MoneyGram, a global payment service provider, embraced Ripple in a strategic partnership for payment settlement of cross-border and foreign exchanges in the second quarter of 2019. This was one of the landmark achievements of Ripple lab in its attempt to utilize the XRP, a blockchain-based token for cross-border payment settlement. The partnership cost Ripple $11.3 million worth of XRP tokens. Since then, Moneygram sold these XRP tokens, and a earned a huge sum of money.
In its annual report filed to US securities and exchange commission, Moneygram attributed this huge earning as a result of selling the XRP tokens acquired during financial agreement with Ripple. MoneyGram had received these XRP tokens as an incentive to use the Ripple’s On-Demand Liquidity (ODL) for the transmission of money to different countries.
“The Company is compensated by Ripple in XRP for developing and
brining liquidity to foreign exhcnage markets, facilited by the ODL platform, and providing a reliable level of foreign exhcnage trading activity”
San Francisco based Ripple lab was founded to resolve the issue of cross-border payment through blockchain technology. It is intended to remove the intermediary that charges a huge amount as fees. Its partnership with MoneyGram was a new initiative in its attempt to use Ripple net for real-time settlement of cross-border payments.
The ODL is the platform developed by Ripple that helps payment providers like Moneygram to settle the remitted amount in real-time by converting the currency into XRP tokens. It enables the payment providers to send the money in the form of digital assets across the world without any restriction or enormous charge. The crypto money again converts into the currency of destination place and hence making the whole process easy, transparent, and fast. Currently, MoneyGram is using XRP through ODL for the settlement of its 10% transactions between Mexico and the US. The percentage is expected to increase in the future.
MoneyGram was the first big firm that accepted the proposal of Ripple to use its cryptocurrency for payment settlement. However, Ripple is consistently involved in convincing the payment service providers to use XRP to help reduce the overall cost. The adoption of Ripple net by giant payment providers will be beneficial for Ripple as well as it’ll help transcend the need of central authority for the payment settlements.