Western Union reportedly is pushing to acquire MoneyGram – a deal that could have a significant impact on Ripple and XRP.
An unnamed source that is ‘familiar with the case’, says Bloomberg that Western Union has made an official takeover bid. MoneyGram has yet to decide.
MoneyGram partnered with Ripple in 2019 and uses the fintech startup’s XRP-powered cross-border payment product, On-Demand Liquidity, to process some of its transfers. Ripple owns approximately 10% of Dallas-based MoneyGram’s common stock after completing a $ 50 million investment in the payment giant last year.
Western Union is currently exploring XRP’s potential to enable cross-border transactions, but is not being sold because the company can save money. Last June, CEO Hikmet Ersek said Initial testing of the company with XRP found that using cryptocurrency was five times more expensive than relying on Western Union’s internal system.
However, those prospects may change. In April, researchers at Credit Suisse reported that Western Union is continuing to test and consider the use of Ripple (XRP) for cross-border [payments]Despite the fact that the company was “initially less optimistic” about the technology.
MoneyGram and Western Union are two of the largest money transfer companies in the US. Bloomberg reports that as of Monday, MoneyGram has a market value of approximately $ 164 million, in addition to 878 million in debt. Western Union has a market value of approximately $ 8.5 billion.
Despite the acceptance of ODL, MoneyGram has not yet completed the transition from physical to crypto. Less than a fifth of all of the company’s transactions in the first quarter of 2020 were digital, according to a quarter report.
However, that shows signs of change. Digital transactions grew 57% year over year in the first quarter, while walk-in transactions decreased 6%. And those trends persisted only during the coronavirus pandemic, with digital transactions reaching 28% of the company’s cash transfers in the first 27 days of April.