MoneyGram and Ripple have been working together for the past year, with the remittance giant using Ripple’s One-Demand Liquidity (ODL) to speed up cross-border transfers. While there have been rumors of a strained relationship between both firms recently, Alex Holmes, MoneyGram’s chief executive, is downplaying any problems.
Tremendous Work on Transaction Settlements
In an interview with CNN’s Julia Chatterley earlier this week, Holmes discussed some of the company’s milestones this year. The CEO explained that the company’s online performance had outpaced its walk-in business, with transactions on its online platform surging by 220 percent. The trend isn’t much of a surprise, considering that digital payments have seen an uptick in 2020 due to the coronavirus.
Holmes also praised Ripple, explaining that the company had played a significant part in MoneyGram’s triple-digit growth in cross-border payments for 11 straight months.
“We’ve been partnering with Ripple now for about 18 months, and the idea behind that was to really push innovation and see how we can help in the pioneering, the expansion and global utilization of blockchain […] Our customers are looking for real-time payout and so the money has to be there, really before the transaction is initiated,” Holmes pointed out.
Ripple famously purchased 10 percent of MoneyGram in 2019 as part of the ODL partnership. The deal, worth $50 million, was completed in December. The ODL uses Ripple’s in-house token, XRP, to settle transactions between countries and currencies in real0time, allowing users to improve remittances and cash transfers.
No Trouble in Paradise
While the partnership between the firms started blissfully, some have noted that there could be challenges. In its earnings call for Q1 2020, Holmes told MoneyGram’s shareholders that the company had seen a “quiet quarter” viz a viz the partnership with Ripple.
At the time, Holmes explained that things hadn’t exactly picked up in terms of expanding the ODL service or introducing anything new to the market. However, he expressed that he was happy with the partnership, and that there was still significant potential for growth going forward.
Another potential fork in the road came late last month, when a filing from Ripple with the Securities and Exchange Commission (SEC) confirmed that the company had sold 2.26 million shares in MoneyGram for $15.3 million. The selloff immediately sent rumors flying, with many believing that the two companies had grown wary of their alliance.
However, a spokesperson for Ripple told industry news sourced that the move was purely a financial one. As the spokesperson explained, Ripple remains a proud partner of MoneyGram, and the selloff was merely in a bid to realize some financial gains on the investment.
MoneyGram’s stock price jumped in recent times, moving from $2.94 in October to $6.54 at the time of the selloff announcement. Considering that the stock was trading at about $1.5 when Ripple stepped in, the company’s desire for gains seems plausible.