Ripple, the blockchain payments startup according to the companies announcement on Monday has struck a deal to buy a stake in money transfer giant ‘MoneyGram.’
According to the Wall Street Journal and Fortune, pertaining the deal, Ripple has set aside $30 million to spend in buying shares at a price of $4.10 per piece. While MoneyGram in the next two years has the option to sell an additional $20 million worth of shares to Ripple at the same price too.
Notably, MoneyGram shares at the close of day, were trading at about $1.45 a piece which means that Ripple’s purchase price is close to three times the current market value.
Therefore, the deal will also see Ripple’s xRapid transaction product as MoneyGram utilizes the digital token XRP as part of its day-to-day operations.
Though, MoneyGram said that it has started organising the token back in January 2018, according to previous reports then. MoneyGram already services 200 countries and territories, with roughly $600 billion processed in the global remittance market.
At present, the company uses traditional foreign exchange markets, which requires pre-funding accounts. Under the deal, Ripple and MoneyGram expects that settlement fees should be dropping from $30 per transaction to “fractions of a penny,” while settlement times are expected that it should drop from 15-60 minutes to just a few seconds.
“it’s quite necessary for us to continue to improve our platform and as well provide the most effective solution to get funds from one angle to another ” Alex Holmes, CEO of MoneyGram made in a statement.
“Through Ripple’s xRapid product, We will definitely have the ability to instantly settle funds from US dollars to destination where the currencies are going on a 24/7 basis through Ripple’s xRapid product. This will enhance the potential to revolutionize our operations and ultimately streamline our global liquidity management,” He added.
In support of the above statement made, Ripple CEO Brad Garlinghouse likewise said:
“the partnership will allow MoneyGram to greatly improve its operations leading to improved efficiency which will enable millions of people around the world to benefit from it.
Cross-border payments are greatly transformed through this process and its quite a huge milestone as the pattern is now transformed for the better and more effective way and I look forward to a long-term, very strategic partnership between our companies,” he added.
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