MoneyGram Signs Deal to Work with Currency Startup Ripple | Hacker News Reader

MoneyGram Signs Deal to Work with Currency Startup Ripple

wsj.com

238 pointsggurgone118 comments

There are many remittance companies in UAE, Saudi & Oman where migrant workers send their salary back home to India, Pakistan, Bangladesh, Nepal & Philippines. UAE Exchange being the major player there. Many of these companies might want to signup for Ripple because they can avoid the middlemen (what if Ripple becomes the middlemen ?) , thus more profits while keeping the fees low for customers and have rapid money transfer rather than waiting days for bank clearance.

The problem in implementing this is the origin & destination country should have legal mechanisms in place to operate this. Many low income migrant workers use schemes called "Hawala" , "Hundi" to avoid the fees charged by the remittance companies.

Maybe RippleNet can work in favor for both consumers and providers. Do keep in mind that RippleNet is not the same as XRP. The remittance houses will have to maintain Nostro and Vostro accounts for funding which I believe is currently maintained in USD. They can switch this to XRP to avoid those transaction fees and overhead.

That’s rights. XRapid removes the need for dormant FIAT sitting in Nostro/Vostro accounts.

Whether you use ripple or any other intermediary, it will not save conversion costs from one currency to other. You are really selling one currency and buying other.

The actual costs of converting currencies on the normal money markets using an account like interactive brokers are almost zero - maybe 0.05% or you can even make a profit on it if you put in a limit order near the current price. The costs are mostly in getting money in to the system at one end and out at the other. I'm not sure how going via crypto will be any cheaper - it's usually more expensive in my experience.

I agree. Ripple is a rip off. Converting to intermediary is not going to help. The costs I was takking about are the exchange rate that local banks charge.

> Maybe RippleNet can work in favor for both consumers and providers. Do keep in mind that RippleNet is not the same as XRP. The remittance houses will have to maintain Nostro and Vostro accounts for funding which I believe is currently maintained in USD. They can switch this to XRP to avoid those transaction fees and overhead.

For me this doesn't make much sense, why would the remittance operators be willing to hold XRP now? It is unstable and volatile like Bitcoin.

This whole ripple thing sounds like an epic scam. The actual technology is just a story that people can tell without actually understanding the business. Then the actual business is pumping the token, and then dumping at some point.

> why would the remittance operators be willing to hold XRP now?

They don't hold it forever. The sender and receiver hold XRP only for the period of time that the transaction is confirmed and settled, and according to Ripple CEO Brad Garlinghouse, this time is as little as 3 seconds.[1]

Source: See https://youtu.be/vnGNycbhJlE?t=388 at 6:28. He explains this.

More than that MoneyGram is a loss making entity with a negative equity. This is just an attempt by MoneyGram to pull a Kodak (last ditch attempt to stay afloat by attaching itself to "cypto" currency bandwagon)

i hope this is the case. XRP is a joke.

You have been downvoted because you are not a crypto fanboy.

I don’t understand - XRP is actually putting crypto currency to use by solving existing problems... right now!

Either way you look at Fiat is going to be around for a few years yet - ripple are actually aiding the transition.

ripple is a contradiction of Satoshi's white paper. I don't support contradictions to it.

What in in the world are you talking about? Moneygram is a successful business

MoneyGram isn't loss-making, where did you get that idea from?

Got any numbers to back that up? Both WU and MoneyGram are extremely popular, especially in developing countries.

http://ir.moneygram.com/releasedetail.cfm?ReleaseID=1046981

$900 million in debt. Assets minus liabilities is around -$184 million.

Not loss making, however.

Correct. Loss already made.

While Kodak is easily baiting, this is actually a payment company.

That accepts money payments.

This seems like the entire purpose crypto is designed for.

Totally thought Kodak was BS, but I can't deny when money companies are working with money companies.

Same can be said of CryCash: https://crycash.io/

CryTek was on the verge of bankruptcy a year ago when they were unable to pay their employees. The one-time payment from Amazon in exchange for the engine distribution rights is probably running out.

https://www.reddit.com/r/gamedev/comments/7l640w/crytek_has_...

https://www.reddit.com/r/gamedev/comments/5wzlf2/crytek_empl...

http://www.eurogamer.net/articles/2016-12-20-crytek-breaks-s...

