By Ripple, the blockchain payments startup has announced that it has entered into a deal to purchase a stake in MoneyGram, the money transfer giant.
Announced on Monday, 17 June, the deal will, according to the Wall Street Journal, will see Ripple spending around $30 million to purchase shares at $4.10 per piece. Over the next two years, MoneyGram has the option to sell an additional $20 million in shares to Ripple at the same price per share. As per the article published by the Wall Street Journal, MoneyGram’s share prices were trading at around $1.45 per piece at the close of the day, which means Ripple’s purchase price is nearly three times the current market value.
Furthermore, the deal will see MoneyGram using the XRP token as part of its daily operations via Ripple’s xRapid transaction product. MoneyGram stated that it would be piloting the token as far back as January 2018.
Currently, MoneyGram services 200 countries and territories, with close to $600 billion processed within the global remittance market. The company currently uses foreign exchange markets, which require pre-funding accounts. Both MoneyGram and Ripple believe that settlement fees could drop by as much as $30 per transaction to “fractions of a penny.” In addition to this, settlement times are expected to drop from 15-60 minutes to mere seconds.
Alex Holmes, CEO of MoneyGram in a statement said “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.”
Holmes added:
“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.”
Brad Garlinghouse, CEO of Ripple added to this in a statement, stating that the new partnership will allow MoneyGram to “greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.”
Garlinghouse added:
“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.”
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