Blockchain startup Ripple and money transfer company MoneyGram have announced that the former is buying a stake in the latter.
MoneyGram shares were $1.45 apiece at the close of day, meaning Ripple paid close to three times their current market value.
Under the terms of the deal, MoneyGram will also have the option to sell an additional $20 million worth of shares to Ripple at the same price within the next two years.
Lower fees, faster settlements
On MoneyGram’s side, the money transfer giant will be folding Ripple’s digital token XRP into its day-to-day operations via Ripple’s xRapid payment liquidity solution.
“It’s imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B,” MoneyGram CEO Alex Holmes said in a statement.
“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”
By using xRapid, Ripple and MoneyGram estimate a massive drop in settlement fees, from $30 per transaction to mere fractions of a penny. Settlement times are also expected to drop from as long as an hour to just a few seconds.
“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,” Ripple CEO Brad Garlinghouse told Fortune.