MoneyGram International ("MoneyGram") CEO, Alex Holmes, talked about his company's partnership with Ripple during a Q2 2019 Results Conference Call on Friday (August 2).
MoneyGram is one of the largest global money transfer companies. It is based in United States, and its headquarters is in Dallas, Texas. MoneyGram operates in more than 200 jurisdictions with nearly 350,000 global agent locations.
MoneyGram's Strategic Partnership With Ripple
On June 17, MoneyGram issued a press release that stated that it had signed an agreement with cross-border payments specialist Ripple that would allow MoneyGram to use Ripple's XRP-powered product xRapid as part of MoneyGram's "cross-border payment process."
The announcement also mentioned that:
- this partnership would initially be two years;
- Ripple would become MoneyGram's "key partner for cross-border settlement using digital assets";
- Ripple had made "an initial investment of $30 million in MoneyGram equity";
- Ripple had "purchased the newly-issued common stock (including the shares underlying the warrant) from MoneyGram at $4.10 per share" (which was significantly higher than MoneyGram's stock price at the time); and
- MoneyGram has the option to make Ripple invest another $20 million (again, paying $4.10 per share).
The press release also nicely described MoneyGram's motivations for wanting to upgrade the technology for its cross-border payments process:
Today, 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.
This would be by far the largest ever real world use of xRapid ("a solution for on-demand liquidity, which reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency") in production. xRapid uses XRP, which is the "native digital asset of the XRP Ledger", as a "real-time bridge between the sending and receiving currencies."
Ripple CEO Brad Garlinghouse told Fortune:
This will eliminate the need to deploy foreign bank accounts. That’s why MoneyGram has negative working capital. It will help customers and also smooth out their treasury operations.
MoneyGram's Use of Ripple's xRapid Product and the XRP Cryptocurrency
On Friday, MoneyGram announced its second quarter of 2019 results. During the prepared statements section of the earnings call—which is "a conference call between the management of a public company, analysts, investors, and the media to discuss the company’s financial results during a given reporting period, such as a quarter"—MoneyGram Chairman and CEO Alex Holmes had some interesting things to say about Ripple, xRapid, and XRP. (The Seeking Alpha website has the full transcript of this earnings call.)
Regarding the strategic partnership with Ripple, Holmes started by saying that this was one of the "three important achievements" that helped MoneyGram improve its "long-term capital structure and credit standing."
Next, he said that MoneyGram had started "transacting on the Ripple xRapid platform" earlier that week and that "all signs point to this being a tremendously beneficial relationship for all parties involved."
Even better was how the MoneyGram CEO expressed his excitement about xRapid:
We're literally settling currencies in second, and to quote my friend Larry, this is really cool.
Finally, he said that this partnership with Ripple will help improve MoneyGram's settlement engine and that MoneyGram's innovations lab "continues to explore new and exciting use cases for crypto, DLT and blockchain as we look to build the business model of the future."
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