress outside of Asia.