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FreedomGundam

Is Earthport purchase by Visa Good News?

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24 minutes ago, Yodaxrp said:

There's enough evidence about a running cooperation Earthport-Ripple. What we do not know at this stage are Visa's intentions. IMO it would be silly to spend usd 250m to just kill the above cooperation, so I'm confident (doesn't mean sure) there'll be an indirect cooperation Visa-Ripple.

I am sure there are strategic considerations and depending on the progress Earthport has booked with Ripple, they might have acquired the the entity with the idea to have them as frontrunner to lead VISA's transition for cross border payments to the modern age.

Who knows, at the moment it's all speculation and all we know is that VISA acquired a company that uses Ripple product, which is nice, but correlation does not imply causation. 

 

 

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4 hours ago, RikkiTikki said:

What particular reason would Visa be remotely interested in Earthport?

That's the question. I don't know the answer but what I know for sure is that Earthport plc (EPO.L) used to be performing poorly financial wise while they were focusing on growing their business. Visa sought Earthport as an interesting growth company and/or as a threat to their business which is why Visa paid almost 4x premium of the stocks of Earthport. This is very high premium imo. Visa basically wanted to buy Earthport at any cost.

https://finance.yahoo.com/quote/EPO.L/financials?p=EPO.L

[page 31]: https://www.earthport.com/wp-content/uploads/2018/12/252513-Earthport-RA-WEB.pdf

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3 hours ago, mistatee2000 said:

Hank Uberoi, the Executive Chairman at Earthport doesn't tweet alot. The following tweet does not confirm their on-going relationship with Ripple, but why would he congratulate team Ripple in Nov

Also alot older I know, but shows his enthusiasm for Ripple

 

good finding. thanks

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1 hour ago, hallwaymonitor said:

That's the question. I don't know the answer but what I know for sure is that Earthport plc (EPO.L) used to be performing poorly financial wise while they were focusing on growing their business. Visa sought Earthport as an interesting growth company and/or as a threat to their business which is why Visa paid almost 4x premium of the stocks of Earthport. This is very high premium imo. Visa basically wanted to buy Earthport at any cost.

https://finance.yahoo.com/quote/EPO.L/financials?p=EPO.L

[page 31]: https://www.earthport.com/wp-content/uploads/2018/12/252513-Earthport-RA-WEB.pdf

Well, this is confusing if Visa want to use Ripple, why they not contact directly?

And they pay a lot for earthport. Visa can get better deal if they talk to Brad directly

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34 minutes ago, FreedomGundam said:

Well, this is confusing if Visa want to use Ripple, why they not contact directly?

And they pay a lot for earthport. Visa can get better deal if they talk to Brad directly

I think it is very likely that Visa does not want to use Ripple's software at least any time soon. Instead, they want to do their own thing with VisaNet.

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3 hours ago, FreedomGundam said:

Well, this is confusing if Visa want to use Ripple, why they not contact directly?

And they pay a lot for earthport. Visa can get better deal if they talk to Brad directly

(Assuming they understand what's happening) They are not trying to simply plug into RippleNet, they are trying to become a hub node in the IoV.. which includes being connected to RippleNet.

I'm somewhat guessing here, but I think Earthport was already functioning as a key hub node within RippleNet. Enabling transactions to "multi hop" around XRPLedger if necessary. 

The thing that's weird or not in alignment that I see, is that I think Earthport has floated capital in all their operational fiat markets, while Visa does not float capital, they only provide the messaging layer of a transaction. 3rd party liquidity providers float the capital for the time between transaction and settlement.

Maybe they view Earthport as a messaging hub? You could potentially open up some arbatrage opportunities with the data flow through a messaging hub.

4x screams "strategic acquisition" which may imply they had some realization that the current business model is exposed to a new attack vector, or risk type. 

3 hours ago, hallwaymonitor said:

I think it is very likely that Visa does not want to use Ripple's software at least any time soon. Instead, they want to do their own thing with VisaNet.

They will want to become the biggest possible node in the new domain of the IoV.

This includes joining RippleNet, in addition to developing other private path connections enabling value to flow through your node and end up faster at more places.

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The purchase was a steal for Visa to be honest. Earthport had a tough 2018 and CEO was replaced back this summer who also brought changes including ex-Visa employee into the board. Visa saw a wounded animal, seized the moment and sunk their teeth in. I don't believe Visa wants anything to do with Ripple as the former sees the latter as a competitor. 

Correspondent banking has seen a decline for a while now from incumbents and Visa is positioning itself to take on the empty seats left by the big banks. Its odd that the demand for correspondent banking is on the rise but the old guards are walking away. Is it the stringent regulations and capital requirements forcing banks to pull back and refocus? Banks surely can't be fighting wars home and abroad. They are taking a beating from Digital banks at home and now digitisation is about to take their grounds in the cross border battlefield

If it wasn't Earthport then Visa surely would have looked elsewhere as they need the infrastructure and it was a lucrative deal to acquire a company that had a tough year so shares were on the cheap. 

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9 hours ago, hallwaymonitor said:

Visa sought Earthport as an interesting growth company and/or as a threat to their business which is why Visa paid almost 4x premium of the stocks of Earthport. This is very high premium imo. Visa basically wanted to buy Earthport at any cost.

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.

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18 hours ago, GrayFox said:

Its odd that the demand for correspondent banking is on the rise but the old guards are walking away. Is it the stringent regulations and capital requirements forcing banks to pull back and refocus?

I think the biggest factor why banks have been "walking away" from cross-border payments is simply their lack of fintech innovation. The banks basically have SWIFT and that's it. SWIFT has been outdated for a long time already and that's why there are bunch of other companies (PayPal, Master Card, Visa, AMEX, TSYS, First Data Corporation and whatnot) that basically do the heavy lifting of the cross-border payments IMO.

https://www.quora.com/How-do-PayPal-MasterCard-and-Visa-work

RippleNet is supposed to be the SWIFTNet killer. I wonder will this jeopardize the business model of those above companies as well?

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16 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.

If there were other bidders then they probably were the biggest competitors of Visa such as Master Card and AMEX. The latter is already RippleNet member. :)

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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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