MoneyGram, a global money transfer company, announced today it has entered into a strategic agreement with Ripple (XRP), the provider of enterprise blockchain solutions for cross-border payments.
The deal will enable MoneyGram to utilize Ripple’s xRapid product, leveraging ripples (XRP) in foreign exchange settlement as part of MoneyGram’s global payment process
With an initial term of two years, Ripple will become MoneyGram’s key partner for cross-border settlement using digital assets. Furthermore, as part of this partnership, Ripple has made an initial investment of $30 million in MoneyGram equity, made up of common stock and a warrant to purchase common stock.
Ripple purchased the newly-issued common stock (including the shares underlying the warrant) from MoneyGram at $4.10 per share, which represents a significant premium to MoneyGram’s current market price of $1.45 at the time of writing. In addition, at MoneyGram’s election, Ripple may fund additional purchases of common stock or warrants up to $20 million at a minimum price of $4.10 per share.
“I’m extremely excited about Ripple’s investment in MoneyGram and the related strategic partnership,. As the payments industry evolves, we are focused on continuing to improve our platform and utilizing the best technology as part of our overall settlement process. Through our partnership with Ripple, we will also have the opportunity to further enhance our operations and streamline our global liquidity management. Since our initial partnership announced in January 2018, we have gotten to know Ripple and are looking forward to further leveraging the strengths of both of our businesses.”
– Alex Holmes, MoneyGram Chairman, and CEO
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 aims to be able to settle key currencies and match the timing of funding with its settlement requirements, reducing operating costs, working capital needs and improving earnings and free cash flow.
“This is a huge milestone in helping to transform cross-border payments. MoneyGram is one of the largest money transfer companies in the world and the partnership will continue to further the reach of Ripple’s network. I look forward to a long-term, very strategic partnership between our companies.”
– Brad Garlinghouse, CEO of Ripple