Ripple bought a share issue from MoneyGram worth $30 million at $4.10 per share to acquire 8-10% of the company. MoneyGram would also have an option of infusing another $20 million over the next two years. A strategic partnership will now ensue where Ripple will become the critical service provider for cross-border payment and foreign exchange settlement using digital assets.
The digital asset they will be leveraging is Ripple, using Ripple’s xRapid Product. This partnership is a massive step towards the vision with which Ripple began, and investors put money is XRP.
Until now, MoneyGram has had to use banking services to provide settlements for payments they initiate. Due to the difference in time of settling payments, MoneyGram has to take loans to increase the required liquidity. However, by deploying xRapid, they will now be able to leverage XRP’s liquidity to provide cheaper and faster settlements.
MoneyGram Chairman and CEO, Alex Holmes noted,
“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 reported a net loss of $24 million in 2018 compared to a net loss of $29.8 million for the fourth quarter of 2017. The money transmitting service provider has been working towards developing, and 2019 will be part of the roadmap. Hence, the success of this strategic partnership is crucial for MoneyGram.