As part of the arrangement, MoneyGram will test the use of Ripple's cryptocurrency, XRP, to move funds in a faster and cheaper way.
Ripple, created by the founder of Bitcoin exchange Mt Gox, has risen 31,000 percent over the past year, overshadowing bitcoin's 1,200 percent increase.
XRP rose 13 percent to $13.38 (roughly Rs. 850) on Thursday, according to coinmarketcap.com.
Many see it as a close contender to Bitcoin, which is by far the biggest cryptocurrency with a market value of more than $250 billion (roughly Rs. 15.9 lakh crores).
XRP allows banks and payment companies to send money quickly, no matter the location. Its transaction fee, at just "fractions of a penny", is also comparable to bitcoin's $30 (roughly Rs. 1,900) per transaction fee.
Several companies such as UBS and Santander already use Ripple's products to enable payments. In November 2017, American Express Co also launched an instant blockchain-based payment system using Ripple.
China's Ant Financial's deal to buy MoneyGram for $1.2 billion (roughly Rs. 7,600 crores) collapsed last week.
© Thomson Reuters 2018