MoneyGram, will be testing the use of Ripple’s XRP currency on its payment network. The following Thursday signing of an agreement between the two.
At the same time, MoneyGram shares yesterday shot highest in 10 months — from 10 percent to $13.39 at 9:37 a.m. in New York — following the announcement. On the other hand XRP registered a 4 percent rise to $2.06 to recover from a decline of as much as 21 percent.
Moneygram working with Ripple
Moneygram is looking to using the cryptocurrency to reduce money transfer costs and settlement times. However, the new testing is limited to internal processes & will therefore not involve customers.
“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 CEO Alex Holmes in a statement.
The announcement said XRP was strategic for reducing payments compared to Bitcoin whose transaction fees are about $30 per each. It said, the transaction time on XRP takes about 2-3 seconds. And other digital assets range from 15 minutes to an hour.
Ripple CEO Brad Garlinghouse, who said XRP makes it possible for money transfer shops to maintain local currency accounts (so-called nostro and vostro accounts) in far-flung locations. And said the partnership was strategic wtih that the company would prove its ability in achieving low transaction fees.
XRP has faced criticisms in the recent past in regard to its actual application. For instance, XRP, which is not mined like many other cryptocurrencies, was created in a single 100 billion batch by the company. This has led to mistrust and contempt.
The company has also partnered with American Express. Michael Arrington also announced in November, creation of a $100 million hedge fund denominated in XRP.
The partnership will mean alot for MoneyGram, which together with competitor Western Union, faces stiff competition from new generation of low-cost Internet-based services like TransferWise.