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MoneyGram is one of the major partners of Ripple. And it received good investments from it. In the last half-year, it got a sum of another $11 million.
Last year Q3 and Q4 reports indicate remittances to MoneyGram by Ripple Labs Inc. The sums were broken down into $2.4 million in Q3 and $8.9 million in Q4. MoneyGram referred to the Q4 remittance as “Financial Benefit”. This wasn’t added to the payments firm’s revenue base. The amount was included as an expense at the SEC’s urging. Revenues were also indicated albeit with a $2.4 million reduction.
This also evened things as earnings stayed as-is.
Investments Made by Ripple in MoneyGram Expand Their Partnership
Moneygram and Ripple seem to have fallen “head over heels” for each other. This has also created a partnership between the remittances company and the cryptocurrency unicorn. MoneyGram indicated:
“MoneyGram continued to expand its strategic partnership with Ripple as the first money transfer company to scale the use of blockchain capabilities.”
Before now, MoneyGram had championed the use of the XRP token for use regarding transfers on its network. It had championed the use of XRP tokens for its on-demand liquidity product in international payments. The recent filing indicates that Moneygram will increase its usage of XRP and Ripplenet for international transfers.
Sources indicate that Alex Holmes who is MoneyGram CEO intends to expand XRP use to account-to-account transfers across borders. He reportedly said:
“Our progress on the Ripple partnership has been instrumental in helping us lead the evolution of digital P2P payments… Today, our trading volume continues to grow and we’re partnering to expand the service to more corridors.”
The account-to-account transfer feature will also affect corporate accounts. This also indicates that Moneygram is going supernova with Ripple. RippleNet will become a core part of the MoneyGram infrastructure. This move has made many within the fintech community to be concerned. Already, Ripple has had its share of legal battles. This hasn’t gone down well with initial investors into the token.
Numerous Ripple’s Issues
The continued sales of its XRP token has also attracted scrutiny. Many believe that the XRP token is grossly undervalued due to massive sales. It has also drawn the ire of several industry heavyweights. They have become wary of investments in XRP.
This, however, doesn’t seem to bother Holmes and his team. MoneyGram and Ripple Labs concluded the $50 million deal recently. This makes MoneyGram one of the biggest believers in Ripple Labs. So much so that more than a tenth of all US-Mexican transfers occur within the XRP ecosystem.
While there may be a rosy future up ahead for the two companies, Ripple being a unicorn startup needs to put itself together and address certain strategic issues concerning its financials. Its corporate strategy also needs to be considered as well. The U.S. SEC is still yet to make its mind on the classification of XRP. The SEC thinks it may have more use as security than a commodity. Ripple Labs is pushing strategically for this to occur.
So, what may have been a match made in heaven may become a marriage of strange bedfellows. The guys at MoneyGram aren’t betting on that though (pun intended).
As at the time of filing this report, the XRP token stood at $0.24. This is a 9.56% drop in prices within the last 24 hours. Shares of Moneygram International Inc (NASDAQ: MGI) stood at $2.09. This is an 18.68% drop in prices since the last trading session. But in the pre-market the stock is 2% up to $2.15.