MoneyGram stock is the biggest percentage gainer on the Nasdaq after MoneyGram International Inc (NASDAQ:MGI) signed a deal with Ripple (XRP).
Big Boost for MoneyGram
In a development that would come as a major boost to Ripple and the cryptocurrency XRP, the company announced on Monday that it had reached a deal with money transfer giant MoneyGram. According to the terms of the deal, Ripple will invest $50 million in MoneyGram International, while the money transfer company will use the cryptocurrency XRP for transferring money worldwide. It is a major development for Ripple since it is one of the very few deals in which a major cryptocurrency is being adopted by a reputable company.
As per the deal, Ripple will pick up an 8% to 10% stake in the money transfer company through an investment of $30 million. The company is paying $4.10 a share to MoneyGram. The residual $20 million could be invested in the next two years.
MoneyGram stock is reacting positively and now up 125% at $3.25.
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Crypto Craze
Ripple has often stated that the cryptocurrency XRP and the product XRapid could open up a lot of value for financial institutions involved in sending money worldwide. XRP is defined as a bridge currency that could result in quick transfers, and in addition to that, institutions would not have to keep money in the form of collateral in overseas accounts either.
That being said, the announcement is a significant one for Ripple, and if the partnership with MoneyGram proves to be a success, then it remains to be seen if other institutions start using it or not.
Brad Garlinghouse, who is the Chief Executive Officer of San Francisco-based Ripple, explained how the use of XRP will help MoneyGram International. He said, “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.”
It is interesting to note that MoneyGram’s main rival, Western Union, had actually commissioned a pilot project with Ripple last year and stated that the use of XRP had not resulted in a lot of savings for them.
After today’s surge, MoneyGram stock is up about 50% so far in 2019.
Featured image: DepositPhotos © BiancoBlue
