Since last week rumors swirled about a potential blockchain partnership between Western Union (NYSE: WU) and Ripple, operator of digital currency XRP. However, instead of a news release from Western Union, rival MoneyGram (NYSE: MGI) took the first shot and today announced a pact with Ripple to pilot XRP in their payment flows.

The current model for money transfer companies requires use of pre-funded accounts and the newer blockchain technologies have the potential to revolutionize this process, lower cost and an increase payment speed.

Crypocurrencies have been criticized recently for being mainly tools for speculation, in part due to the meteoric rise in the value of digital coins like XRP and Bitcoin, so it goes without saying that today’s deal has broader importance for both digital currencies and payment companies like MoneyGram and Western Union, which face risk from potential disruption to the industry.

"The inefficiencies of global payments don't just affect banks, they also affect institutions like MoneyGram. Money transfer companies are incredibly important because they help people get money to their friends and loved ones," said Brad Garlinghouse, CEO of Ripple. "We are excited about this pilot and a long-term strategic partnership with MoneyGram. By using a digital asset like XRP that settles in three seconds or less, they can now move money as quickly as information."

Alex Holmes, Chief Executive Officer of MoneyGram, said, "Every day blockchain technology is changing the norm and encouraging innovation. Ripple is at the forefront of blockchain technology and we look forward to piloting xRapid. We're hopeful it will increase efficiency and improve services to MoneyGram's customers.

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