Well, MoneyGram cannot be liking that Walmart now has Walmart2Walmart for transferring money as a cheaper service.

Yeah, especially since Walmart2Walmart is powered by Ria / Euronet [1], a direct competitor to MoneyGram.

[1] https://corporate.walmart.com/_news_/news-archive/2014/04/17...

In that case, I'm sure MoneyGram declined to provide their service at a lower rate.

They did, and each Walmart has a big sign showing the difference in fees.

How long does it have to pass until whatever Kodak does is not its last ditch attempt at...?

First, I don't know for sure, but one of the reasons why they might show in their balance loss like that, is that they don't want to pay taxes ie. tax evasion strategy.

Otherwise I can't see how else they can have loss while all migrant people are using them to send money home.

Except moneygram has a huge place in the history of cryptocurrency, where as kodak doesn't even come close. If you purchased bitcoin in 2013 there was a very good chance that you transferred cash using moneygram from a local CVS or Walmart.

+1. Moneygram was one of the few ways to fund a wallet almost completely anonymously in those days.

Didn't you need some kind of escrow?

> More than that MoneyGram is a loss making entity with a negative equity

Their net income has been positive for each of the last five quarters and their operations and business produced net cash in the first three quarters of 2017 [1].

Their operations throw off substantially more cash than the $30 or so million in interest they pay each year, and their senior notes don't come due until 2020. Moody's and S&P rate them as highly-speculative, non-investment grade companies (B1) [2]. Not great, but not at risk of imminent default either.

It's not a healthy company. But it's not one in the midst of its death throes, either. Given the amount of dumb money chasing anything that smells like Blockchain, it's not particularly dumb to let shareholders sell their shares at a premium to uninformed buyers.

Book equity is a bad sole measure of the health of a business, particularly a financial business.

[1] https://finance.google.com/finance?q=NASDAQ%3AMGI&fstype=ii&...

[2] https://www.sec.gov/Archives/edgar/data/1273931/000127393117...

Disclaimer: This is not investment advice. Do not buy or sell any securities based on this Internet commentary.

> Given the amount of dumb money chasing anything that smells like Blockchain, it's not particularly dumb to let shareholders sell their shares at a premium to uninformed buyers.

Are you advocating companies exploiting uninformed investors or just saying that it's the "money-smart dickish move"?

As long as buyers aren't actively being lied to, they're responsible for their own dumb decisions.

> Are you advocating companies exploiting uninformed investors or just saying that it's the "money-smart dickish move"?

I'm not advocating it. I'm saying there is a logic to it.

I think "pull a Kodak" is an awesome term. I checked if it was already published on Urban Dictionary. It wasn't, so I submitted it and it was published: https://www.urbandictionary.com/define.php?term=pull+a+Kodak

I hope that's ok :-) If not, please let me know.

i used it as pull a riot, which started this nonsense.

Pulling a Kodak for me would be something else. It would be when a company that boomers love can no longer innovate and just starts licensing it’s image to the highest bidder. We’ve seen this many times with action cams and so on.

Well, that's not what Urban Dictionary says.

It should really be "pull a RIOT" because RIOT Blockchain was 1 of the 1st companies to pull this off.

Struggling medical equipment company. Acquires a "blockchain mining" company for a few mil, stock shoots up overnight like 500% or something, then their CEO dumps all his stocks.

Jeez I had a look at their share price. Tripled in 2 days and down 21% the next. It's price movement resembles a typical ponzi token. It is like the bubble thought pathogen has lept from token world to the traditional stock market. Who will be the last fool? Is it 1999?

If it's 1999, that means we have at a year or two or additional irrational exuberance.

Yes, I'm still 'in'

I don't own ripple, but you don't need a ponzi scheme to see that kind of growth in speculative value. For example, you may have seen the same thing if Uber's valuation was liquid during it's early days.

Of course Uber followed a traditional funding model that restricted access to the top 1% of wealthy Americans. All VC-backed startups do. And many of them follow this curve, it's just not visible to us.

This is pretty much exactly Ripple's use case, and remittances are a huge deal. So, progress! :)

Totally agree! But the one caveat is that using Ripple does not mean using XRP.

True, but MoneyGram is piloting xRapid, which is Ripple's product that uses XRP.

