MoneyGram and Ripple entered strategic partnership
Ripple has agreed (or MoneyGram has agreed of you prefer :)) to enter into a strategic partnership with MoneyGram (NASDAQ: MGI), one of the world’s largest money transfer companies.
The companies had an existing partnership, announced in January 2018, in which the money transfer group launched a pilot program to test the use of XRP. The agreement comes as financial services companies seek to leverage blockchain technology as digital currencies enter the mainstream. Through this partnership, which will have an initial term of two years, Ripple would become MoneyGram’s key partner for cross-border payment and foreign exchange settlement using digital assets. In conjunction with the partnership, Ripple has agreed to provide a capital commitment to MoneyGram, which enables the company to draw up to $50 million in exchange for equity over a two-year period.
The partnership with Ripple will focus on the xRapid product, a solution for on-demand liquidity, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency. It leverages XRP, the native digital asset of the XRP Ledger, as a real-time bridge between the sending and receiving currencies. XRP remains the most efficient digital asset for settlement with transaction fees at just fractions of a penny, compared to other digital asset fees of about $30 per transaction. Similarly, the average transaction time for XRP is two to three seconds with other top digital assets ranging from 15 minutes to an hour.
“As the payments industry evolves and matures, it’s imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B,”
said Alex Holmes, MoneyGram Chairman and CEO.
“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”
MoneyGram operates globally in the $600 billion global remittance market, serving millions of customers in more than 200 countries and territories, supporting multiple currencies. Today, MoneyGram relies on traditional foreign exchange markets to meet its settlement obligations, which require advance purchases of most currencies. Through this strategic partnership, MoneyGram will be able to settle key currencies and match the timing of funding with its settlement requirements reducing costs, improving its balance sheet efficiency and reducing risk.
“This strategic partnership will enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency. This is a huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies,”
said Brad Garlinghouse, CEO of Ripple.
MoneyGram shares more than double on Ripple deal Blockchain group will invest up to $50m under cryptocurrency partnership Share on Twitter. MoneyGram shares surged 152 per cent to $3.65 in pre-market trading, putting the stock on track to hit its highest level since November. It would also mark MoneyGram’s best single-day gain, eclipsing a 32 per cent rally on July 1, 2009.