Ripple Takes $30M Stake in MoneyGram to Boost XRP Usage
Ripple will seek to acquire a 8-10% in MoneyGram, in a bid to popularize its payment system.
Ripple is aiming to build a share in its rival MoneyGram, paying $4.10 per share in a $30 million deal, reported Fortune. Ripple will have the option of investing another $20 million in the payment processor.
The deal is yet another chance for Ripple to use its xRapid payment protocol. The unique feature of xRapid is the possibility to transfer value without a bank account, by using the XRP asset.
“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 said in an interview with Fortune.
Ripple has reached out to multiple financial institutions, including Western Union, and also set aside significant XRP funds sent for experiments. So far, no bank has adopted any of the Ripple payment protocols in its official work. However, Ripple still believes there is a use case for the XRP asset.
The XRP coin was sent out in a series of airdrops, and the asset also had the name “Ripples”. However, Ripple Inc. resorted to rebranding after XRP was targeted for its dubious status and for potentially serving as unregistered security. Later, it became clear that the XRP asset was not essential to all of Ripple’s payment solutions.
XRP has been viewed with skepticism by the crypto community, as the payment system does not include an open, permissionless blockchain, but can be secured by a series of known servers in banks.
MoneyGram (NASDAQ:MGR) currently trades at $1.45, meaning Ripple paid a significant premium to acquire a larger share of the company. For that share, Ripple will receive an observer status on the company’s board, without decision-making rights.
MoneyGram itself has registered significant losses recently, becoming an easy target for buyouts. The payment processor fits the goal of some digital asset companies to reach the unbanked. But it remains to be seen if the xRapid protocol takes off within the company and is used for international remissions.
Following the news of the acquisition, XRP revived once again, moving up to $0.44.