Banking News

Moneygram partners with Stellar blockchain for stablecoin payouts

moneygram

Yesterday Moneygram announced plans to use the Stellar blockchain to enable its customers to make payments with the USDC stablecoin or settle incoming money as USDC. It also enables near-real time settlement of Moneygram payments. 

The solution will start to go live this year, with an international roll out in 2022.

Moneygram isn’t a newcomer to blockchain. In 2019, it signed a deal with Ripple that involved Ripple investing $50 million in the company. Additionally, Moneygram adopted Ripple’s On Demand Liquidity (ODL) solution for foreign exchange that uses the XRP cryptocurrency as an intermediate coin. 

However, when the SEC sued Ripple alleging that the XRP cryptocurrency is a security, Moneygram eventually suspended the arrangement in February 2021. A few weeks later, Ripple announced the arrangement had ended by mutual agreement. According to Ripple, Moneygram had processed billions in transfers using its solution.

Meanwhile, Stellar was founded by Jed McCaleb, who was also the co-founder of Ripple but had an acrimonious split with the company. According to an  Observer report, the falling out partly related to McCaleb trying to unilaterally sell Ripple to Stripe in 2013.

In other related news, Bloomberg reported that Stellar was considering acquiring Moneygram earlier this year.

“At MoneyGram, one of our top strategic priorities is to pioneer cross-border payment innovation and blockchain-enabled settlement,” said Alex Holmes, MoneyGram Chairman and CEO. “As crypto and digital currencies rise in prominence, we’re especially optimistic about the potential of stablecoins as a method to streamline cross-border payments.” 

Stellar previously had an arrangement with IBM for cross border payments with its IBM World Wire solution. However, in May 2019, Stellar had a two-hour outage. Just weeks later, Jesse Lund, the former banker who led the IBM project, departed abruptly. And IBM quietly abandoned World Wire.