Ripple, the Fintech company behind the XRP token and ledger with the same name, has just signed a deal with MoneyGram pilot the use of the of xRapid, Ripple's payment protocol.
Ripple (XRP) has been making waves in the cross border payments space recently. The goal is to take on the slow and inefficient cross border payment industry and settle payments to correspondent banks in an instant.
Moneygram is one of the World's largest money transfer companies in the world. They have been operating for a number of years and are competing in the hyper competitive payment service and remittance industries.
What is the Partnership?
According to the announcement, MoneyGram will pilot the use of XRP on xRapid with some of its current payment flows. They have done this because XRP remains one of the most effecient payment digital payment solutions.
As an indication of just how fast XRP is, a typical transaction takes about 3 seconds. If one were to compare this to traditional digital assets such as Bitcoin, the appeal of XRP becomes apparent.
Moreover, in terms of the number of transactions that can be completed on the Ripple protocol, it can accommodate about 1,500 per / second compared to the rate of approximately 3-6 t/ps on the Bitcoin network.
How Does This Help MoneyGram?
Large cross border payment companies such as MoneyGram have to rely on pre-funded accounts in numerous different banks across the world. These are required in order to provide the right liquidity for the customers who are sending funds.
However, this means that a great deal of assets have to be tied up at these banks with levels constantly monitored. With Blockchain technology, however, this can be effectively optimised and capital can be more effectively deployed.
According to a statement from Brad Garlinghouse, CEO of Ripple:
The inefficiencies of global payments don't just affect banks, they also affect institutions like MoneyGram…By using a digital asset like XRP that settles in three seconds or less, they can now move money as quickly as information
With this strategic partnership, MoneyGram will be able to study how xRapid can help and improve their business model and save them costs. Moreover, it will allow MoneyGram to effectively test a blockchain solution for the first time.
Positive for Ripple
In the immediate aftermath of the deal announcement, the price of XRP rallied off of weekly lows. This is no doubt a vote of confidence for the Ripple team as they present the xRapid solution to a number of banks around the world.
Ripple also signed other lucrative deals with financial institutions such as American Express and Santander last year. The result of all the expansion was a large rally Ripple rally to the start the year off.
Watch this space…
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