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MoneyGram announced that they’ve agreed to a deal with blockchain company Ripple that involves an investment of up to $50 million. MoneyGram will use Ripple’s XRP technology to handle cross-border transfers of digital funds for at least two years under the deal.
After a lot of rumors and discussions, Ripple decided to enter into a strategic partnership with MoneyGram, one of the world’s largest money transfer companies.
The partnership will have an initial term of two years, and it will enable Ripple to become MoneyGram’s key partner for cross-border payment and foreign exchange settlement using digital assets. Ripple has agreed to a capital commitment, which enables MoneyGram to draw up to $50 million in exchange for equity over a two-year period.
Ripple’s CEO Brad Garlinhouse tweeted:
An industry defining milestone: together, @MoneyGram and @Ripple are solving the challenges with cross-border payments using the speed and efficiency of #XRP. https://t.co/xIfeJJgSy7
— Brad Garlinghouse (@bgarlinghouse) June 17, 2019
He also added that this will eliminate the need to deploy foreign bank accounts:
“That’s why MoneyGram has negative working capital. It will help customers and also smooth out their treasury operations.”
MoneyGram Chairman and CEO Alex Holmes added:
“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from U.S. dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”
Ripple’s investment comes a year after MoneyGram’s rival Western Union ended a trial experiment with XRapid, saying the XRP transfer service had not produced any significant savings.
Ripple’s director of regulatory relations, Ryan Zagone tweeted:
Ripple’s purchase of newly-issued shares of MoneyGram presents a big premium on MoneyGram’s recent price, which has weakened around $1.45—that is still a huge gap from the $18 that Ant Financial reportedly offered. Just for reminder, what destroyed them the most, was the $1.2 billion deal with Ant Financial, owned by Jack Ma, the executive chairman of Chinese giant Alibaba Group Holding.
In a deal with Ant Financial, the company would be sold for USD 18 per share, or more than USD 1 billion.
According to the companies, Ripple will not immediately receive a seat on MoneyGram’s board, but will instead have observer status. The initial deal would give Ripple about a 10% stake in MoneyGram.
This doesn’t seem to move Ripple’s XRP price as expected. It was up, however, 3.53% to $0,44 at the time of writing.
However, it is showing up that Ripple intends to fight for its spot under the crypto heaven. Bare in mind that today Facebook will reveal its Libra whitepaper.
Anthony Pompliano, Co-founder & Partner at Morgan Creek Digital and one of the biggest crypto influencers tweeted:
Facebook is rumored to launch their cryptocurrency, Libra, tomorrow which many believe could render Ripple/XRP useless.
Ripple not going down without a fight though — they just agreed to invest $50M in MoneyGram to accelerate adoption.
The token wars are upon us!
— Pomp 🌪 (@APompliano) June 17, 2019
This is for sure being very good news for Ripple especially if we consider the fact that they have trying to find the ways of driving adoption of the XRP cryptocurrency via tokens held in escrow and released quarterly. To date, the company has succeeded in attracting large financial institutions to trial its xCurrent product which doesn’t involve the XRP currency in the money flow.