Ah you are correct! I couldn't' read the original article due to pay wall, but I found info on other site. Well this is great news for XRP hodlers.

That won't stop all the XRP owners from posting this everywhere to pump the price.

True. The whole relationship between Ripple, XRP, and potential other tokens on the same network(?) has always confused me. If someone has a good explanation (or rather a link to one, I'd be very happy about that.

For example if this test works out, what's to stop MoneyGram from using some other token, cutting out XRP altogether? Or just spin up their own system (think LTC vs BTC)?

I found this article yesterday and I think it answers part of your question:

https://hackernoon.com/4-alarming-reasons-ripple-might-not-b...

30% reduction in transaction cost if you use XRP over other currencies.

The weird transaction cost in ripple is that you always have to leave 20 XRP to the account. LOL.

That can change by vote, and they're looking at doing that as the price increases. In the past, XRP was well below $0.01, so it wasn't that big of a deal.

Can you explain this further?

XRP is the currency to move money at Ripple.

They have some minor currencies for some situations like debt IIRC.

But Ripple is going to use their currency for transactions.

XRP is only used as a spam deterrent. There is a 0.00001 transaction fee to change ledgers (send money, but not XRP) in Ripple, that is actually destroyed, and there is a requirement that every account in Ripple maintain a $20ish balance of XRP.

You're understanding is 1/3 correct. XRP is only used for xRapid protocol. Ripple Labs has 3 protocols (xCurrent, xVia, and xRapid) and the other 2 do not use XRP. However, it does look like MoneyGram is using xRapid.

The whole point of Ripple originally is that you could use it to send actual fiat money by using a network of trust relationships to chain together IOUs that could eventually be settled via actual transfers if necessary. Then after Bitcoin took off it was retooled as something more Bitcoin-like with its own internal cryptocurrency, XRP, and a ledger system to support it. (Except that the ledger is pretty much centralised.)

I'm amazed MoneyGram is still in business. I had to deal with them last week and it was hell.

Their reliance on phone support for most operations is absurd. I saw five people attempt to use the kiosk - and all were required to call phone support for various reasons! The kiosk complained about DOB missing (date of birth I guess?), yet there wasn't any field left unfilled. Changes in unpaid/draft transactions resulted in duplicate ones instead, and they could only be deleted by calling support. The kiosk software was filled with dumb errors like that. I could go on an on.

Using cryptocurrencies seems like a good idea, but I'd bet just improving the kiosk software to make phone support a rarity instead of practically a requirement would be way more efficient at reducing cost.

Along with Western Union, it’s the only viable option for sending money to people who don’t have a bank account and can’t use a computer.

It’s taken years for my wife to persuade her parents in Brazil to try Azimo or Transferwise. We were using Moneygram until last year.

The money remittance market is a very interesting problem. The key to understanding why moneygram is still around is by getting a good understanding of global banking and associated regulation & fees along with top immigration/immigration corridors and consumer behaviour in these corridors.

Most money transfers happen from a stable high net worth economies (USA,UK,Germany, UAE, Saudi Arabia) to growing economies(India, Mexico, Brazil, Philippines) and following the emmigration/immigration corridor.

The money transfer market is more akin to a marketplace with disparate sender-receiver situations. Sender banking infrastructure typically is more sophisticated but disjointed with the receivers banking infrastructure.

Learn more about these patterns in this document. https://siteresources.worldbank.org/INTPROSPECTS/Resources/3...

Can you explain why these situations led them to be secure in business?

many people at work at "investing" in ripple, they all got rather excited when the value spiked 25% this afternoon.

"This time next year Rodney, we'll be millionaires."

Yep. Moreso the MoneyGram announcement is not new news, this is their business model. I suspect the well timed press release had something to do with XRP sinking over the past few days.

The entire market sank over the past few days. MoneyGram couldn't have predicted the drop, and I'm not sure why they'd rush the press release to coincide with it.

For that to be true, Ripple's market cap would have to be in the trillions unless they invested half a million or even a quarter of a million dollars.

Same, pretty sure the whole team is buying (small) amounts of bitcoin. Reminds me of the story of the guy who dodged the great depression because he pulled his stocks when his taxi driver starting giving him tips.

