MoneyGram to test cryptocurrency Ripple

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As part of the arrangement, MoneyGram will test the use of Ripple's cryptocurrency, XRP, to move funds in a faster and cheaper way, Reuters reports.

Ripple was more appealing than Bitcoin to Moneygram because of Bitcoin's fees.

The transfers will be processed on xRapid, Ripple's on-demand liquidity service designed for payment providers and other financial institutions that want to minimize costs while improving their customer experience.

XRP allows banks and payment companies to send money quickly, no matter the location. XRP is an efficient digital asset for blockchain powered payments with transaction fees at just fractions of a penny.

For MoneyGram, Fortune said, the partnership with Ripple "may provide a way to maintain its share of the money transfer market" amid competition from a new generation of low-priced Internet-based services like TransferWise.

The U.S. money transfer giant announced that it will be testing out XRP, a cryptocurrency developed by Ripple, in its payments network.

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This notion of using digital currency as a form of bridge funding is not unique to XRP.

Alex Holmes, CEO of MoneyGram said: "Every day blockchain technology is changing the norm and encouraging innovation".

For MoneyGram, the tie-up with Ripple may provide a way to maintain its share of the money transfer market. Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid.

International Payments is a multi-billion dollar industry and the current way of using a centralized authority who hold enough foreign reserves to be able to facilitate the cross-border transfers is very inefficient considering the time and cost involved.

MoneyGram, like its rival Western Union has faced increasing competition from a new generation of low-priced Internet-based services like TransferWise.

Ripple, a bitcoin rival, temporarily became the second-largest cryptocurrency by market value last month when it moved past ethereum, but its price has since dropped. The currency boomed to an all-time high of over $3.5 - following which it witnessed a fall in the price.

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