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Is Earthport purchase by Visa Good News?

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Visa makes 10 billion a year net, 250 million is one weeks net income.

They process over 11 trillion USD a year and fastest growth is in cross-border and corporate payments. They are much bigger than Mastercard, Amex, JCB and Diners combined. Much bigger.

They have clearly addressed developing countries’ economies lack of banking infrastructure and they focus heavily on low-cost, low-value payments. In India alone they have more than 700.000 scan-to-pay points, and the amount seems to be growing everywhere, based on ”reading between the lines” myself.

Visa pays out everyday 930 million USD. Most of these are paid to their 15.900 Financial Institute clients globally. They have more than 7.5 billion USD worth of cash reserves on their bank accounts around the world to cover all these expenses.

in US these payments are settled same day but internationally there is 2 day delay. Nothing is more important for corporates than steady and predictable cashflow, nothing! 

Using RippleNet without XRP, they can message these payments in seconds, removing 2 day delay on international settlements, which is good.

Using RippleNet and XRP, they can instantly buy local currency from an exchange when needed and free 6.5 billion USD worth of funds to more profitable use

A minimum 1 billion more in gains per year, and this is very conservative estimate.

 

So...my answer to original guestion if this is good or bad, I see this being extremely good.

 

No matter what they call their service, being it RippleNet or VisaNet, to fully benefit from their newly acguired connections with Earthport, they need to source liquidity from either their own prefunded foreign currency reserves or XRP, since there are no other options available at all.

The more time goes by, the more mature, less volatile, more stable and more valuable XRP will be. Visa starting an own coin and building value to it, to be used as liquidity between currencies and tokens and who knows what there will be in 5 years time, is just not worth it. We all know how violent and volatile these early years are for any coin, including XRP.

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32 minutes ago, P3T3RIS said:

Visa makes 10 billion a year net, 250 million is one weeks net income.

They process over 11 trillion USD a year and fastest growth is in cross-border and corporate payments. They are much bigger than Mastercard, Amex, JCB and Diners combined. Much bigger.

They have clearly addressed developing countries’ economies lack of banking infrastructure and they focus heavily on low-cost, low-value payments. In India alone they have more than 700.000 scan-to-pay points, and the amount seems to be growing everywhere, based on ”reading between the lines” myself.

Visa pays out everyday 930 million USD. Most of these are paid to their 15.900 Financial Institute clients globally. They have more than 7.5 billion USD worth of cash reserves on their bank accounts around the world to cover all these expenses.

in US these payments are settled same day but internationally there is 2 day delay. Nothing is more important for corporates than steady and predictable cashflow, nothing! 

Using RippleNet without XRP, they can message these payments in seconds, removing 2 day delay on international settlements, which is good.

Using RippleNet and XRP, they can instantly buy local currency from an exchange when needed and free 6.5 billion USD worth of funds to more profitable use

A minimum 1 billion more in gains per year, and this is very conservative estimate.

 

So...my answer to original guestion if this is good or bad, I see this being extremely good.

 

No matter what they call their service, being it RippleNet or VisaNet, to fully benefit from their newly acguired connections with Earthport, they need to source liquidity from either their own prefunded foreign currency reserves or XRP, since there are no other options available at all.

The more time goes by, the more mature, less volatile, more stable and more valuable XRP will be. Visa starting an own coin and building value to it, to be used as liquidity between currencies and tokens and who knows what there will be in 5 years time, is just not worth it. We all know how violent and volatile these early years are for any coin, including XRP.

I agree and would add that there will be one Internet of Value just as there is one World Wide Web.  Every financial company will have its face on the IoV and will interact using the protocols of the ILP or die.  This is a nod in that direction.  Very good news, everything is happening very fast.

Edited by Julian_Williams

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23 hours ago, GiddyUp said:

This was my thought as well, for some reason they didn't simply buy them out at par value, or 2x the stock price, but paid 4x the going price of the stock? W the absolute F? I can only think that there must have been other bidders - I'd be curious to know who they were.

Most likely MasterCard.

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25 minutes ago, Nohut said:

Why going throu Earthport to get to Ripple? Why not going straight to Ripple?

One weeks profits vs building an own network, hiring managers and staff, training them, opening bank accounts for this use and what else...

I do not know how fast and easy it is for Visa to open bank accounts all across the world, but what I know from my previous experience, it is a nightmare. No matter if you are Visa, it takes time to make it all happen. Now they got it all in one deal.

I know I might be wrong, but first mover advantage plays big role when taking more marketshare from competitors and keeping them out.

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1 hour ago, Nohut said:

Why going throu Earthport to get to Ripple? Why not going straight to Ripple?

Earthport has a preferential deal with Ripple that predates exclusivity contracts. Earthport was one of the first Ripple gateways

The value of said deal to whomever owns the contract  increases proportionally to the volume of transactions being done this way. 

You can put the rest together 

Also earthport infrastructure is valuable in right hands and that alone would cover cost of the deal .

Edited by Atomic1221

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8 minutes ago, P3T3RIS said:

And thanks Yoda for your post. Feels good when people don’t agree with me but still reply like an adult.

You're welcome mate! But in this case I 120% agree with you. Perhaps I didn't explain me in a proper way...english in not my mother tongue:rolleyes:

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This is still non-conclusive, but I found a Cooperation Agreement deep in the Google search results which has some insight into the reasoning of the acquisition. 

https://s1.q4cdn.com/050606653/files/doc_downloads/proposal-earthport/Edge-Cooperation-Agreement-(Conformed-Copy).pdf

Quote

Pg. 36 - Background to and reasons for the Offer

...Bidco believes that Earthport can complement the development of the Visa payment solutions and intends to use its resources to help Earthport grow.

Quote

Pg. 37 - Background to and reasons for the Recommendation

...Over the summer of 2018 Earthport put in place a new executive team to guide the Company through the next phase of growth of the business. The first task set out for the new executive team was a full strategic review of every part of the business and operations from end-to-end, assessing the strengths and weaknesses of the organisation, core and non-core activities, and the opportunities and threats the Company faces. The results of this review underpinned a resetting of Earthport’s strategy including a redefined "go to market", investment into the technology platform, a new operating model for scale, and capability enhancement.

 

Edited by ShiftyMitch
Realized this PDF is a merged document. The PDF page numbers were updated.

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7 hours ago, Atomic1221 said:

Earthport has a preferential deal with Ripple that predates exclusivity contracts. Earthport was one of the first Ripple gateways

The value of said deal to whomever owns the contract  increases proportionally to the volume of transactions being done this way. 

You can put the rest together 

Also earthport infrastructure is valuable in right hands and that alone would cover cost of the deal .

Not all contracts are assumed during closing. So don't ever assume a takeover means business as usual. We have no idea what contracts will be terminated by Visa after closing, if any.

Edited by TheXRPer

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