MoneyGram's second-quarter financial report reveals that Ripple paid the company more than $ 15 million in XRP. The report says the payment was an incentive to use Ripple's payment solution, On-Demand Liquidity (ODL). The payment was classified as "market development fees" in MoneyGram's financial report.
This is reportedly an incentive that Ripple has been paying MoneyGram for a while. In the first quarter, Ripple paid the sum of $ 16.6 million in incentives, more than in the second quarter. A MoneyGram official says the company does not own any XRP tokens and sells all the units it receives from Ripple. As of March 2020, MoneyGram had sold $ 11.3 million in XRP that it obtained from Ripple.
MoneyGram and Ripple partnered more than a year ago. As part of the agreement, MoneyGram uses Ripple's ODL solution to facilitate cross-border remittances. Ripple also has a 10% stake in MoneyGram, which was sealed with a $ 50 million investment in June 2019. MoneyGram has since been exploring ways to expand its use of ODL for payments to its customers.
Of the $ 15 million, the company claims it used $ 6.3 million in transaction expenses and only had $ 8.8 million as net income. Ripple's investment in MoneyGram has significantly helped promote the MoneyGram business. According to the financial report, the payments giant saw a 106% increase in digital transactions, and now represents 27% of its total transactions.
“The investments we have made in recent years have allowed us to build a fast growing digital business that not only has higher customer retention rates and productivity, but also outperformed the business during the quarter, offering higher margins in average. With digital now accounting for 27% of money transfer transactions, the business is making a significant contribution to our bottom line, ”MoneyGram CEO Alex Holmes said in a statement.