The deal teams MoneyGram with the direct competitor of former partner Ripple, which invested heavily in the international payments firm when it was producing steep losses.
International payments firm MoneyGram is working with the Stellar Development Foundation to use its blockchain to make cross-border payments far faster and cheaper.
Circle’s USD Coin stablecoin — USDC — will be used for consumer transactions between different countries and currencies, the firms said in a release on Oct. 7.
Saying the partnership “revolutionizes the settlement process” — which can take days to finalize — MoneyGram CEO Alex Holmes added:
“One of our top strategic priorities is to pioneer cross-border payment innovation and blockchain-enabled settlement ... Given our expertise in global payments, blockchain, and compliance, we are extremely well-positioned to continue to be the leader in building bridges to connect digital currencies with local fiat currencies."
Traditional cross-border payments take days to finalize and the costs are high — especially in the remittances market used by unbanked immigrant workers to send money home to poor countries. A $200 transaction can cost $15 or more.
According to Denelle Dixon, CEO and executive director of the Stellar Development Foundation, the partnership will create “more equitable financial access.” She said:
“A shining example of how blockchain technology and stablecoins bring new opportunities to global customers and enhance the existing financial system. Thanks to the reach of MoneyGram's services and the speed and low cost of transactions on Stellar, a new segment of cash users will be able to convert their cash into and out of USDC, giving them access to fast and affordable digital asset services that may have previously been out of reach.”
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Barely a Ripple
Stellar competitor Ripple will be unamused by the announcement.
MoneyGram started using blockchain technology after partnering Ripple in 2019, which invested up to $50 million in MoneyGram and paid it millions in market development fees to use its On-Demand Liquidity product for cross-border foreign currency exchange trading — but not consumer payments directly.
MoneyGram ended the deal early this year after Ripple was sued by the U.S. Securities and Exchange Commission over allegations that the XRP sales it has made for seven years were illegal securities sales.
Stellar founder Jed McCaleb was also one of Ripple’s founders, leaving the company in 2013 with billions worth of XRP, which he has been selling regularly. The next year, he founded the open-source Stellar protocol, which also focuses on cross-border payments.
