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.