Ripple, a provider of leading enterprise blockchain solutions for global payments, has agreed to enter into a strategic partnership with MoneyGram (NASDAQ: MGI), one of the world’s largest money transfer companies.
Through this partnership, which will have an initial term of two years, Ripple would become MoneyGram’s key partner for cross-border payment and foreign exchange settlement using digital assets. In conjunction with the partnership, Ripple has agreed to provide a capital commitment to MoneyGram, which enables the company to draw up to $50 million in exchange for equity over a two-year period.
The partnership with Ripple will focus on the xRapid product, a solution for on-demand liquidity, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency. It leverages XRP, the native digital asset of the XRP Ledger, as a real-time bridge between the sending and receiving currencies. XRP remains the most efficient digital asset for settlement with transaction fees at just fractions of a penny, compared to other digital asset fees of about $30 per transaction. Similarly, the average transaction time for XRP is two to three seconds with other top digital assets ranging from 15 minutes to an hour.
MoneyGram operates globally in the $600 billion global remittance market, serving millions of customers in more than 200 countries and territories, supporting multiple currencies. Today, MoneyGram relies on traditional foreign exchange markets to meet its settlement obligations, which require advance purchases of most currencies. Through this strategic partnership MoneyGram will be able to settle key currencies and match the timing of funding with its settlement requirements reducing costs, improving its balance sheet efficiency, and reducing risk.