Last week, we reported on a rumored partnership between Ripple and Western Union. That remains unconfirmed, but Business Insider has reported that Ripple and MoneyGram have teamed up. The project is still in its infancy, but MoneyGram hopes to use Ripple’s cryptocurrency, known as XRP, in its “payment flows.”
Companies such as MoneyGram use pre-funded accounts to handle payments, but this process is often slow and can tie up funds for longer than is ideal. MoneyGram’s Alex Holmes told Bloomberg that he was hopeful that the use of Ripple’s blockchain technology could speed up the process of transferring funds.
“Ripple is at the forefront of blockchain technology,” Holmes said. “We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”
It remains to be seen as to whether or not MoneyGram will actually adopt XRP, but Ripple has had some success in this area before. It currently offers quick and affordable money transfers to users on different continents. Ripple’s fees are lower than traditional services and cryptocurrency rivals such as bitcoin, because it employs several middlemen to expedite and simplify the process.
The full details of this plan have not yet been revealed, but MoneyGram’s partnership with Ripple highlights the changing nature of money remittance services such as Western Union and MoneyGram. Currently, so-called legacy providers remain a dominant force in this industry, but digital competitors such as Ripple are starting to catch up. One only needs to look at the fate of Blockbuster Video to see the dangers of ignoring the shifts in a changing market.
In addition to being faster than traditional services, XRP could also disrupt this industry by being more affordable. Digital-first companies have the competitive advantage of not having to pay as high costs as their brick-and-mortar rivals. They’re able to pass those savings on to consumers making them an attractive option for the money-conscious.
The longterm success of this plan remains to be seen, but the short-term has turned out well for both companies. MoneyGram saw its stock rise by 10 percent. Ripple saw an increase of four percent during the same time period.
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