- New strategic partnership announced
- XRP digital currency to be introduced
Blockchain company Ripple has announced a partnership with funds transfer powerhouse MoneyGram.
The agreement represents a significant shift, as MoneyGram will be one of the first to implement the use of XRP, Ripple's digital currency, in its services. XRP has faced serious questions about its practicality, despite its rapid increase in value.
MoneyGram will begin a pilot program with XRP, using Ripple's xRapid service, which is meant to improve liquidity for traditional financial institutions. In a joint press release, Ripple and MoneyGram highlighted the efficiency and speed of XRP transactions:
“XRP remains the most efficient digital asset for payments with transaction fees at just fractions of a penny, compared to Bitcoin fees of about $30 per transaction. Similarly, the average transaction time for XRP is 2-3 seconds with other top digital assets ranging from 15 minutes to an hour.”
According to Ripple CEO Brad Garlinghouse, the partnership with MoneyGram is strategic, as it will demonstrate the ability of XRP to lower the cost of domestic and international money transfers.
Blockchain technology — the foundation of cryptocurrencies like Bitcoin and Ripple — has been tempting for financial institutions across the globe, with many banks testing its use to help lower transfer costs. Skeptics, however, say Ripple's XRP currency isn't necessary to send money abroad.
Yet Garlinghouse says XRP eliminates the need for brick-and-mortar money transfer locations to maintain accounts in local currency. Theoretically, using XRP will allow service providers to free up capital to use elsewhere.
The idea that digital currency can be used as a means of bridge funding is not exclusive to Ripple's product. Last year, IBM and a number of financial institutions in the South Pacific reached an agreement to use blockchain for money transfers with a cryptocurrency called Stellar.
Ripple's deal with MoneyGram could provide a way for the firm to keep a hold on its share of the funds transfer market. Like many other traditional transfer services, MoneyGram has faced increased competition from a host of low-cost web-based payment services.
"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," said Alex Holmes, MoneyGram CEO.
Ripple has also partnered with American Express in recent months, as well as providing XRP for prominent tech executive Michael Arrington's $100m hedge fund.
Ripple has come under intense scrutiny lately, as XRP has risen in value exponentially, briefly becoming the world's second most valuable cryptocurrency. In early January 2018, XRP reached an all-time high of more than $3.50 and a $120bn market cap. Since then, the digital currency has dipped more than 50%.
