MoneyGram (NASDAQ:MGI) has received over US$11 million in the last six months from Ripple in what was described as “Ripple market development fees.”
A partnership between the money remittance company and the crypto services firm was first announced back in June when Ripple agreed to provide MoneyGram with US$50 million in order to support its payments product, On-Demand Liquidity, or xRapid, as it is sometimes referred to as.
The US$11.3 million sent MoneyGram’s way over the last months is broken up into two quarters, US$2.4 million in Q3 and an additional US$8.9 million in Q4. The Q4 payment, described as a “financial benefit” by MoneyGram, was not included in its most recent earnings report. Instead, it was accounted for as a contra expense in its operating expenses, which required the company to restate its revenue down by US$2.4 million but cut operating costs by the same amount, leaving earnings unchanged.
MoneyGram had previously been filing the investments as revenue but was instructed to refile as operating expenses at the recommendation of the SEC.
“The Company is compensated by Ripple for developing and bringing liquidity to foreign exchange markets, facilitated by Ripple’s blockchain, and providing a reliable level of foreign exchange trading activity. The Company expects that this partnership, at scale, will reduce our working capital needs and generate additional earnings and cash flows,” read MoneyGram’s Q3 earnings report.
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Interestingly, the payments made to MoneyGram are actually paid out in XRP, Ripple’s native token. The crypto firm sells XRP tokens from a vast escrow account on a monthly basis, with CEO Brad Garlinghouse admitting that the company would not be where it is today without doing so. MoneyGram then sells the tokens upon receipt, which implies that the more professional users XRP attracts, the more tokens will be sold on the open market.
The agreement between MoneyGram and Ripple is slated to run until 2023.
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