According to a press release published on 17th June, “Ripple, a provider of leading enterprise blockchain solutions for global payments, has agreed to enter into a strategic partnership with MoneyGram (NASDAQ: MGI), one of the world’s largest money transfer companies.”
The MoneyGram announcement is a significant one for the international payments sector. It also says, Ripple would become MoneyGram’s key partner for cross-border payment and foreign exchange settlement using digital assets. In conjunction with the partnership, Ripple has agreed to provide a capital commitment to MoneyGram, which enables the company to draw up to $50 million in exchange for equity over a two-year period.
The plan is to focus on Ripple’s xRapid product, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency. MoneyGram says, “XRP remains the most efficient digital asset for settlement with transaction fees at just fractions of a penny, compared to other digital asset fees of about $30 per transaction. Similarly, the average transaction time for XRP is two to three seconds with other top digital assets ranging from 15 minutes to an hour.”
Alex Holmes, MoneyGram Chairman and CEO, said, “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.”
MoneyGram operates globally in the $600 billion global remittance market, serving millions of customers in more than 200 countries and territories, supporting multiple currencies. Through this strategic partnership MoneyGram will be able to settle key currencies and match the timing of funding with its settlement requirements reducing costs, improving its balance sheet efficiency, and reducing risk.
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.”