Transforming the cross-border payment industry landscape? Ripple invests $50 million in MoneyGram

According to the cointelegraph, Ripple, the US bank’s XRP operator and US financial technology company, announced on June 17 that a two-year strategic cooperation agreement with MoneyGram, a remittance service provider, will promote MoneyGram. XRP is used in daily business, and Ripple platform xRapid is used to manage settlements with XRP transfers.

Under the agreement, Ripple will spend up to $50 million over two years to make equity investments in MoneyGram. These include existing common stocks with a value of US$30 million from Expressway, accounting for 8% to 10%. The Ripple purchase price is $4.1 per share, almost three times the closing price of MoneyGram on the 17th. Ripple will also purchase warrants at $4.10 per share, equivalent to the subscription of $20 million in MoneyGase to issue new shares.

Ripple CEO Brad Garlinghouse commented that the strategic partnership is “a huge milestone” that will help to innovate cross-border payments, so that MoneyGram can greatly enhance its business and increase the efficiency of millions of people around the world.

In fact, according to Coinspeaker, as early as January 2018, MoneyGram entered into a partnership with Ripple and announced the trial of its RPR-based xRapid product in its internal processes. The basis for the cooperation between the two parties is Ripple’s ability to handle instant payments. The average trading time for XRP is 2-3 seconds, and the time for other “top” digital assets ranges from 15 minutes to 1 hour. In terms of cost, “XRP is still the most effective digital asset, with transaction costs of only one cent, and Bitcoin transaction costs of about $30.”

The reason for achieving the above numbers is that xRappid in Ripple’s three main services (xCurrent, xRappid, and xVia) is working.

The xRapid platform was originally designed to accelerate international payments without the need to create a pre-funded nostro account. The product is said to achieve liquidity through XRP transactions in global markets, completing faster and cheaper cross-border payment transactions than traditional methods.

xRapid entered the pilot phase in May this year, with a number of financial institutions and payment providers including MercuryFX and Cuallix participating in the trial. Trial participants reported that trading through the platform can save 40%-70% of transaction costs, and the transaction speed has increased from 2-3 days to more than two minutes.

Currently, Cuallix is ​​managing key remittance channels from the US to Mexico, while MercuryFX intends to use xRapid in remittances from Europe to Mexico. According to the statement, Catalyst Corporate Federal Credit Union, which serves US customers and credit unions, will also develop new cross-border payment services through xRapid.

In August, Ripple partnered with three cryptocurrency exchanges, Bittrex in the US, Bitso in Mexico, and Coins.Ph in the Philippines, as part of Ripple’s plan to establish a “healthy” digital exchange system. The three exchanges will use xRapid to convert between XRP and the US dollar, the Mexican peso and the Philippine peso.

It is not just the blockchain company that cross-border payment of “big cakes”. As the world’s second largest remittance service provider (the first is Western Union Western Union), MoneyGram was almost acquired by Ali’s Ant Financial.

In January 2017, Ali’s Ant Financial Co., Ltd. announced that it would acquire the listed company’s MoneyGram at a price of US$13.25/share for a total of US$880 million.

In March, another US electronic payment services company, Euronet, joined the bid to raise the offer price to $955 million. This is equivalent to a premium acquisition, and MoneyGram immediately announced an acquisition negotiation with Euronet. Ant Financial also responded quickly, raising the purchase price to $1.2 billion, and Euronet did not continue to add. Since Euronet and MoneyGram are both US companies, M&A transactions do not require inspection and approval by the US Foreign Investment Committee.

Ant Financial bought the Quick Cash, mainly because the company has 347,000 agent outlets in more than 200 countries, covering a wide range.

Later, due to US regulatory issues, some US lawmakers and government agencies said that the huge investment of Chinese companies may pose a threat to the United States. Eventually, the M&A transaction was terminated. According to the announcement, Ant Financial also needed to pay a $30 million “breakup fee” to MoneyGram.

Source: CoinTelegraph, CoinSpeaker, Odaily Planet Daily, Coiness


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