Ripple, which is more of a payment protocol than cryptocurrency, has been gaining some serious traction lately; with TechCrunch’s Michael Arrington announcing a $100 million XRP hedge fund, and Bill & Melinda Gates Foundation launching an open-source software for creation of payment platforms to help unbanked people access digital financial services. Adding to that trend is the company’s latest deal with the money transfer company MoneyGram, which wants to explore the use Ripple in its operations…
MoneyGram to pilot XRP
MoneyGram announced its intent to 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 touted as the most efficient digital asset for payments with transaction fees at just fractions of a penny, whereas it costs around $30 per transaction on the Bitcoin network. Also, the average transaction time for XRP is 2-3 seconds while other top digital assets range from 15 minutes to an hour.
In that sense, Ripple could help MoneyGram advance its mission of allowing people to safely and efficiently 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; by using Ripple, pre-funded accounts could effectively be eliminated, with Ripple network providing near-instant money transfers from one part of the globe to the other. Or as MoneyGram has put it — this would optimize capital deployment.
“The inefficiencies of global payments don’t just affect banks, they also affect institutions like MoneyGram,” Brad Garlinghouse, CEO of Ripple, said in a statement. “By using a digital asset like XRP that settles in three seconds or less, they can now move money as quickly as information.”
The partnership would also enable MoneyGram to better understand how blockchain technology and XRP can improve the efficiency of their global treasury operations and consumer experience.
“Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid,” added Alex Holmes, CEO of MoneyGram. “We’re hopeful it will increase efficiency and improve services to MoneyGram’s customers.”
Not the only company testing Ripple
Earlier in 2017, we have seen Amex establishing the so called “Ripple corridor” between the U.S. and England. In addition to Ripple, Amex also worked with Spanish bank Santander to connect Amex customers using U.S. dollars to Santander bank accounts in the UK using British pounds. The integration routed non-card payments through the shared payment network for nearly instant, auditable cross-border payments.
Even before that, Ripple has connected Europe and the U.S. via its work with Swedish bank SEB. That partnership produced a corridor between Stockholm and New York City which has already conducted more than $600 million-worth of transactions since launching into production in the second quarter of this year.
That corridor, however, hasn’t included the use of the XRP cryptocurrency; rather, it was “a direct connection,” with no intermediary cryptocurrency.
Ripple has more than 100 customers around the world, supported by its offices in San Francisco, New York, London, Luxembourg, Mumbai, Singapore and Sydney.