One of the largest money transfer companies, MoneyGram, received a $30 million injection from the third largest cryptocurrency, based on market capitalization — Ripple (XRP). XRP’s move is aimed toward enhancing liquidity, speed of transactions, as well as lowering transaction fees for cross-border payments.
MoneyGram will use Ripple’s xRapid blockchain and Ripple’s XRP token to transfer small to medium size amounts of fiat from one customer to another. For now, both companies settled on a two-year partnership, with Ripple getting ready to invest further $20 million in shares, increasing their stakes in the company to 15%.
Ripple’s CEO Brad Garlinghouse stated that the partnership between Ripple and MoneyGram would eliminate the need for “setting up numbers of bank accounts, and the costs that come with their management.”
“Furthermore, customers will experience the instant speed of all placed transactions with almost no to little transaction fees, which will ensure smooth operations,” Garlingtonhouse added.
The $30 million financial injection will help MoneyGram stand on its feet after the stock crash from November last year. The stock market responded to the news instantly, with MoneyGram’s stock price surging over 150 percent in a matter of less than two hours.
Surprisingly, the XRP price has gone up with only 1.43% for the last 24 hours as a result of the announcement and is currently traded at $0.4383
Ripple’s cooperation with MoneyGram seems to be a win-win situation for both parties, as MoneyGram will receive an additional financial aid, and Ripple is anticipated to acquire more clients and scope of operation for its xRapid network, which has no rival in terms of speed and efficiency.
xRapid is part of a more significant project, called RippleNet. Ripple’s head of Banking Marjan Delatinne stated that Ripple made more transactions in Q1 of 2019 than in the whole 2018.
Delatinne also stated that “banks and financial institutions have learned to distinguish the differences between a cryptocurrency and the technology behind it.” The head of banking even revealed that two to three financial institutions join the RippleNet on a weekly basis, but Delatinne did not provided the exact numbers on the companies that have already joined their network.
Delatinne added the importance of liquidity in modern-day banking:
“Until you come face to face with traditional banking, you cannot realize the need for a new system to substitute something that has been in use for 40+ years. Liquidity management is one of the most important problems for modern banks because the market shifts to real-time. We are talking about small-ticket amounts, but as soon as the traditional banking world adapts to the new technology, we may start observing large-ticket amounts to be transferred as well.” Delatinne added.