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The acquisition talks between Western Union and Moneygram are going on. Here’s how Ripple Labs and XRP token can be affected by this deal.
The potential acquisition of MoneyGram International Inc (NASDAQ: MGI) by Western Union (NYSE: WU) has raised many questions, the key ones among them are the implications for Ripple and XRP. Ripple Labs is already in deep relationship with MoneyGram.
Ripple owns about 10% of MGI stock. This occurred after a $50 million investment last year. Later another $11 million input followed, which also helped to expand and deepen the companies’ partnership.
Let also remind you MoneyGram uses XRP in its cross-border payment solutions.
That’s why this acquisition may bring many things for Rippel as well.
MoneyGram to Be Bought by Western Union: What Could It Mean for Ripple?
Firstly, this acquisition will create a powerhouse in terms of a superuser database and branches across the World. Western Union is the largest remittance service provider in the US. It has a market value of $8.6 billion. Moneygram is the second-largest remittance service in the U.S. It has a market value of $164 million and $878 million of debt.
These two if they come together will become the behemoth of remittances. The new giant will rule the financial space with all sorts of discounts and special remittance products available. The one thing they have to agree on is the efficiency of the RippleNet and the XRP ecosystem.
If they don’t agree on this, then the acquisition will have many problems.
Before now, Western Union wasn’t keen on Ripple’s Technology. This has changed, however. The payments giant is testing the technology. This comes after Western Union CEO Hikmet Ersek said last year that Ripple was five times more expensive to use than in-house tech.
Despite having access to the on-demand liquidity product that relies in XRP, cryptocurrency transactions accounted for less than 20% of its transactions. This may be changing, however. There is a significant increase in its online remittances (57%). This is as compared to last year. There is also a 6% drop in walk-in services for the same period.
This could create a new paradigm for near-instant payments across the globe. The cost of transfer (COT) has always been a big issue where cross-border payments are concerned. The time of transfers and regulatory hurdles have created a big mess.
DLT Is Changing Things
The use of Distributed Ledger Technologies (DLTs) will change how these transactions occur. Rather than have slow transactions that have their issues, faster transactions will ensue.
Ripple Lab’s Protocol Consensus Algorithm (RPCA) ensures this. That is alongside other tools that ensure liquidity at the cheapest cost.
Ripple does have its legal issues though. A U.S. Federal Court judge merged two cases against Ripple Labs and its CEO Brad Garlinghouse. The core issue to be determined is the fundamental question of Ripple being security.
If the single suit goes in Ripple’s favor, this will be a boom for the cryptocurrency. If it goes against it then the thorny issues surrounding other cryptocurrencies with similar usage will also emerge.
As the Western Union-Moneygram deal is moving forward, we will see the direction that both parties are taking concerning XRP.