In June this year, Ripple made an investment commitment to MoneyGram. Soon after that, the company invested $30 million in MoneyGram. In that deal, Ripple received about a 10% stake in MoneyGram. Under the deal, MoneyGram would begin using the XRP currency in its money transfer services. As part of the deal, Ripple agreed that it would invest a further $20 million at some point within the next two years. The company has now fulfilled that promise with the latest investment.
The investment by Ripple came at a crucial moment for MoneyGram. This was around the same period when Western Union, a major MoneyGram rival ended its trial run with XRapid. Western Union stated it had not seen any substantial benefits. At the time, MoneyGram had suffered a major slump in the stocks share price, as it’s earnings reports were flashing signals of slowing growth and operations. This was also about a year and a half after the SEC had banned Ant Financial from buying the firm.
At the time, Ripple’s price of $1.50 per MoneyGram was seen as a premium. However, this was a far cry from the $18 that Ant Financial had been willing to invest in the company. As part of the deal, Ripple was not given a seat on the firm’s board. Instead, it was given observer status.
The $20 Million Investment
According to an SEC filing, Ripple bought each share for $4.10, which is over a dollar more than the current price of $3 per share. According to the MoneyGram CEO, this deal had made it possible for them to settle currencies in just seconds. The success they had enjoyed had made them expand their use of On-Demand-Liquidity (ODL). Currently, about 10% of MNX-USD transactions were being processed via the Ripple ODL.
With the latest investment, Ripple will now own 9.95% of MoneyGram common stock. In terms of a fully diluted basis, Ripple will own about 15% of the stock. This will include non-voting warrants that are owned by Ripple.
The Ripple CEO noted that it was just a month ago that they announced that MoneyGram had begun using the ODL feature for payments in the Philippines. He added that they would support the further expansion of MoneyGram in Australia and Europe. The Ripple CEO noted that blockchain technology and digital assets had the potential to make a huge impact on cross-border payments. He noted that the Ripple-MoneyGram deal was a good example of what was possible.
Why MoneyGram is So Important
The Ripple project hopes to transform the existing cross-border payments landscape instead of trying to replace it, like most other crypto projects. To do this, it has made partners with various institutions in the fiat currency world.
However, the MoneyGram deal might be one of its most important thus far. While it may not be doing well financially, it already has an existing infrastructure in place. Almost anyone can send funds to over 200 nations globally using the MoneyGram service. It also has a robust compliance program that has made it an industry leader when it comes to protecting consumers.
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