Ripple Invests Another $20 Million in XRP User MoneyGram

Siamak Masnavi

MoneyGram International ("MoneyGram"), one of the world's largest money transfer companies, says that Californian FinTech firm Ripple has made another $20 million investment in MoneyGram equity to help MoneyGram continue increasing the volume and use of Ripple's XRP-powered product "On-Demand Liquidity" (ODL).

Ripple announced on June 17 that it had entered into a strategic partnership with MoneyGram. According to the terms of this deal, Ripple would make an initial investment of $30 million in MoneyGram by acquiring shares at a price of $4.10 per share (or roughly three times the market value). During the next two years, MoneyGram had the option to make Ripple invest another $20 million (again, paying $4.10 per share).

Well, on Monday (November 25), MoneyGram announced that Ripple had "made the final $20 million investment in MoneyGram equity", with Ripple paying $4.10 per share for the newly-issued MoneyGram equity; MoneyGram common stock (ticker: MGI) closed at $3.00 on November 25.

This latest investment by Ripple means that Ripple will "own 9.95 percent of the outstanding common stock of MoneyGram, and approximately 15 percent on a fully-diluted basis including non-voting warrants held by Ripple."

MoneyGram also said in its press release that this funding "will support MoneyGram's operations as the company continues to increase volume and use of On-Demand Liquidity, Ripple's product that leverages the digital asset XRP to send money globally, instantly and reliably for fractions of a penny. "

Alex Holmes, MoneyGram Chairman and CEO, had this to say:

"Our partnership with Ripple is transformative for both the traditional money transfer and digital asset industry - for the first time ever, we're settling currencies in seconds. This initial success encourages us to expedite expanding our use of On-Demand Liquidity. Partnerships with companies like Ripple support innovation and allow us to invest in creating better customer experiences. I anticipate furthering our growth into new corridors and exploring new products and services."

According to a blog post by Ripple on November 8, on day two of the two-day Swell 2019 conference (November 7–8) in Singapore, Holmes talked to Ripple CEO Brad Garlinghouse about MoneyGram's experience with using Ripple's ODL product for cross-border transactions.

First, Holmes talked about the global remittance market:

"What has amazed me the most is the amount of pressure that legacy players face.The fundamental challenge of moving money around the world is that there isn’t a lot of coordination between financial institutions and there should be more solutions to connect all of these pieces. More and more companies are looking to make the economy move like it should."

Next, the MoneyGram CEO talked about how his company's innovations lab is helping MoneyGram explore the use of emerging technologies for improving the company's services:

"We’re migrating our legacy systems to the cloud and looking at how we can use blockchain distributed ledger technology to improve our core systems."

His most interesting comments though were about Ripple's ODL product, which uses XRP as a bridge currency for cross-border payments:

"What I love about ODL is that we’re completely at the forefront of this technology … We’re able to settle billions of dollars in seconds. The magic really comes from pairing MoneyGram transactions with Ripple’s ODL."

According to Ripple, the MoneyGram CEO also announced on stage at Swell 2019 that "the company is currently moving 10% of its transaction volume through ODL between the United States and Mexican borders and planned to expand into four more corridors by the end of this year."

In yesterday's press release, MoneyGram says that it has "already started transacting in four additional cross-border corridors, including Europe, Australia and the Philippines since the partnership with Ripple was announced in June 2019. 

As for Ripple CEO Brad Garlinghouse, he stated:

"Last month, we announced that MoneyGram began using On-Demand Liquidity for payments to the Philippines, and we're excited to support MoneyGram's further expansion into Europe and Australia. Digital assets and blockchain technology have the potential to make a tremendous impact on cross-border payments - MoneyGram and Ripple is an example of that."

Featured Image Courtesy of Ripple