Shares of the money transfer firm, MoneyGram, more than doubled on 18th June 2019 because of the news that the company further grew its partnership with blockchain and cryptocurrency start-up Ripple. According to reports, Ripple has agreed to invest up to $50m in the company.
Ripple had earlier said that it had made an investment of $30 million initially to acquire the shares of MoneyGram and a warrant to buy the common stock of the company. The price at that time was $4.10 a share which reflects quite a significant premium over the MoneyGram’s closing price on 17th June 2019 of $1.45. MoneyGram might also have the blockchain and cryptocurrency firm, Ripple, invest another additional $20m at a price of at least $4.10 a share.
As per the deal, MoneyGram will be using Ripple’s cryptocurrency, XRP, and Ripple’s platform, xRapid, which handles the transfers for XRP.
MoneyGram’s chief executive officer and chairman, Alex Homes, said, “As the payments industry evolves, we are focused on continuing to improve our platform and utilizing the best technology as part of our overall settlement process.”
The shares of MoneyGram have surged over 152 percent to $3.65 in the pre-market trading, which put the stock on track to hit the highest level since November 2018. The surge also marks MoneyGram’s top single-day rise, the last best gain was a 32 percent upward rally on 1st July 2009.
MoneyGram’s representative spoke about how this deal made with Ripple is likely to improve the procedure of cross-border payment transactions. MoneyGram so far relied completely on the forex markets to settle transactions, in this process the company requires its customers to buy the foreign currencies in advance.
Both the companies have already had a partnership, which was announced in the first month of 2018, where MoneyGram had launched a new program to test XRP’s usage. The latest collaboration’s initial term will be for two years.
Do you think that this agreement can leverage the blockchain technology as digital currencies enter the mainstream? Let us know in the comment section.