Ripple rose six percent on Monday after the news broke out that its San Francisco-based startup has invested $30 million in global money transfer company MoneyGram. The move is significant because the arrangement also involves a partnership to use of XRP, Ripple’s digital currency, as part of MoneyGram’s cross-border payment process.
The pilot run will see MoneyGram using XRP to introduce blockchain-enabled cross-border payments. MoneyGram will tap Ripple’s on-demand liquidity product, xRapid, to make blockchain payments commercially available, reducing the time and cost of settlement, while maintaining the level of security.
MoneyGram customers making payments on its international platform will have access to Ripple’s enterprise solution, which enables real-time FX settlement through its cryptocurrency, XRP. xRapid will become a feature in Ripple’s partnerships with banks and other financial companies further down the line, as it gives these institutions the ability to unlock liquidity and access multiple corridors with one pre-funded originating account.
Ripple added that it might increase its investment in MoneyGram with additional purchases of common stock or warrants up to $20 million.
Global money transfer firms pilot the use of XRP
Ripple said that it has tested xRapid as a means of speeding up payments and that it would reduce money transfer fees while allowing senders/receivers to have real-time insight into the status of their payments.
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Ripple suggested that the blockchain project could eventually be extended worldwide. The company revealed earlier that three of the top five money transfer companies worldwide would be implementing Ripple’s XRP token in their payment flow systems.
Ripple’s MoneyGram partnership fits in nicely with its big plan to become the crypto payment solution of choice not just on the web, but also through brick-and-mortar transfer providers.
The news comes shortly after rumors were flying earlier this month that Ripple has acquired Dallas-based money transfer giant. Although both companies refused to comment, the rumor was enough for XRP price to rise over 10 percent around this time.
In a statement, Ripple CEO Brad Garlinghouse described the MoneyGram tie-up as a strategic one and said “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.”
“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,” added said Alex Holmes, MoneyGram Chairman and CEO.