MoneyGram has announced a two-year strategic partnership with Ripple that will enable MoneyGram to utilize Ripple’s xRapid product, leveraging XRP in foreign exchange settlement as part of MoneyGram’s cross-border payment process.
Improving the settlement of cross-border payments by increasing efficiency and reducing cost through RippleNet happens to be the shared goal for both the companies and the partnership will support this.
MoneyGram will continue to make progress toward closing the refinancing of its existing first lien term and revolving facilities and expects to announce the closing of that transaction next week.
Partnership for cross-border settlement
Ripple has made an initial investment of $30 million in MoneyGram equity, made up of common stock and a warrant to purchase common stock. Ripple purchased the newly-issued common stock (including the shares underlying the warrant) from MoneyGram at $4.10per share, which represents a significant premium to MoneyGram’s current market price. In addition, at MoneyGram’s election, Ripple may fund additional purchases of common stock or warrants up to $20 million at a minimum price of $4.10 per share.
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 operating costs, working capital needs and improving earnings and free cash flow.
Transforming cross-border payments
Alex Holmes, MoneyGram Chairman and CEO said: “I’m extremely excited about Ripple’s investment in MoneyGram and the related strategic partnership. As the payments industry evolves, we are focused on continuing to improve our platform and utilizing the best technology as part of our overall settlement process.
“Through our partnership with Ripple, we will also have the opportunity to further enhance our operations and streamline our global liquidity management. Since our initial partnership announced in January 2018, we have gotten to know Ripple and are looking forward to further leveraging the strengths of both of our businesses.”
Brad Garlinghouse, CEO of Ripple added: “This is a huge milestone in helping to transform cross-border payments. MoneyGram is one of the largest money transfer companies in the world and the partnership will continue to further the reach of Ripple’s network. I look forward to a long-term, very strategic partnership between our companies.
“We are very pleased with the terms of the Ripple investment which supports the Company with permanent capital and additional liquidity,” said Larry Angelilli, Chief Financial Officer of MoneyGram. “This partnership also provides MoneyGram with the opportunity to improve operating efficiencies and increase earnings and free cash flow.”
In recent updates on cross-border payments, SWIFT and ECB tested instant cross-border payments in Europe and Bank of Canada and MAS performed first blockchain cross-border payment