When did MoneyGram partner with Ripple?
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MoneyGram, one of the world's largest money transfer companies, announced its partnership with Ripple on June 17, 2019. This landmark deal marked a significant milestone for Ripple and XRP, as it represented the first major, publicly-traded money services business to commit to using Ripple's On-Demand Liquidity (ODL) solution, which utilizes XRP for cross-border settlement. The partnership generated enormous enthusiasm in the XRP community and validated Ripple's strategy of targeting institutional payment corridors for XRP utility, though the relationship would ultimately end in controversial circumstances related to the SEC lawsuit.
The Initial Partnership Announcement:
On June 17, 2019, Ripple and MoneyGram jointly announced a strategic partnership with several key components:
1. $50 Million Investment: Ripple agreed to invest up to $50 million in MoneyGram over two years through purchasing MoneyGram equity. This investment gave Ripple approximately 10% ownership in MoneyGram and provided the money transfer company with capital for technology improvements and operations.
2. ODL Commitment: MoneyGram committed to using Ripple's On-Demand Liquidity (ODL) solution, which uses XRP as a bridge currency for cross-border settlements. This meant XRP would be actively used in MoneyGram's payment corridors to reduce the need for pre-funded nostro accounts.
3. Corridor Development: The partnership would focus initially on specific payment corridors (particularly US to Mexico), expanding to additional corridors as the relationship matured.
The announcement was highly significant because MoneyGram was a household name brand, trading on NASDAQ under ticker MGI, with hundreds of thousands of retail locations worldwide. This represented a major public validation of Ripple's technology and XRP's utility.
Market Reaction:
The June 17, 2019 announcement triggered positive market response: - XRP price increased approximately 10-15% in the days following the announcement - Trading volumes spiked as investors responded to the news - Ripple's credibility increased significantly in financial services sector - The partnership was widely covered in financial and technology media
Implementation and Usage:
Following the June 2019 announcement, MoneyGram gradually implemented ODL:
2019 (Second Half): - Initial implementation began in the US-Mexico corridor - MoneyGram tested and scaled ODL usage - The company reported positive results regarding speed and efficiency
2020: - MoneyGram expanded ODL usage to additional corridors - The company stated in quarterly earnings calls that ODL was providing operational benefits - MoneyGram's CEO Alex Holmes publicly discussed the partnership positively in interviews - By mid-2020, MoneyGram was reportedly using ODL for approximately 10% of US-Mexico corridor transactions
Financial Arrangements:
Beyond the initial equity investment, the partnership involved additional financial elements:
Market Development Fees: Ripple paid MoneyGram "market development fees" to support ODL adoption and integration. These payments, disclosed in MoneyGram's SEC filings, totaled: - Q2 2019: $4.7 million - Q3 2019: $5.9 million - Q4 2019: $12.4 million - Q1 2020: $5.3 million - Q2 2020: $10.3 million - Q3 2020: $11.3 million - Q4 2020: $7.6 million (partial quarter before termination)
Total market development fees exceeded $50 million over the partnership's duration. Critics questioned whether these payments meant Ripple was essentially paying MoneyGram to use XRP rather than ODL providing standalone economic benefits. Ripple countered that market development fees are common in strategic partnerships as companies integrate new technologies and build out infrastructure.
MoneyGram's Public Statements:
Throughout 2019-2020, MoneyGram executives made various public statements about the Ripple partnership:
- CEO Alex Holmes discussed ODL benefits including reduced working capital requirements and faster settlement - CFO mentioned market development fees as meaningful revenue contributions - The company highlighted the partnership in earnings calls and investor presentations - Executives stated the technology was working well and expanding to additional corridors
These public endorsements from a major, traditional financial services company provided credibility to Ripple's ODL solution.
Partnership Termination:
On March 8, 2021, MoneyGram announced it was terminating its partnership with Ripple, effective immediately. The termination came approximately 2.5 years after the June 2019 announcement and directly resulted from the SEC lawsuit against Ripple.
MoneyGram's statement explained: - The company was suspended its use of Ripple's ODL platform - The decision resulted from the ongoing SEC litigation - MoneyGram stated it was never named in the SEC lawsuit and had not engaged in wrongdoing - The company thanked Ripple for the partnership but cited the need to avoid regulatory uncertainty
The March 8, 2021 termination date came about 2.5 months after the SEC filed its lawsuit on December 22, 2020. MoneyGram initially stayed silent about the partnership's future when the lawsuit was filed, but eventually decided that continuing the relationship posed too much regulatory and reputational risk.
Ripple's Response:
Ripple responded to the termination pragmatically: - Acknowledged MoneyGram's decision - Stated ODL continued to grow with other partners - Noted that the relationship had proven ODL's viability - Highlighted that numerous other financial institutions were using ODL - Expressed confidence in resuming relationships like MoneyGram's once regulatory clarity was achieved
Impact and Significance:
The MoneyGram partnership, despite its termination, was highly significant:
Proof of Concept: The partnership proved that a major money services business could implement and scale ODL for real payment volumes. MoneyGram handled millions of transactions, demonstrating XRP could function at institutional scale.
Institutional Validation: A publicly-traded, heavily regulated company partnered with Ripple and used XRP, validating the technology's credibility beyond the cryptocurrency space.
Corridor Development: The US-Mexico corridor usage demonstrated ODL's practical application in a high-volume remittance corridor where speed and cost efficiency matter.
Market Development Model: The partnership established Ripple's approach of providing financial support (investment and fees) to partners during ODL adoption, a model Ripple would use with other partners.
Post-Partnership Developments:
After the March 2021 termination: - MoneyGram moved forward with other blockchain partnerships, including Stellar (ironically, Jed McCaleb's project) - Ripple continued expanding ODL with other partners including Travelex, Viamericas, Transfast, and others - The SEC lawsuit mentioned MoneyGram in passing but focused on Ripple's conduct rather than MoneyGram's - After Judge Torres' July 2023 ruling, speculation emerged about whether MoneyGram might resume the partnership, though no announcement was made
Financial Performance During Partnership:
Analysis of MoneyGram's financial statements during the partnership revealed: - Market development fees from Ripple were material to MoneyGram's revenue - The fees helped offset operating losses during difficult periods - ODL usage appeared to be growing but detailed volume wasn't disclosed - The partnership provided both technological and financial benefits to MoneyGram
Lessons from the Partnership:
The June 2019 - March 2021 MoneyGram partnership provided several important lessons:
1. Regulatory Risk: Major institutional partnerships in cryptocurrency remain vulnerable to regulatory uncertainty, even when the partner itself isn't accused of wrongdoing.
2. ODL Viability: The partnership demonstrated that ODL can work at scale for institutional payment corridors, validating Ripple's core use case for XRP.
3. Financial Support Necessity: Successfully onboarding traditional finance partners to crypto solutions may require significant financial incentives during transition periods.
4. Public Company Considerations: Publicly-traded companies face different risk profiles than private companies, making them more cautious about controversial partnerships.
The MoneyGram partnership, announced June 17, 2019 and terminated March 8, 2021, remains one of the most significant institutional partnerships in XRP history, demonstrating both the potential and challenges of bridging traditional finance and cryptocurrency.