Intermex handles a large percentage of the US – Mexico corridor (18%) which equals $6.2 billion, while 25.4% of the US – Guatemala corridor equals $2.4 billion. 60% of Intermex’s business comes from Mexico.
According to Intermex’s announcement, the partnership would enable Intermex to utilize Ripple’s On-Demand Liquidity (ODL) product, through RippleNet, the company’s global network of financial institutions that sends money globally, instantly and reliably for fractions of a penny.
However, according to the Intermex Fourth Quarter and Full Year 2019 Earnings Conference Call, Intermex will not be using Ripple for the US – Mexico corridor or its core markets.
When answering the question: “You have a big concentrated market, 60% of your business going to Mexico. So is your plan to get some of that on Ripple? How do you kind of see that progressing in 2020? And what are the benefits?“, Tony Lauro (Chief Financial Officer, Intermex) stated that Intermex would be testing XRP for the US – Mexico corridor and evaluate the solution at a later stage.
“We’re looking at Ripple for a couple of other products which I think we mentioned in the press release. The first of which is RippleNet which, as you know, is their hub connecting financial institutions together which will enable us to onboard new payers faster than we would if we were doing direct connections to each one.
So that has more applicability for us outside of Mexico, where we’re building out our network into other corridors. But the other would be on-demand liquidity, I think that might be more of what you’re talking about, where we can use XRP as kind of a pivot currency to swap U.S. dollars for pesos, 24/7. And it’s early days, but we would expect to be testing that later this year.
And to the extent that it is viable, either from a rate perspective or a capital efficiency perspective, we’ll expand it. But it’s too early to say how much we intend to do.”
However, Bob Lisy (Chief Financial Officer, Intermex) jumped in to state that Intermex would not be leveraging Ripple in its core markets:
“Ripple will not be an answer for places like Mexico. We’re very proud about the relationships we have there. And as one of the top two providers, we believe, today, company-wise, with Western Union and one of the top four with Western Union, MoneyGram and Ria that we don’t think that we could replicate the kind of relationships we have with the key payers like Bancoppel, Electra with a Ripple-type setting.
That’s a commoditization, and we differentiate ourselves a great deal through those relationships. We have very tight relationships that strategically setting plans and objectives with those payers. And so you won’t really see us leveraging Ripple in our core markets. I think it will bring us more growth in newer markets in places where we’re exploring going into ancillary products, but probably not in our core business because those are really critical where we differentiate ourselves from others because of the kind of volume we drive and the relationships we’ve built over the years with direct relationships.”
It seems that Intermex is currently satisfied with its current relationships in Mexico and will not be leveraging Ripple in Mexico or in its core markets. Ripple will be mostly used in newer markets, taking advantage of RippleNet to connect to other financial institutions and onboard new payers faster.