According to Bitcoinist's report on March 23, in its most recent annual report to the Securities and Exchange Commission (SEC), MoneyGram announced $ 11.3 million in revenue from its partnership with Ripple. Ripple Labs pays the remittance company to motivate it to use RippleNet in its operations.
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Ripple's revenue grows rapidly
Although MoneyGram ’s total revenue continues to decline, the cooperation with Ripple clearly benefits the company. In the second quarter of last year, MoneyGram started using RippleNet's on-demand liquidity (ODL), which proved to be very successful. The report states:
"The MoneyGram company developed and brought liquidity to Ripple's foreign exchange trading market through the ODL platform, and provided a reliable level of foreign exchange trading activity, which brought the company XRP token returns."
It is worth noting that of the $ 11.3 million that MoneyGram received from Ripple, $ 8.9 million came from the fourth quarter. Given the overall growth of the Ripple platform, this number may be even higher in 2020.
The campaign said that Ripple Labs was looking for ways to get financial institutions to use its services, and the results proved to be positive. It also reportedly paid other cooperating agencies. In MoneyGram's example, such a payment is a bit weird because Ripple Labs already owns a considerable stake in the company. The agreement to use RippeNet will expire in 2023.
Remittance companies need to transform
The cooperation between MoneyGram and Ripple shows that the company has recognized a major change in the global financial sector. Blockchain assets are playing an increasingly important role in global capital flows and may make traditional remittance service providers obsolete. In fact, eliminating the need for companies like MoneyGram is a core design feature of Bitcoin.
By actively seeking cooperation with fiat currency financial institutions, Ripple Labs has become an early practitioner in the crypto space. Nonetheless, its CEO Brad Garlinghouse has repeatedly emphasized that cryptocurrencies will be the best complement to the traditional economy, at least for now. In other words, Gallinghouse doesn't think central banks and their currencies will disappear any time soon.
Ripple's strategy of incorporating banking partners into its ecosystem is clearly at work, but the extent to which these institutions actually use RippleNet is still unclear, and they appear to be limited to the research phase. The fact that Ripple had to pay for them to actually use it proves it again.
At present, the cooperation between Ripple and MoneyGram has benefited both parties. However, both companies undoubtedly understand that larger changes will soon have a huge impact on their core businesses.