MoneyGramis recent announcement that he will partner with the Foundation for Stellar Development, a non-profit organization, on an e-wallet offering with near-instant settlements in US Dollar Coin (USDC) from Circle, is an indication of the growing use of cryptocurrency in the cross-border remittance industry. .
Read more: MoneyGram, Stellar Development Team on eWallet offering near instant USDC settlements
The partnership aims to bridge the gap between digital assets and local currencies for consumers, enabling the seamless conversion of USDC to cash and vice versa, while speeding up fundraising, reducing risk and improving the efficiency.
Commenting on the deal, MoneyGram CEO Alex holmes said that the pioneering innovation of cross-border payments and blockchain-enabled settlement is one of the company’s top strategic priorities, and “as cryptocurrencies and digital currencies rise in importance, we are particularly optimistic about the potential of stablecoins as a method of streamlining cross-border payments. “
He added that the company is also “extremely well positioned” to lead the construction of bridges to connect digital currencies to local fiat currencies, “given our expertise in global payments, blockchain and compliance.”
These gateways are necessary because the high transfer fees often paid to traditional money transfer operators (MTOs) negatively impact both the sender and the recipient, as well as businesses needing fast transfer services. and affordable.
And with its blockchain network, Stellar is positioning itself as a solution to the problem, offering on its platform money transfer service providers, traditional MTOs, digital currency applications and correspondent banks to reduce friction and costs associated with cross-border remittances.
Related: MoneyGram Mulls Stellar Development repurchase interest
This is not the first time that MoneyGram and Stellar have partnered. In July, Stellar and private equity firm Advent International were considering acquiring MoneyGram as the money transfer firm moved away from legacy services and interest in the buyout increased.
The link between mobile wallets and cryptocurrencies
According to the report, the impact of the partnership is expected to increase as more wallets and companies join Stellar, an open source public blockchain network that allows digital representations of any currency to be tokenized and transferred all over the world.
Using digital wallets for sending funds offers a faster, safer and more convenient substitute for cash, while removing friction points such as the need to enter credit card details to make a purchase.
Data collected in a recent PYMNTS report on cross-border remittances revealed that in the aftermath of the pandemic, consumers’ need for cheaper and more convenient alternatives led them to turn to virtual currencies for cross-border remittances.
And those who now use cryptocurrency to send their cross-border remittances are frequent users of innovative payment methods like mobile wallets, given the convenience of instant contactless payments and the fast transfer service they offer. According to research, published in collaboration with the Stellar Development Foundation, cryptocurrency users are more likely to send them directly to a mobile wallet (46%).
This is the reason why many users transfer their payment activities to payment service providers, like Stellar, which allow them to send funds using cryptocurrencies. Many are using these digital payments to send funds to a mobile wallet, as the PYMNTS study shows.
Cryptocurrencies such as Circle’s stablecoin, USDC, can be sent instantly to a mobile wallet, and mobile wallets give recipients the ability to make contactless payments anywhere currency is accepted.
Further reading: Crypto-based remittances on the rise; Nigeria leads the African pack