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MoneyGram Chairman and CEO, Alex Holmes announced its Q3 results and has also talked about its amazing digital business performance that drove the performance of its impressive quarter. Looking at the disclosure of its financial interjections in the quarter, the report also mentions how Ripple has paid MoneyGram $9.3 million in its Q3.
The Q3 report said:
“The three and nine months ended September 30, 2020, include Ripple market development fees of $9.3 million and $41.0 million, respectively, partially offset by related transaction and trading expenses of $0.4 million and $11.2 million, respectively.”
It further said, “$8.9 million net benefits from Ripple market development fees of $9.3 million, partially offset by related transaction and trading expenses of $0.4 million.”
Last year in July 2019, Ripple forged a strategic partnership with MoneyGram, considered to be the world’s largest money transfer company. The partnership engagement has rendered Ripple to become MoneyGram’s key partner for cross-border payment and foreign exchange settlement using the digital asset. Ripple had also agreed to provide a capital commitment to MoneyGram that will enable the company to draw up to $50 million in exchange for equity over a two-year period.
The partnership of Ripple with MoneyGram stands very important as focussed initially on something called xRapid which is a solution for on-demand liquidity reducing much of the dependability on pre-funding by letting money be sent from one currency with instantaneous settlement in another currency. The partnership leverages the native digital asset of the XRP ledger acting as the link between the sending and receiving currencies.
“As the payments industry evolves and matures, it’s imperative that we continue to improve our platform and provide the most effective solution to get funds from point A to point B,” said Alex Holmes, MoneyGram Chairman, and CEO. “Through Ripple’s xRapid product, we will have the ability to instantly settle funds from US dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management.”
As for the inclusion of Ripple’s injected funds, MoneyGram has named it as market development fees in its earning report. The fees were initially included in the company’s revenue but last year the Securities and Exchange Commission recommended to classify them under contra expenses in March. In the second quarter, Ripple paid higher development fees. The Q3 fees are 38.4% lesser than what it paid in its previous quarter. Observing the earnings report, it can be seen that the net profit earned by MoneyGram also has increased thanks to a major reduction in the trading expenses.
In one of the interviews it had with CNN, the CEO of MoneyGram Alex Holmes has revealed that the company does not hold any XRP it receives. Ripple holds a 10% stake in MoneyGram after it had invested $50 million in the company. The partnership hopefully will salvage Moneygram and save it from delivering net losses quarter over quarter.