On Monday, cryptocurrency company Ripple announced a major partnership with MoneyGram. The partnership pushes the money transfer service to use the digital currency XRP.
MoneyGram, one of the world’s largest money transfer companies, has started a strategic partnership with Ripple. The partnership enables MoneyGram to utilize Ripple’s xRapid product, including the XRP token.
Brad Garlinghouse, CEO of Ripple, 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
The two firms signed a two-year agreement. As part of the agreement, MoneyGram will be able to draw up to $50 million dollars from Ripple in exchange for equity. Ripple is paying $4.10 per share to acquire an 8% to 10% stake in MoneyGram ($30 million in total). Furthermore, MoneyGram has the option to get another $20 million cash infusion in the next two years.
Ripple CEO Brad Garlinghouse told Fortune about the partnership:
“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.”
Currently, MoneyGram offers its services in 200 countries and territories, roughly processing $600 billion in the global remittance market. Because at the moment, the company uses traditional foreign exchange markets, which requires pre-funding accounts, partnering with Ripple makes perfect sense for MoneyGram.
Alex Holmes, CEO of MoneyGram, said about the news:
“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.”