Yesterday, US-based money transfer service MoneyGram announced that blockchain firm Ripple completed the second $20 million investment tranche. Ripple purchased newly-issued shares from MoneyGram at $4.10 per share, a premium of over 36% to yesterday’s closing price.
Ripple also announced plans to extend its partnership with U.K.-based money transfer service TransferGo. The two collaborated in 2018 to introduce blockchain cross-border remittance to India, and will now expand the service to new markets in Southeast Asia, Latin America and Africa.
In June, Ripple announced MoneyGram had joined its cross-border money transfer platform. Ripple initially invested $30 million as part of a $50 million equity commitment. MoneyGram is interested in leveraging the On-Demand Liquidity (ODL) solution (previously called xRapid) which uses XRP to increase transaction volumes while reducing cost.
Ripple recently fused the xCurrent and xRapid branding into the RippleNet umbrella. The former is a messaging system competing with SWIFT, while the latter uses Ripple’s digital currency XRP for fund transfers.
“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,” said Alex Holmes, MoneyGram Chairman and CEO.
MoneyGram said 10% of its present Mexican Peso transfers use XRP. It has also started ODL transactions in four other cross-border corridors including Europe, Australia and the Philippines. The firm is one of the biggest money transfer service providers in the U.S., with a presence in over 200 countries.
With the total investment of $50 million, Ripple now owns 9.95% of the outstanding common stock of MoneyGram.
A few weeks ago, Ripple announced it passed the 300 customer mark on its RippleNet platform. On the other hand, ODL currently has 24 members, the majority of them money transfer firms including Viamericas, FlashFX, Interbank Peru and freelance firm goLance.
The U.K.’s TransferGo is another money transfer firm using Ripple’s technology.
Founded in 2012, TransferGo is headed by Daumantas Dvilinskas who made it to the Forbes list of 30 under 30 in 2017. The company is focused on a purely digital money transfer service and hopes to achieve faster transfer times by using RippleNet.
“TransferGo enables those recipients to get that buying power as quickly as possible. Ripple gives us a competitive edge in India, which is the largest global cross-border remittance market, and today we’re moving more than a couple of million pounds per year,” said Dvilinskas.
The traditional method for money transfer companies is to partner with a single bank at a time and set up numerous bank accounts around the world.
“We would link up directly with our bank partners, but each one had a different technology stack. Every integration was bespoke, which took up a lot of tech resources and was time-consuming,” said Dvilinskas.
He added, “With RippleNet we saw a scalable opportunity to have one integration for multiple partners, so we don’t have to redo it each time.”
TransferGo said its customers were able to save up to 90% of traditional fees for cross-border transfers by using blockchain. The company also launched a free service for people who don’t need instant transfers.
The latest announcements follow Ripple’s recent collaboration with Finastra to enable its high profile banking clients to use RippleNet.