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Cryptocurrency exchange Ripple and MoneyGram have entered into a strategic partnership that will see the money transfer company use the digital currency XRP in its daily operations.
As per the press release, the 2-year agreement will see the two companies work together for cross-border payments and foreign exchange settlements with digital assets. Ripple has initially made an investment of $30 million, paying $4.10 per share for up to a 10% stake of MoneyGram. It could further make an additional investment of up to $20 million within the next 2 years.
MoneyGram, which is currently servicing 200 countries and territories, has processed roughly $600 billion in the global remittance market. At present, it still uses conventional foreign exchange markets that require pre-funding accounts.
Under the collaboration, Ripple and MoneyGram can settle key currencies and match the timing of funding with its settlement requirements. This results in a cheaper operating cost, lesser working capital, and better earnings and free cash flow.
According to CoinDesk, settlement fees are anticipated to drop from $30 per transaction to as low as “fractions of a penny” and faster settlement time from 15-60 minutes to just a few seconds.
Notably, the partnership will see MoneyGram using the digital coin XRP via Ripple’s xRapid transaction product.
“It is imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B,” Alex Holmes, MoneyGram CEO, said.
“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."
It appears that Ripple is rapidly expanding its presence not only by strategic partnerships but also with new offices. As previously reported, the cryptocurrency startup recently opened a new Brazilian office with Luiz Antonio Sacco, the former CEO of the Brazilian subsidiary of The Warranty Group, as the manager.
