MoneyGram International, Inc., one of the largest money transfer services in the world, is partnering with the Stellar Development Foundation, a non-profit organization that supports the development of Stellar, a blockchain network that facilitates cross-border transactions. The Stellar network utilizes the XLM coin to operate, currently priced at $0.327 with a $7.8 billion market capitalization.
Through the partnership, MoneyGram’s network will integrate with the Stellar blockchain to enable cash funding and payout in multiple currencies, be it a U.S. dollar or Japanese yen, using USD Coin (USDC), a stablecoin governed by Coinbase and Circle through the Centre consortium, according to Denelle Dixon, CEO and executive director of the Stellar Development Foundation. Initially developed on the Ethereum blockchain, USD Coin went live on Stellar in February.
Customers will be able to convert cash into and out of USDC for instant pickup at MoneyGram locations. On the backend, Dallas-based FDIC-insured United Texas Bank will facilitate settlement between Circle and MoneyGram. The service is scheduled to launch in select markets by the end of this year, with further international rollout planned in 2022, though no additional details, including pricing, have been shared.
“We’re enabling consumers to bridge crypto assets and fiat currency,” says Alex Holmes, chairman and CEO of MoneyGram International, “and we think that we can be a pioneer and a leader in that opportunity.”
What’s important, Dixon notes, is that a whole segment of cash users will get access to cryptocurrency services that may have previously been out of reach. “You can bring in your cash into a MoneyGram location and bring it onto the blockchain, and you don’t have to have a bank account to do that,” Dixon explains. “And the same is true if you don’t have a bank account to pull your assets off of the blockchain like Stellar. [Now] you can do that by going into a MoneyGram location and picking up your cash there.”
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The partnership is also notable because MoneyGram is now allied with a chief competitor to its previous partner Ripple, which offers a similar product for international payments. In fact, one of Stellar’s co-founders, Jed McCaleb is a co-founder of Ripple who comes in at #377 on this year’s Forbes 400 list of the wealthiest Americans by nature of his $3 billion stash in XRP, the native asset of the namesake XRP Ledger, a blockchain utilized by Ripple. Rumors of MoneyGram’s potential takeover by Stellar began swirling in July (both declined to comment on the matter), less than six months after the money transfer services company announced the end of its partnership with Ripple.
The relationship came to an end this March after Ripple was sued by the U.S. Securities and Exchange Commission, which accused the company of selling the digital asset XRP, developed by Ripple, as an unregistered security.
Holmes disagrees with the characterization of the Stellar tie-up being a replacement, saying that the partnership with Ripple “was much more focused on the backend”. “This, I think, is actually even more exciting because it brings the frontend consumer side to it,” he posits.
Additionally, the initiative signals a rising interest from traditional payment networks in connecting fiat and digital currencies. In March, payments juggernaut Visa piloted transaction settlement in USD Coin on the Ethereum blockchain with its partner Crypto.com, and last week, outlined a plan for what it calls a “Universal Payment Channel” (UPC), interconnecting multiple blockchain networks that will facilitate transactions between various stablecoins and central bank digital currencies (CBDCs).