Two new payment firms try out Ripple's cryptocurrency

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Ripple's vision of a world in which money moves as fast and frictionlessly as email just got one step closer to being realized.

Two new payments companies, IDT Corp. and MercuryFX, have announced that they plan to use Ripple's cryptocurrency, XRP, to improve the speed and efficiency of cross-border payments.

The news comes hot on the heels of MoneyGram's own announcement earlier this month that it was piloting Ripple's xRapid product as a means of settling customer transactions.

Alastair Constance, founder and CEO of the currency exchange provider Mercury FX, said in a news release that XRP and traditional fiat currency "fit hand in glove," and that he expects the cryptocurrency to help companies like his "remove billions of dollars in unnecessary intermediary fees."

Those fees derive from the correspondent banking model that makes international payments slow and costly to send, with the sending institution often in the dark about how much a given transaction will cost. Such intrinsic costs eat into the money that participants in the $600-billion-a-year remittance market are able to send home to their families.

Ultimately, Ripple wants banks to use xRapid for on-demand liquidity instead of relying on cash in overseas accounts. Critics have lately cast doubts on the company's ability to convince top-tier firms to use its product, but Wednesday's announcement may go some way toward restoring faith in its business model.

"We're excited to pilot Ripple's xRapid solution for on-demand liquidity," Alfredo O'Hagan, senior vice president of New Jersey-based IDT's consumer payments business, said in the release. "We expect that xRapid will enable us to settle more transactions in real time and at a lower cost."

Ripple, which also sells blockchain software designed to compete with Swift, appears to be gearing up for the long game. In recent months, the San Francisco startup has strengthened its board of directors, adding Benjamin Lawsky, who as superintendent of the New York State Department of Financial Services from 2011 to 2015 was one of the first regulators to tackle bitcoin regulation, and a former Morgan Stanley veteran, Zoe Cruz.

Last year, as the cryptocurrency market exploded, XRP was one of the biggest winners. The digital currency's value increased 35,692% from the prior year. That matters, because Ripple uses its own cryptocurrency to fund development costs. At the Wednesday afternoon price of $1.36, Ripple is sitting on a war chest worth tens of billions of dollars.

Neither the groundswell of speculative interest in XRP nor the news of recent partnerships, however, stopped the financial rating agency Weiss Ratings from giving XRP a C grade when it released its first ever batch of grades for dozens of cryptocurrencies on Wednesday. The agency said in a news release that a C was the investment rating equivalent of "hold."

In what may be a reaction to the continued volatility of the digital-asset market, none of the cryptocurrencies Weiss Ratings covered, including bitcoin, received an A.

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Cryptocurrencies Blockchain Distributed ledger technology Remittances Cross border payments Fintech Disruptors Ripple