During the pilot, MoneyGram will utilize XRP, the native digital asset of the Ripple Ledger, with the aim to speed up payment flows through xRapid, Ripple's solution for on-demand liquidity. As part of the agreement, MoneyGram will pilot XRP in their payment flows and also explore integration into Ripple's ecosystem through xVia. Moreover, Ripple charges about a penny compared to a transaction fee of nearly $30 that Bitcoin charges.
There are miles to go before a cryptocurrency-based system replaces correspondent banking, but MoneyGram's pilot looks like a step toward a world of faster, simpler, cheaper global payments.
Ripple, a bitcoin rival, claims it can settle digital transactions in three seconds or less, making it attractive to financial institutions.
Much of the interest in the coin appears to be based on assumptions that XRP may ultimately come to function as a reserve currency for banks who use Ripple's technology to conduct real-time funds transfers. With a digital currency such as the one Ripple provides, the wait time could be reduced.
"Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid", said Alex Holmes, chief executive officer of MoneyGram, in a press release.
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With offices in San Francisco, New York, London, Luxembourg, Mumbai, Singapore and Sydney, Ripple has more than 100 customers around the world.
"The Japan Bank Consortium's pilot with Woori Bank and Shinhan Bank brings us closer to sending money in an important corridor", said Emi Yoshikawa, director of partnerships at Ripple. To execute cross-border payments today requires financial institutions to rely on a complex web of relationships with correspondent banks in other countries.
Worldwide bank payments are slow and the associated fees often remain unknown until after a transaction has reached its final destination.
This strategic partnership will allow Moneygram to understand how blockchain technology and XRP can improve the efficiency of its global treasury operations and consumer experience.