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Moneygram ODL but highest fees?


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1 hour ago, Tinyaccount said:

This is not secret and is widely known and understood.  You are making a big deal of the pump priming that everyone knew was potentially going to be needed.  Ripple have been upfront about it for literally years.

Also your understanding of the dynamics of the Ripple - Moneygram relationship seems flawed.  Ripple do not “own” Moneygram.  

What does "own" in quotations even mean?

They have invested $50 million in shares in moneygram and they own more than 10% of the company.

1 hour ago, Tinyaccount said:

That’s what he has done,

Slippage and spread is two different concepts. Spread is the initial gap and slippage is dependent on the size of the trade. We need to count both slippage and spread for each of the two trades. I can't find any figures for this in the other thread but it is a quite long thread and if there are figures in it I would appreciate a link. I can't see any indication that ODL is profitable still, but would gladly be proven wrong.

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I'm building a website to calculate the costs of transferring money via ODL from Bitstamp to Bitso (USD -> XRP -> XRP -> MXN), but unfortunately it is not really ready to put it up for public

Howdy Q I've been (on and off) working on something similar, logging my progress in another thread. I've noticed the baseline cost of just the slippage ranging from 1.8 % to 0.12 % for amoun

Another thing is just because they are using ODL doesn't mean that 100% of transactions are moving through ODL. I don't have the link off hand, but I think it was only 1% of their transactions to thos

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3 minutes ago, QWE said:

I'm building a website to calculate the costs of transferring money via ODL from Bitstamp to Bitso (USD -> XRP -> XRP -> MXN), but unfortunately it is not really ready to put it up for public display, so I will just leave a few basic figures here. Currently, sending 10,000 USD via Trasfewise adds up to about 97 USD in transfer fees ( https://transferwise.com/widget/calculator ), while using ODL adds up to about 30 USD (jumping between 15 USD and 35 USD). Here's a quick screenshot (no design has been added yet, so please excuse the basic layout):

Howdy Q

I've been (on and off) working on something similar, logging my progress in another thread.

I've noticed the baseline cost of just the slippage ranging from 1.8 % to 0.12 % for amounts like $5k USD.

We'll have to compare results when we're done :) 

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4 minutes ago, JASCoder said:

Howdy Q

I've been (on and off) working on something similar, logging my progress in another thread.

I've noticed the baseline cost of just the slippage ranging from 1.8 % to 0.12 % for amounts like $5k USD.

We'll have to compare results when we're done :) 

Hey JAS,

that's great! Hmm, I would say your range seems reasonable. If you are recording your data, you probably have a better insight into the correct number than I do. My project basically takes live order books via websockets from both exchanges, then calculates how much fiat you could transfer using ODL in real time (and how much of it gets lost because of the spreads and exchange fees).

 

Great to hear people working on interesting projects, will make sure to check your thread!

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1 hour ago, opaopa said:

Slippage and spread is two different concepts.

Thank you yes, I’m aware.  I think you are overall trying to say that ODL is uncompetitive at the moment and that it’s only being used because Moneygram were forced to.

Probably fairly true.  But as you can see from Jas and Q and other posters who are looking at it,  the situation is improving rapidly and may already be more than competitive (albeit not yet ready for maximum volumes and only in a limited number of corridors).

None of this is unexpected.  Moneygram CEO seems genuinely delighted with ODL and wants Ripple to hurry up and open more. So I’m not sure what point you are trying to make,  but I think the situation is clearly improving rapidly so wherever you think it is right now...    we will all be delighted soon I think.

 

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On 12/14/2019 at 3:43 PM, superboon said:

So, out of curiosity I was looking at the fee calculation on Moneygrams website and was a little bit surprised.

Something doesnt add up here and maybe someone has an explanation.

As it is known Moneygram is using ripples ODL for specific corridors, saving them a lot of costs for remittances.

Yet the customer fees for transferring lets say 1k USD to PHP are even higher than WU or Transferwise.

How can that be? Claiming to save costs, but not being able to beat competitors?

Were are you seeing the different fees; what's your source; and what are they specifically for each company? 

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1 hour ago, WuWei said:

Were are you seeing the different fees; what's your source; and what are they specifically for each company? 

For a 1k USD-PHP cash to cash transfer im paying 1026$ with moneygram, receiving 49.451,7PHP

For a 1k USD-PHP cash to cash transfer im paying 1012$ with Western Union receiving 49.793,8‬PHP.

Sources are the official Moneygram/WesternUnion sites.