That was Joe Kennedy. JFK's father

and the tips came from a shoeshine boy.

Not only did he pull out of stocks but he was shorting the market.

I heard recently of form workers/construction workers giving a friend crypto tips. Its everywhere.

don't pay too much attention to stories like that, there are easily countless stories that serve as counterpoint. example, warren buffett mentioned several times in his writings that very often, it's the regular folks who are more capable of spotting potential new investments rather than institutional investors, because they can see businesses succeeding in the real world much sooner than institutional investors spot them on balance sheets.

I think the price of 1 XRP is going to be somewhere between $5 and $10, $5 being more reasonable. The time to buy in was when it was less than a cent and nobody believed it would go anywhere. On a sidenote, I believe Ripple is made primarily by banks and I think the idea was to make it as close to USD as possible. If this is in fact true, it obviously will be overvalued even at $5.

With 100B XRP eventually in circulation, $10 would give it a preposterous market cap. The current price is based on only 38B tokens in circulation.

That's only about 12x the market cap now. I am sure the people investing don't think it's anywhere near preposterous to have a $1T market cap.

1. Nothing is preposterous in crypto. 2. Yes, I said $5 is more reasonable.

I think one thing people, especially on HN, need to remind themselves of is the price isn’t determined by what _you_ think, it’s determined by what _everyone else_ thinks.

This is the best comment. People here know the "value" but the market determines the "price".

I understand why people see the value proposition here and think these things are over-priced, its because people "trading" do not really have the depth and they are playing the market psychology game. For something new, this is more akin to Poker, at this time too many people are playing the people. The question is when the river card show up, who will remain standing.

The river card?

Last card in Texas Hold'em, after a final round of betting, if two players have not folded the winner is determined at showdown.

The most apt description I've heard for cryptocurrency markets is that it's a Keynesian beauty contest for blank drawings.

Amazing that there is supposed to be a $100B of value here and the big announcement is a pilot program.

Also MoneyGram had revenue of $1.6B for 2016, so I'm not sure how far even a full roll-out would go to justifying the valuation.

100B of value?

You mean market cap?

There might be 100B in solving the problem of Moving Money.

But market cap for Ripple is intentionally misleading. only 19,000,000,000 ripple are owned by the masses. 20,000,000,000 ripple are controlled by 3 people. 61,000,000,000 is held by ripple labs.

The 20,000,000,000 ripple held by the founders are included into the market cap.

Its basically 2x overvalued.

Not a single price of the top 100 crypto-currencies is reflecting their value. They are all over-priced by magnitudes and still "investors" insist it is not a bubble.

If you sum the top 100, what do their “market caps” add up to?

Edit: back of the envelope it’s something like $700 billion.

I've not used MoneyGram in many years, but as I recall the friction is account set-up, authentication and funding the transation --> authentication and account set-up to receive funds. I don't think Ripple removes those choke points.

Ripple is not necessarily targeted at end consumers. In some cases you may notice lower fees and faster transactions, however, they are targeting banks and payment providers.

Non-paywalled article: https://techcrunch.com/2018/01/11/ripple-announces-an-actual...

Mods should change the link.

And the underlying press release is here: https://www.prnewswire.com/news-releases/ripple-and-moneygra...

Update: They have only decided to do some prototyping, not a full on deployment. https://themerkle.com/moneygram-confirms-xrp-integration-is-...

Are there any other blockchain use cases at scale more than that of RippleNet?

Personally, I hope OMG will become the go to for remittance in the crypto world. Much prefer something decentralized and community focused.

Same question: Are they using XRP?

Answer: No.

Brad Garlinghouse reminds me so much of Dick Costolo. He'll keep allowing Ripple Deals(bots) to increase the valuation of the company unwarranted.

The banks and no-one I've talked to in fintech has indicated to me any serious adoption of XRP.

What? From a Fortune article about this [1]:

> The partnership will see MoneyGram pilot the use of XRP through a new Ripple service, called xRapid

[1] http://fortune.com/2018/01/11/ripple-moneygram-xrp-cryptocur...

Wrong. They use Ripple's xRapid which utilizes XRP. This is (after cuallix) the second company that uses XRP for money transfer.

Thanks for posting this, this is my understanding.

Ripple is the company that controls 61% of the worlds XRP. XRP is the medium to move money.

