Shares of MoneyGram International soared on Tuesday, following blockchain startup Ripple’s plans to invest in the company.
MoneyGram is a money transfer services company based in the U.S. Ripple has agreed to buy $30 million of MoneyGram's fresh shares at $4.10 a share. It might also purchase another $20 million at its discretion at a minimum of $4.10.
MoneyGram’s services encompass 200 countries and territories, with around $600 billion processed in the global remittance market.
Under the terms of the deal, MoneyGram will use Ripple’s XRP technology to process cross-border transfers of digital funds for at least two years.
With nearly $900 million in total debt, MoneyGram indicated that it is close to a refinancing of a loan and revolving credit facilities following the investment.
For Ripple, the deal could potentially spell a critical opportunity for it to prove the effectiveness of its crypto technology in lowering time and costs associated with fund transfers. It’s been a challenge for Ripple’s XRP crypto-currency in gathering steam in the digital coin space. As of Monday, XRP was trading at a little less than 43 cents a coin.