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51 minutes ago, superboon said:

For a 1k USD-PHP cash to cash transfer im paying 1026$ with moneygram, receiving 49.451,7PHP

For a 1k USD-PHP cash to cash transfer im paying 1012$ with Western Union receiving 49.793,8‬PHP.

Sources are the official Moneygram/WesternUnion sites.

I don’t think the Philippines corridor is anywhere near as ready as the still not-fully-ready Mexican.  So maybe try it USD to Mexico?

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3 minutes ago, superboon said:

Imagine being in the philippines and some dude comes and wants to pay you in MXN.

Imagine wanting to drive on the road before it is built.

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I think people that expect extremely low fees by MG just because they use ODL are in for a surprise. Even if 100% of their volume goes through the usd-mxn corridor and even if it costs them times less than before - they won't just simply lower the fees much. They'll lower them just enough so they can start stealing customers from competitors e.g. WU. The rest will purely be a profit.

Down the line, if a lot of other providers start using ODL (or any other methodology that'll save them money) we'll start seeing lower and lower fees, that's what competition does. But since MG is pretty much first, I don't expect them to lower their fees much, even if they transfer money for a penny.

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8 hours ago, QWE said:

I'm building a website to calculate the costs of transferring money via ODL from Bitstamp to Bitso (USD -> XRP -> XRP -> MXN), but unfortunately it is not really ready to put it up for public display, so I will just leave a few basic figures here. Currently, sending 10,000 USD via Trasfewise adds up to about 97 USD in transfer fees ( https://transferwise.com/widget/calculator ), while using ODL adds up to about 30 USD (jumping between 15 USD and 35 USD). Here's a quick screenshot (no design has been added yet, so please excuse the basic layout):

image.png.97ea4df8f7e97c776895032aab6f5a1a.png

 

It is really hard to send 100k USD through ODL in this corridor at the moment, but 10k USD seems competitive to other options (Transferwise). Sending 10 USD only costs a few cents, but there are other fees involved to get it from the exchange to your bank account, so I can't really say if the smaller amounts are competitive for the full settlement. Transferwise will require a 1.76 USD fee for a 10 USD remittance at the time of writing, so ODL may be competitive in the long term for microtransactions, if the "last mile" (getting fiat to and from exchanges) becomes cheaper.

 

All I can say is this - I have seen significant changes in the past weeks and months on these two exchanges. You can now send larger amount of fiat through ODL cheaper than before, so liquidity is definitely improving and ODL is becoming more and more competitive to traditional means of remittance in this corridor.

This is great!

Hope you don't mind sharing your methodology instead of only the result? I can start the discussion by explaining how I think that the correct methodology should look like.

Total cost = 0,5 * Spread(USD/XRP) + Slippage(Amount(USD/XRP)) + Exchange Fee(USD/XRP) + 0,5 * Spread(XRP/MXN) + Slippage(Amount(XRP/MXN)) + Exchange Fee(XRP/MXN)

Where Spread is the total gap between the currency pair on the exchange, Slippage is the additional effects to the average exchange rate of your transaction due to the volume eating up the liquidity in the orderbook on the exchange and the Exchange Fee is the commission that the Exchange is charging to facilitate the trade.

The above does not include any fees from receiving the funds from the exchange which you alluded to, maybe they should be included too?

If you use another formula to calculate the cost, what formula do you use and why?

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2 hours ago, opaopa said:

This is great!

Hope you don't mind sharing your methodology instead of only the result? I can start the discussion by explaining how I think that the correct methodology should look like.

Total cost = 0,5 * Spread(USD/XRP) + Slippage(Amount(USD/XRP)) + Exchange Fee(USD/XRP) + 0,5 * Spread(XRP/MXN) + Slippage(Amount(XRP/MXN)) + Exchange Fee(XRP/MXN)

Where Spread is the total gap between the currency pair on the exchange, Slippage is the additional effects to the average exchange rate of your transaction due to the volume eating up the liquidity in the orderbook on the exchange and the Exchange Fee is the commission that the Exchange is charging to facilitate the trade.

The above does not include any fees from receiving the funds from the exchange which you alluded to, maybe they should be included too?

If you use another formula to calculate the cost, what formula do you use and why?

Sure, I don’t mind at all. Just bear with me through this long answer.

