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Western Union Aiming to Acquire MoneyGram Potentially Affecting Ripple and XRP

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According to a report by Bloomberg on June 1, Western Union is targeting to acquire rival money transfer firm MoneyGram, in a deal that would significantly affect Ripple and XRP.  According to an anonymous source to Bloomberg, Western Union is awaiting MoneyGram’s decision after submitting an official takeover bid.

MoneyGram collaborated with Ripple back in 2019 utilizes Ripple’s cross-border technology to make overseas payments, On-Demand Liquidity, to process a portion of its remittances. In addition, Ripple owns about 10 percent of MoneyGram after successfully completing a $50 million investment in the payments firm.

Western Union exploring Ripple’s potential on facilitating international transfers

In the meantime, Western Union is looking into the perspective of XRP’s capacity to initiate cross-border transfers, however, it is not yet convinced on Ripple’s ability to save the payment giants money.  According to the CEO of Western Union Hikmet Ersek back in 2019, the firm’s initial tests on XRP uncovered that using digital currencies is five times costlier than using the company’s in-house system.

However, this perception seems to be changing. Back in April, a study by Credit Suisse suggested that  Western Union is still “testing and considering the use of Ripple (XRP) for cross-border [payments]” regardless of the firm’s initial perception on Ripple’s technology. 

MoneyGram yet to fully transition to XRP

The two money transfer companies are among the largest in the United States. According to Bloomberg, MoneyGram has a market value of nearly $164 million; as of 1st June with $848 million in total debts. On the other hand, Western Union has a market value of approximately $8.5 billion.

Although MoneyGram adopted Ripple’s ODL technology, the payments firm is yet to fully transition from the traditional system to go full crypto. As per a quarterly report by the firm, barely a fifth of the firm’s entire transactions in Q1 of 2020 were digital. However, it is anticipated that this trend might change due to the spread of coronavirus worldwide; as digital payments are preferred to walk-in transactions.

Western Union doesn’t need Ripple when they have Earthport

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Western Union, one of the world’s leading payment service providers, has been in talks with Ripple over some time. Last weekend, a prominent crypto analyst mentioned on Twitter that, WU doesn’t need to integrate Ripple when they are using Earthport. And, his claim seems to hold substantial weight.

Before we move any further with the story, it’s worth noting that Western Union has been doing a test with Ripple and a couple of months back WU CEO, Hikmet Ersek said that they are still working with Ripple and learning from it.

Ripple has influenced a lot of financial institutions with its revolutionizing technology. Moneygram’s adoption has added significant value to the American Fintech firm. With several top banks using Ripple’s services, Western Union has always been interested in integrating Ripple, and it tested Ripple’s product (xRapid).

Officials from the blockchain firm mentioned regarding a potential collaboration with the money transfer giant, it said:

“We continue to test different products with Western Union. We are excited about this new partnership and our participation in a pilot implementation of xRapid. As many know by now, the xRapid product uses XRP in settlement flows.”

The world thought that Western Union is going to integrate Ripple, but things changed when WU CEO in the recent Brainstorm Finance 2019 conference changed his tone and said that they are providing the service even cheaper than Ripple (almost five times low). Ersek made sense, and he was logical. However, he didn’t neglect that they have stopped working with Ripple as he added:

“I’m open, any cost savings, any innovation. I’m there. We can sign a deal tomorrow.”

Despite all these uncertain circumstances, the thing to notice is that Western Union is using Earthport, a Fintech firm being regulated under the UK’s Financial Conduct Authority (FCA). Earthport is currently providing cross-border services across 88 countries.

https://twitter.com/naylor_vail/status/1172844236212973570

A brief look into Earthport makes things very interesting. Back in 2015, it partnered with Ripple, and in 2016, the fintech firm announced its Distributed Ledger Hub. It then made the first cross-border payment transaction through the Santander bank UK (again a Ripple partner), which made it the first DLT service to be provided to a UK bank for the cross-border transaction.

Now Western Union is using Earthport, which indirectly leads it to Ripple, and makes a connection between them substantially. However, who knows in the coming time Western Union may settle down with Ripple directly, and end up in a potential partnership just like Moneygram.

If Western Union goes on to announce a collaboration with Ripple in the future, it would be a massive breakthrough for the blockchain firm. Having the two biggest money transfer giants in the pocket could lead it to the pathway of new heights in the remittance world.

In case Western Union announces to stay away from Ripple, it would not have a massive impact on the Fintech firm, as it is still popular among banking world and almost all top banks and financial institutions are using its products in some manner.

Moreover, as the blockchain technology grows and makes waves into the masses, Ripple will more likely bring innovations in the industry. And that is where it has the edge over all the firms providing cross-border services. In the end, blockchain technology is the one that will make a difference.

Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

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Can Ripple help as Western Union cuts staff due to low earnings?

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Western Union is one of the best-known and most successful financial services around the world, and many believed that this would never change. However, Western Union has started experiencing quite a bit issues recently, which might indicate that it is time for the company to change its mindset. And apparently, get on board with blockchain solutions such as Ripple, as MoneyGram did.

Western Union sees lower earnings in Q2 2019

Many among you may or may not know that Western Union trialed Ripple in the past, too. But they decided to move along without carrying any substantial tests.

So now, one of the biggest and most impacting changes is the drop in its stock price after a reported miss on earnings. Its new earnings per share (EPS) came in at $0.45 per each share. Previously, analysts had predicted that the earnings would be somewhat higher, at $0.48 per share. While nowhere near the predicted EPS, it is even lower than the earnings from last year, when the EPS stood at $0.46 per share.

On the other hand, Western Union’s net income in the Q2 2019 was at $614.8 million, which translates to $1.42 per share. Last year, however, the figures were significantly lower, sitting at $217.6 million, or only $0.47 per share.

However, there were significant drops in revenue reported in the Q2 of this year, with revenue coming in at only $1,34 billion. While this is a considerable sum, it is below the last year’s revenue during the same period, which was at $1.41 billion.

That is not all; Western Union’s C2C (Consumer-to-Consumer) revenues made 83% of the total revenue in the second quarter, which is still 1% below the reported basis. This comes despite the fact that transactions actually grew by 1%.

The strongest growth for the US-based financial services company (Western Union) that keeps ignoring to adapt the change (Ripple blockchain) with era came in Latin America, which helped offset the declines recorded in the US domestic market and the Asia Pacific region.

Meanwhile, Western Union’s C2C revenues increased, even going as high as 18% above the reported basis. This translates to 20% constant currency, while transactions went up by 15%. It should also be pointed out that Western Union represents 13% of the total C2C revenue, and that it is currently serving 70 nations around the world.

It is not so bad for all the WU branches, however, and Western Union Business Solutions revenue actually went up by 3% above the reported basis. This is also a 7% improvement on a constant currency basis. This is something that was driven the strongest in Australia and Europe.

Hikmet Ersek, the CEO and President of Western Union commented on the results, stating that they were stable for the second quarter, and saw strong growth, at least as far as the digital sector goes. Further, he pointed out that the results in international digital transactions were particularly impressive. Western Union also managed to attract more of the leading global brands with their unique capabilities, and they still remain on track when it comes to delivering on their 2019 outlook.

Western Union brings changes — but are they enough?

So, why did Western Union saw such a significant drop in their earnings? Many believe that it might simply be due to the change of the methods used for sending payments. The people are getting used to having faster transaction speeds and lower fees; thanks to new systems, delivered by the cryptocurrency sector, Ripple in major.

https://twitter.com/stuart_xrp/status/1158030528840392705

One interesting situation is that of Moneygram, which did exactly that — it partnered up with Ripple, and has already started using the blockchain firm’s products to speed up transactions and cut back on the fees.

As a result, more people started employing its services, and many of the newcomers are likely former Western Union customers. This indicates that Western Union might have to change its ways soon if the leading financial services firm wants to remain ahead of everyone in the race. The world of finances is changing, rapidly, and WU must find a way to adapt or continue seeing losses in quarters and years to come.

The company is already experiencing quite negative consequences, as its biggest news of the quarter was the announcement of the workforce reduction. The company will have to let go around 10% of its workers.

Western Union announced job cuts, claiming that they are a part of its new global strategy that is supposed to improve efficiency, bring long-term revenue growth, and increase profitability. As for its plans for the future, the company seems to be encouraged by its cross-border money movement results, and so it plans to focus especially on its solutions and products in this area. But yes, it hasn’t confirmed any shift towards Ripple yet.

Ersek added that the firm is very excited about changing strategy, and they plan to start implementing changes as soon as possible. He stressed that the changes are being made from a position of strength and that they represent only the first step of a larger plan.

And, while the changes in the structure are supposed to bring a decrease in cost structure, it appears that the company has lowered its earnings expectations for the year. Previously, it expected to see prices of $2.66 to $2.76 per share, which was now reduced to $2.47 to $2.57. Meanwhile, the earnings per share were adjusted as well, moving to $1.70 to $1.80.

Consequently, change is what every business in the world needs to stay right on the top. It’s evident that if Western Union wishes to remain the number money transfer company, it will need to embrace the change. What change? We hear you ask — that’s Ripple.

Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

Never miss our daily cryptocurrency news, price analysis, tips, and stories. Join us on Telegram | Twitter or subscribe to our weekly Newsletter.