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Legacy remittance provider MoneyGram will form Ripple’s network Ripple’s pilot XRP, the cryptocurrency used on Ripple’s network, in MoneyGram’s
The firms did not specify how many of MoneyGram’s transactions will be included in the test, or whether the partnership will become a permanent part of MoneyGram’s business, according to Bloomberg But both parties are optimistic it will improve services. It’s worth noting that this news comes just after rumors that Western Union, MoneyGram’s biggest competitor, would forge a similar relationship.
The move comes as a legacy remittance players seek out ways to better compete with digital upstarts. Digital-first remittance players are still much smaller than dominant legacy providers, but they are growing more quickly, and could represent a substantial threat down the line.
That’s possible because they are profitable and they do not pay off. If they want to remain atop the industry, they need to find ways to compete.
This driver could show if enlisting blockchain and technology is a viable way of doing so.
Blockchain technology, and Ripple in particular, could increase speed and efficiency. Right now, MoneyGram’s process links to “pre-funded accounts” in the markets it operates across the globe. These accounts, and the transfers between them, may be time-consuming to operate and often tie up capital for these firms, according to Fortune . Ripple, and platforms like it, change that by giving a more efficient, and often less expensive, way to transact.
That could help the firm find level ground. The retail costs that the legacy players must maintain make it hard for them to compete with upstarts on pricing. So if they want to do so, they’re going to have to find other places to trim costs. Looking for ways to save money for players, which can be used to save money, or save and re-invest in other types of digital innovation.
If the firm really sticks with Ripple, it could be a big win. The announcement comes just after MoneyGram terminated Ant Financial’s billion dollar acquisition follows regulatory hurdles; MoneyGram’s MoneyGram’s Digital Capabilities would have been drastically boosted. MoneyGram’s ongoing innovation, and interest in finding ways to compete, with stronger digital growth and improved industry positioning on the horizon.
Ayoub Aouad, research analyst for BI Intelligence , Business Insider ‘s premium research service, had put together a detailed report on digital remittance That:
quantified how large is the remittance market currently is.
Discusses what some of the barriers to growth have been for remittance industry in recent years.
Identify what factors are going to lead to continued growth going forward.
Considers ways digital-first startups have begun to disrupt traditional remittance companies and bring down fees.
Breaks down what legacy firms are doing to hold off these challengers, while also evolving with the changing circumstances globally.
Explores what firms in the industry will have to do in order to avoid being outperformed in an industry that is becoming saturated.
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