July 2, 2019 – With Ripple’s purchasing a stake on Moneygram, both companies strike a deal so that Moneygram will start using Ripple’s xRapid for foreign exchange settlements.
Speaking with PYMNTS.com, Ripple’s SVP of Business and Corporate Development noted how payments across borders have been slow and marked by friction in the past 20 years, but also highlighted why this system is still in place – because money is still eventually transmitted from point A to point B.
Discussing how fund generally flows, with Moneygram outlets as a specific example. Ms. Van Dyke said money must be pre-deployed or pre-funded in the target location/outlet so that it can release funds. This, according to her, is an expense because first, the outlets must have bank accounts and second, they will assume risk because it will take days to settle accounts.
Ms. Van Dyke noted how cryptocurrency can be taken advantage in this situation. XRP will become the bridge currency. Once the sender sends their money in US dollars, it will be first be converted to XRP, and then converted to pesos to finally be received by the eventual recipient. Ms. Van Dyke called the process a “near-instantaneous transfer of real value”.
She, however, admits that there will continue to be challenges because the global banking infrastructure works “in an entrenched way”.
Ripple has recently invested around $50 million into Moneygram. Their partnership also details Moneygram’s usage of Ripple’s blockchain-based infrastructure to change the way how the old-school money transfer company transition to cryptocurrency-based cross-border transfer of money. Ripple has boasted of very low fees and near-instant transaction time when using XRP.
In an interview with local paper BusinessWorld, Ripple’s SVP of Global Operations Eric Van Miltenburg noted that slow transfer time and higher transaction costs when remitting money to the Philippines, stressing that the Philippines must leveraged existing technologies to make this faster and more cost efficient
A typical problem with cryptocurrencies is high volatility. However, when asked, Mr. Van Miltenburg said the exposure to XRP’s price volatility is very minimal because the transactions are almost instant, arguing that there is much more volatility between PHP and USD versus using XRP.
This article is first published on BitPinas: How Ripple Powers Moneygram’s Cross Border Payments