 

I am calculating the cost based on the actual path a potential ODL (xRapid) transaction has to take:

 

Bank USD -> Bitstamp -> Bitso -> Bank MXN

 

Note: I am currently excluding fiat deposit and withdrawal fees (bank -> exchange, exchange -> bank). I will have to do some research to see if I can find out what the fees are for banks and FIs. The point of RippleNet is to connect all these parties and lower both fees and deposit/withdrawal times, so these steps (1 and 4 in my example) should be negligible long-term. I strongly believe every walled garden (fiat) will end up like the EU TARGET2 or SEPA – cheap (1 EUR) and fast.

 

Step 1:

We need to transfer our USD from our bank account to Bitstamp. This currently costs 1 EUR through SEPA and is unified within the EU. The deposit on Bitstamp is free.

If you are doing an international Wire transfer, the deposit fee is 0.05 % + whatever your bank charges. This is a retail fee, players like Moneygram must have their own on/off ramps systems.

 

Step 2:

You purchase XRP using your EUR on Bitstamp. Let’s use 10,000 EUR for our example.

My website connects you to Bitstamp and Bitso through a websocket, so you get a live stream of orders. Basically, you see the same live orderbook as if you logged into both exchanges.

Let’s say the current “asks” order book on Bitstamp looks like this (people selling their amount of XRP at certain prices):

 

1000 XRP at 0.210 USD/XRP

1000 XRP at 0.211 USD/XRP

1000 XRP at 0.212 USD/XRP

Etc.

 

If we have 10,000 USD, this is how our fiat money is spent purchasing XRP with a market buy order:

 

1000 XRP * 0.210 USD/XRP + 1000 XRP * 0.211 USD/XRP + 1000 XRP * 0.212 USD/XRP + …

 

The process goes on, buying all the sell orders until our 10,000 USD are spent. We end up with a certain amount of XRP. Let’s say our average buy order was around 0.212 USD/XRP, allowing us to purchase 47,170 XRP with 10,000 USD.

 

There’s a trading fee on Bitstamp, ranging from 0 % to 0.5 %, depending on our 30-day trading volume. I assume transfer companies to have a high trading volume, so their fee should be small compared to a retail trader, but I guess it is fair to apply a 0.10 % to 0.20 % trading fee at this point. This means we would end up with 47,099 XRP (after a 0.15 % taker trade fee).

The withdrawal fee is 0.02 XRP on Bitstamp. It’s fair to say this amount is negligible, unless we are doing microtransactions.

I do not calculate the XRPL transaction fees (XRP burnt), because those are extremely small. Maybe if the network ever becomes congested, we will have to take those into account as well.

 

Step 3:

Our 47,099 XRP arrive to Bitso, there is no deposit fee. At this point we need to sell all our XRP for MXN. Here’s an example “bids” Bitso order book (people purchasing XRP at certain prices):

 

1000 XRP at 4 MXN/XRP ( =  0.21 USD/XRP)

1000 XRP at 3.95 MXN/XRP

1000 XRP at 3.90 MXN/XRP

Etc.

 

If we have 47,099 XRP, this is how our XRP is sold to MXN with a market sell order:

 

1000 XRP * 4 MXN/XRP + 1000 XRP * 3.95 MXN/XRP + 1000 XRP * 3.90 MXN/XRP + …

 

The process goes on until we’ve sold all our 47,099 XRP and received our MXN. Let’s say we sold all our XRP for MXN at an average of 3.90 MXN/XRP. We would end up with 183,686 MXN.

Bitso taker trading fees are between 0.13 % and 0.65 %, depending on our trading volume. I would say 0.13 % is a good estimate for a company using ODL (we need about 8 million USD trading volume over 30 days to have this fee), which leaves us with 183,447 MXN. This amounts to about 9,629 USD.

 

Obviously, the spreads in the example are completely made up, and in reality, sending 10,000 USD through Bitstamp and Bitso right now gets you about 9,910 USD to 9,985 USD worth of MXN on the other side, mostly depending on spreads and taker fees.

 

Step 4:

I have no idea how much Mexican banks charge to transfer MXN from Bitso to your bank. There is a transaction fee, and it should be accounted for in the final equation. But again, in the long run, I believe this step will be insignificant as explained at the beginning of this post.

 

I think at this stage, ODL is extremely experimental and in its infancy. However, it is improving, and if the price per XRP was higher at this moment, it would be very easy to send large amounts of fiat internationally this way.

 

 

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26 minutes ago, QWE said:

Sure, I don’t mind at all. Just bear with me through this long answer.

