The U.S based payment-focused cryptocurrency startup, Ripple announced Monday that is has secured a strategic partnership with MoneyGram, one of the largest money transfer companies globally.
The deal will see Ripple provide equity funding to MoneyGram, reportedly purchasing 8%-10% of the company’s shares for a price nearly three times its current market value of $1.45. Fortune reports the original investment as $30 million ($4.10 per share) with a further commitment to invest $20 million within the next two years.
In exchange for the funding, MoneyGram would integrate Ripple’s XRapid product into its money transfer system.
Since XRapid makes use of Ripple’s native token, XRP to move money across bothers almost instantly, adding the system to MoneyGram reportedly allows faster settlements and also saves the company the stress of maintaining foreign accounts or storing funds as collateral.
Sharing his thoughts on the overall improvements that MoneyGram can expect by integrating XRapid, Ripple’s founder, Brad Garlinghouse told Fortune,
“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’s Chairman and CEO Alex Holmes also shared the same sentiments, noting in the official announcement that integrating XRapid would give his company the “ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis.”
Such a new approach, according to Holmes, “has the potential to revolutionize [MoneyGram] operations and dramatically streamline our global liquidity management.”
Interestingly, Ripple’s strategic partnership with MoneyGram comes just a day before the expected release of Facebook’s cryptocurrency, which many believe could become the most significant competitor to Ripple’s product.