MoneyGram currently uses Ripple’s product xRapid to purchasing foreign currencies. Western Union has reportedly made a purchase offer to acquire MoneyGram.
The giant payment service Western Union seems to be interested in buying money transfer company MoneyGram. The payment technology-focused blockchain firm Ripple is its co-owner.
By acquiring MoneyGram, Western Union seeks to join two of the largest providers of money transfer services in the USA. According to an anonymous person familiar with the matter, it has already made a purchase offer. However, the said person states that there is not yet a decision in this regard.
As a growing number of people turn to online payments, the coronavirus quarantine has led payment service companies to fight to keep their branches open around the world. However, some have closed their doors to their customers. Even so, the fact that people are staying at home has caused an increase in the number of digital transactions. These accounted for 18% of the company’s money transfers in the first quarter of 2020.
After the rumors in early June 2019, MoneyGram partnered with Ripple later that month. At that time, the blockchain startup made an initial investment of USD 30 million, maintaining a right to make another investment of USD 20 million within a period of 2 years. Ripple made a second investment in November. They said that they will be the owners of 9.95% of MoneyGram’s circulating shares and about 15% of a fully diluted basis including Ripple securities.
On the other hand, MoneyGram said that they use Ripple’s xRapid product, focused on minimizing liquidity costs and powered by the Ripple-pegged XRP token, to buy a portion of its coins in the main markets. The platform is moving 10% of its transaction volume through the on-demand liquidity (ODL) service, between the borders of the USA and Mexico. Furthermore, they had moved more than USD 100 million through the said platform in December, as well as established cross-border routes in Europe, Australia, and the Philippines.
Developing Market
Last May 1st, during a report on profits in the first quarter of 2020, MoneyGram President and CEO Alexander Holmes described it as a relatively quiet quarter.
Holmes added that Ripple’s expansion of its service will lead to changes in the results every month and every quarter. As things move, it will be possible to understand what they want, what they want the product to look and feel like, and how they want to take it to the different markets. They say that a variety of new services and routes are underway and will be expanding this year.
Meanwhile, MoneyGram’s cash remittance business fell by 19% in April, according to PaymentsSource. Its COO Kamila Chytil reportedly said that, despite the pandemic, MoneyGram is now in a better position to respond to quarantined migrants who need digital alternatives for cash remittances.
MoneyGram’s market capitalization is USD 164.3 million, with its shares currently rising by at least 6.15%. Western Union has also seen a 3.45% rise in share value, and its current market value is USD 8.5 billion. On the other hand, XRP is trading at USD 0.212 and has risen by 4% in recent days and 9% in recent weeks. The price dropped by 5.5% in just one month and by 52% in the past year.
By Willmen Blanco