While I personally dont like centralized currency, this is how ripple works. Ripple basically decides the price of their own currency since they have sooo much supply.

Wrong. They locked away 55 billion XRP and are releasing a certain amount monthly for purchase by investors and institutions. If that XRP is not purchased, it goes back into escrow.

https://ripple.com/insights/ripple-escrows-55-billion-xrp-fo...

Unlike other fraudelend coin startups, Ripple made its self subject to regulations. They cannot simply put all their XRP onto the open market. The 55bn locked in escrow are meant to be sold to institutions partnering Ripple, as other comments have already stated. Regulations aren't a bad thing. They are mandatory and prevent us from being scammed in many cases.

The only thing you can blame Ripple for is the insane amount of ripples their founders are holding.

Ripple will be the last cryptocurrency standing when all the dust settles simply due to it being the favorite of the global banking cartel.

As far as I'm aware, there is not use of XRP as of now. There's a difference between Ripple the company and Ripple the centralized blockchain, which many fail to realize.

From a Fortune article about this [1]:

> The partnership will see MoneyGram pilot the use of XRP through a new Ripple service, called xRapid

So there is usage of XRP.

[1] http://fortune.com/2018/01/11/ripple-moneygram-xrp-cryptocur...

Note the use of the future tense in your quote, while who you were responding to spoke to the present.

To expand upon that: many people buying Ripple/XRP the coin believe (falsely) they are buying shares of Ripple the company. I found [0] helpful.

[0] https://www.reddit.com/r/Ripple/comments/6jd9w6/this_is_the_...

Cuallix is actively using XRP. Get your facts straight, cowboy!

It's not a cryptocurrency in the sense that it is centralized and pre-mined by a central authority who could mine even more whenever it feels like it just like fiat. Still, it's an improvement on swift if it succeeds but that would not be a "cryptocurrency success" in my opinion.

Personally I think it would be considered a success, swift sucks, ACH sucks - Ripple giving us a way to apply a lot of the benefits a decentralized cryptocurrency purports to provide (cheap, fast transactions) would be wonderful.

Hell, I would love if I could track payment remits through Ripple someday - stop dealing with the terrible EDI formats our bank dumps to us on a daily basis and just monitor the blockchain. We could have knowledge about payments in real-time AND have a much saner time dealing with them.

slightly offtopic: But I am currently building a ACH parser and I am shocked the banking system works at all.

I think since it uses digital signatures to send the transactions it's a cryptocurrency. It's not a decentralized one sure.

It uses a distributed consensus algorithm to validate transactions. Anyone can run a validator node, and there are many companies/institutions out there doing that (Microsoft, MIT, etc).

They have no reason to use XRP though, they could just use the technology to launch their own token.

Yes, they can use any currency or crypto with the technology, but there still is a transaction cost. Using XRP will lower that by 30%.

>but there still is a transaction cost.

And that will be higher if they're using the same token that the general public are speculating on.

The key property of Ripple you have to understand is that the consensus is decided by a set of nodes controlled by the Ripple team and their partners, and those nodes don't care about the opinion of any other node that's not on their whitelist. Everyone else just listens to what they decide the consensus is and follows along. While in theory you could listen to a different set of nodes, it'd be daft to: if those nodes ever come to a different consensus than the default nodes then you're screwed, and who you trust has no effect on who the default nodes listen to or how their consensus is formed.

Yes, whatever the Bilderberg lizard people truly in power decide upon. It's all in plain sight if people would just stop drinking the tap water and wake up.

How Ripple could succeed but XRP be worth nothing

https://publication.widmerdun.com/how-ripple-could-succeed-b...

People are going to get rekt

Do you have any proof that the global banking “cartel” is using Ripple? Why would they want to use some third party company they have no control over, with participation of the general public, for a solution to a problem that they didn’t think was a big enough issue to address earlier, and that they could create a proprietary, private solution for?

You should do some research on ripple and some of their customers. Huge global banks are already using their software.

Really?

Which ones?

I saw the tweets from their CEO and it actually sounded very much like the emperor has no clothes.

If the best examples of "huge global banks" that Ripple can produce when asked are a couple of small-time national banks suggesting they'll trial the software later this year then I'll reserve judgement.

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