Blockchain payments startup Ripple has reportedly arrived at a deal to buy a stake in money transfer giant Money gram.
The deal which was struck on Monday will see Ripple spend $30 million to stock up on MoneyGram shares that will cost $4.10 a piece, and in the next two years MoneyGram will have the option of selling an additional $20 million worth of shares to Ripple at the same price. MoneyGram shares were trading at $1.45 by the close of day Monday, meaning Ripple will be buying each share at three times its current value.
In return according to the deal, Money gram will utilize Ripple’s digital token XRP as part of its day to day operations through Ripple’s xRapid transaction product. MoneyGram had stated that it was piloting the token back in January last year, and it seems time may just be ripe to begin utilizing it.
MoneyGram is a powerful partner for Ripple since it already serves 200 countries and jurisdictions with roughly 600 Billion processed in the global remittance market. As of now, the company utilizes traditional foreign exchange markets which require prefunding accounts. The partnership with Ripple is expected to see settlement fees sink from $30 per transaction, to “fractions of a penny”, while settlement times shrink from 15-60 minutes to just a few seconds.
MoneyGram CEO Alex Holmes lauded the deal with Ripple stating that;
“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.”
He went on to praise Ripple’s xrapid product while expressing great optimism for the future.
“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.”
On the other end of the deal, Ripple CEO Brad Garlinghouse also lauded the deal and talked up MoneyGram’s bright future with the xRapid product. According to Garlinghouse the partnership will allow MoneyGram to; “greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.”
He also expressed his view that the deal will do wonders in improving cross-border payments and said he looked forward to a healthy partnership between the two companies.
“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,”
In MoneyGram, Ripple has bagged yet another powerful partner this time with a reach of 200 countries. This not only does great for Ripple but is also a great win for cross-border payments and could go a long way in disrupting traditional payment systems.
Image Courtesy of Qz.com
