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MoneyGram International Inc., a leading money transfer company, has made its entrance into a strategic agreement with blockchain solution provider and prominent crypto firm, Ripple.
Ripple provides customers with global payment solution by way of cryptocurrency (XRP) and blockchain. This will enable MoneyGram to make use of Ripple’s xRapid product leveraging the XRP digital currency, from foreign exchange settlements, which makes it a part of MoneyGram’s cross border payment process. This would improve the system of cross-border payment, which would increase efficiency, and reduce costs via RippleNet.
Ripple has struck a deal to buy stakes in the money transfer giant, and different reports estimate that Ripple will spend $30 million to buy these shares. Further, in the next two years, MoneyGram has the option to sell additional $20 million worth of share to Ripple. Ripple’s purchase is about 3 times the current market value of MoneyGram. The deal makes Ripple MoneyGram’s major cross-border payment partner for two years.
What is the Prime Objective of the Ripple-MoneyGram Partnership?
Alex Holmes, MoneyGram Chairman and CEO, stated:
“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. 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.”
The partnership is mainly aimed at making use of xRapid. This is a solution for liquidity provided on demand. It removes the need to rely on pre-funding, and ensures that money can be sent from one currency, and be settled in the destination currency instantly. It uses XRP, which is the native digital asset of the XRP ledger, which functions as a gateway between both currencies; this makes it one of the most effective digital assets for such settlement. The crypto transaction fees are lower than other digital assets, with very low transaction time. While most digital assets take 15 to 60 minutes for transactions to complete, XRP finishes the job in two or three seconds.
Brad Garlinghouse, CEO of Ripple, said:
“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.”
Global Digital Asset Partners
MoneyGram is an international firm, operating in the $600 billion remittance market worldwide. It has offices and bases essentially all around the world, and it supports various currencies. It currently depends on traditional foreign exchange markets in meeting settlement obligations.
Ripple enables customers to experience frictionless money transfer by using blockchain technology. Customer payments can be made in a reliable and cost effective way, anywhere in the world, using the cryptocurrency XRP. It also serves customers in around 200 countries.
With Ripple holding 8 to 10% stake in MoneyGram, it is an unprecedented opportunity for both stakeholders. This comes as a win for Ripple, who have long maintained that banks should definitely make use of XRP as a bridge currency, as opposed to leaving money tied up as collateral in foreign accounts.