 

I am calculating the cost based on the actual path a potential ODL (xRapid) transaction has to take:

 

Bank USD -> Bitstamp -> Bitso -> Bank MXN

 

Note: I am currently excluding fiat deposit and withdrawal fees (bank -> exchange, exchange -> bank). I will have to do some research to see if I can find out what the fees are for banks and FIs. The point of RippleNet is to connect all these parties and lower both fees and deposit/withdrawal times, so these steps (1 and 4 in my example) should be negligible long-term. I strongly believe every walled garden (fiat) will end up like the EU TARGET2 or SEPA – cheap (1 EUR) and fast.

 

Step 1:

We need to transfer our USD from our bank account to Bitstamp. This currently costs 1 EUR through SEPA and is unified within the EU. The deposit on Bitstamp is free.

If you are doing an international Wire transfer, the deposit fee is 0.05 % + whatever your bank charges. This is a retail fee, players like Moneygram must have their own on/off ramps systems.

 

Step 2:

You purchase XRP using your EUR on Bitstamp. Let’s use 10,000 EUR for our example.

My website connects you to Bitstamp and Bitso through a websocket, so you get a live stream of orders. Basically, you see the same live orderbook as if you logged into both exchanges.

Let’s say the current “asks” order book on Bitstamp looks like this (people selling their amount of XRP at certain prices):

 

1000 XRP at 0.210 USD/XRP

1000 XRP at 0.211 USD/XRP

1000 XRP at 0.212 USD/XRP

Etc.

 

If we have 10,000 USD, this is how our fiat money is spent purchasing XRP with a market buy order:

 

1000 XRP * 0.210 USD/XRP + 1000 XRP * 0.211 USD/XRP + 1000 XRP * 0.212 USD/XRP + …

 

The process goes on, buying all the sell orders until our 10,000 USD are spent. We end up with a certain amount of XRP. Let’s say our average buy order was around 0.212 USD/XRP, allowing us to purchase 47,170 XRP with 10,000 USD.

 

There’s a trading fee on Bitstamp, ranging from 0 % to 0.5 %, depending on our 30-day trading volume. I assume transfer companies to have a high trading volume, so their fee should be small compared to a retail trader, but I guess it is fair to apply a 0.10 % to 0.20 % trading fee at this point. This means we would end up with 47,099 XRP (after a 0.15 % taker trade fee).

The withdrawal fee is 0.02 XRP on Bitstamp. It’s fair to say this amount is negligible, unless we are doing microtransactions.

I do not calculate the XRPL transaction fees (XRP burnt), because those are extremely small. Maybe if the network ever becomes congested, we will have to take those into account as well.

 

Step 3:

Our 47,099 XRP arrive to Bitso, there is no deposit fee. At this point we need to sell all our XRP for MXN. Here’s an example “bids” Bitso order book (people purchasing XRP at certain prices):

 

1000 XRP at 4 MXN/XRP ( =  0.21 USD/XRP)

1000 XRP at 3.95 MXN/XRP

1000 XRP at 3.90 MXN/XRP

Etc.

 

If we have 47,099 XRP, this is how our XRP is sold to MXN with a market sell order:

 

1000 XRP * 4 MXN/XRP + 1000 XRP * 3.95 MXN/XRP + 1000 XRP * 3.90 MXN/XRP + …

 

The process goes on until we’ve sold all our 47,099 XRP and received our MXN. Let’s say we sold all our XRP for MXN at an average of 3.90 MXN/XRP. We would end up with 183,686 MXN.

Bitso taker trading fees are between 0.13 % and 0.65 %, depending on our trading volume. I would say 0.13 % is a good estimate for a company using ODL (we need about 8 million USD trading volume over 30 days to have this fee), which leaves us with 183,447 MXN. This amounts to about 9,629 USD.

 

Obviously, the spreads in the example are completely made up, and in reality, sending 10,000 USD through Bitstamp and Bitso right now gets you about 9,910 USD to 9,985 USD worth of MXN on the other side, mostly depending on spreads and taker fees.

 

Step 4:

I have no idea how much Mexican banks charge to transfer MXN from Bitso to your bank. There is a transaction fee, and it should be accounted for in the final equation. But again, in the long run, I believe this step will be insignificant as explained at the beginning of this post.

 

I think at this stage, ODL is extremely experimental and in its infancy. However, it is improving, and if the price per XRP was higher at this moment, it would be very easy to send large amounts of fiat internationally this way.

 

 

This is a key point, XRP is priced too low.  The system needs higher pricing per XRP to carry larger transaction values, and larger transaction values will push the usage case up and the usage will push push price up.   The low price of XRP is impeding development.  Ripple seem to have started to make higher price for XRP one of their priorities over the last 6 months.

 

 

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