Blockchain-based payments and cryptocurrency pioneer Ripple has agreed to enter into a strategic partnership with MoneyGram, one of the world’s largest money transfer companies.

Under the terms of the deal, Ripple becomes MoneyGram’s key partner for cross-border payment and foreign exchange settlement using digital assets.

The partnership has an initial term of two years and Ripple will provide a capital commitment to MoneyGram, allowing the company to draw up to US$50 million in exchange for equity over the two-year period. The news of lifted MoneyGram’s share price, which has recently traded at below $1.50 against a high of nearly $18 in April 2017.

Ripple is initially investing $30 million to buy shares and a warrant to buy common stock at $4.10 a share. MoneyGram can also opt to let Ripple invest a further $20 million at a minimum price of $4.10 per share.

XRP and xRapid

The partnership builds on a pilot begun last year and will see MoneyGram use Ripple’s XRP digital currency in payment flows through its xRapid payment network in an effort to make money transfers cheaper and speedier. xRapid is a solution for on-demand liquidity and reduces reliance on pre-funding by enabling money to be sent from one currency and instantly settled in the destination currency.

Alex Holmes, MoneyGram’s chairman and CEO said: “As the payments industry evolves and matures, 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.

“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 revolutionise our operations and dramatically streamline our global liquidity management.”

MoneyGram serves millions of customers in more than 200 countries and territories, supporting multiple currencies. The strategic partnership will enable the company to settle key currencies and match the timing of funding with its settlement requirements.

Brad Garlinghouse, CEO of Ripple, added: “This strategic partnership will enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency.

“This is a huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies.”