Ripple, an enterprise blockchain solutions provider for global payments, has made a capital commitment to money transfer company MoneyGram.
Image: Ripple and MoneyGram have collaborated on cross-border payment and foreign exchange settlement. Photo: courtesy of William Iven from Pixabay.
Under strategic partnership, MoneyGram will secure up to $50m (£40m) from Ripple in exchange for equity over a two-year period.
The deal will also allow Ripple to become MoneyGram’s major partner for cross-border payment and foreign exchange settlement using digital assets.
The collaboration will focus on the xRapid product, a solution for on-demand liquidity. It helps reduce dependence on pre-funding by allowing customers to send money from one currency and instantly settled in the destination currency.
Ripple’s xRapid will leverage XRP, the native digital asset of the XRP Ledger, as a real-time link between the sending and receiving currencies.
The XRP serves as an efficient digital asset for settlement with transaction fees at just fractions of a penny compared to other digital asset fees of about $30 (£23.9) per transaction, said the company.
The average transaction time for XRP is said to be two to three seconds, while other top digital assets ranges from 15 minutes to an hour.
MoneyGram chairman and CEO Alex Holmes said: “As the payments industry evolves and matures, it’s imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B.
“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.”
Operating in the $600bn (£479bn) global remittance market, MoneyGram serves millions of customers in over 200 countries and territories through supporting multiple currencies.
MoneyGram mostly depends on traditional foreign exchange markets to meet its settlement obligations, which need advance purchases of most currencies.
The strategic partnership will enable MoneyGram to settle major currencies and match the timing of funding with its settlement requirements, helping to reduce costs and improve balance sheet efficiency.
Ripple CEO Brad Garlinghouse said: “This strategic partnership will enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.”