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OFX share price storms higher on Link partnership news

In morning trade the OFX Group Ltd (ASX: OFX) share price has stormed higher following the release of a positive announcement.

At the time of writing the shares of the global provider of online international payment services are up 6% to $1.52.

What did OFX announce?

This morning OFX announced that it has formed an exclusive strategic partnership with Link Administration Holdings Ltd (ASX: LNK) to become its preferred partner in Australia for international payments such as dividends and corporate action payments on Link’s Investor Centre platform.

The release explains that this arrangement will make it easier and cheaper for offshore investors who hold investments in listed Australian companies that use Link as their register, to transfer their funds internationally.

According to the release, the partnership will provide Link with an end-to-end digital cross border payments solution, supported by industry-leading service, that will improve each part of the payment journey from client onboarding to execution and settlement.

In addition to this, investors will benefit from cheaper, simpler and more convenient cross border payments in over 55 currencies and will have access to OFX’s local and global payment specialists and its secure online platform.

Management advised that the partnership will run for an initial term of 5 years from March 2020 and is expected to generate approximately $5 million in annual Fee & Trading Income by FY 2022, subject to the number of new active clients.

Before then, the partnership will be supported by a capital expenditure investment of approximately $2 million in FY 2020. This will be funded by its cash reserves.

OFX’s CEO and Managing Director, Skander Malcolm said: “We are delighted to partner with a well-known and trusted company like Link. Our exclusive strategic relationship will make international payments simple and great value for their clients’ offshore investors. Our leading digital platform provides competitive pricing, control and visibility of international transactions while our global support network provides best-in-class service. Combined with Link’s reach, this will enable clients to benefit from a considerably better experience, not just for their dividends and share sales but for all their cross-border transactions.”

“The Link partnership is an important part of our growth strategy as we continue to focus on expanding our Enterprise partner solutions and provides another way to build our base of active customers. We are also in discussions with Link about expanding the partnership to include a wider reach of its clients and their investors,” Mr Malcolm added.

Whilst this is a positive for OFX, it certainly isn't a game changer at this point. As a result, I would still choose these top shares ahead of it. I believe they have stronger growth potential and are more attractively priced.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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