Visa's Acquisition of Earthport is Possible Big Win for Ripple Labs

Visa, a global payments technology company, acquired Earthport, London headquartered firm that facilitates cross-border transactions for banks and businesses, for USD $250 million.

Visa has paid four times the price of Earthport shares, according to Reuters. Visa International Service Association, a unit of Visa, has offered 30 pence for each Earthport share, a price that is four times the stock’s Monday closing price of 7.45 pence.

Earthport and Ripple Labs 

Earthport has been a partner of Ripple Labs since 2015. The deal enabled Earthport to handle real-time transactions and allowed local banks and clearing systems to send funds into another person's bank account without going through a correspondent bank. Earthport currently offers its services in 88 countries.

As announced in January 2016, Earthport Distributed Ledger Hub for multiple ledgers is a service accessed through Earthport’s Distributed Ledger Gateway. The new hub offers the single API (Application Programming Interface) is a convenient way for banks to access Ripple's distributed ledger protocol with all services, conducted entirely in Fiat currency.

Earthport quoted to Reuters that it offers a lower-cost alternative to traditional payments systems by allowing banks and money transfer firms to have a single relationship instead of multiple ties with various payments channels around the world.

Recently, in November 2018, Earthport has become the best cross-border payments solution at the 2018 Payments Awards.

Possible Outcome of Earthport Acquisition

The volume of cross-border payments, or transactions that involve parties in two or more countries, rose 10 percent in the 2018 fiscal year, Visa said in October. Considering the importance of cross-border payments in Visa's business, it is quite possible that they will leverage Earthport's Distributed Ledger Hub to bring efficiency to their own remittances. This means indirect use of Ripplenet and the xRapid system.

Ripplenet and the xRapid system has a network of over 100 financial institutions in 40 countries and 6 different continents. Earthport’s global ACH network settles cross-border payments in 88 countries locally and offers a cost-efficient, viable alternative for international payments allowing access to emerging and developing economies around the world.