User Fees! Ripple paid $11.3 million in market development fees to MoneyGram.

According to the latest document released, decentralized ledger startup company Ripple has paid $11.3 million market development fee to remittance company MoneyGram to utilize its payment system RippleNet.

Ripple Pays Market Development Fees to MoneyGram

The document describes the amount as "revenue from Ripple," with $11.3 million coming from the fourth quarter of 2019, $8.9 million, and $2.4 million from the third quarter. MoneyGram stated in a release:

"Total revenue was $3.237 billion, down 6% compared to the fourth quarter of 2018. Total revenue does not include the $8.9 million revenue from Ripple, which, as per recent negotiations with the U.S. Securities and Exchange Commission (SEC), will be treated as a hedge expense rather than revenue,"

Based on past earnings call discussions by MoneyGram, the so-called "revenue from Ripple" appears to be market development fees that Ripple paid to MoneyGram for using its payment network RippleNet. MoneyGram CFO Lawrence Angelilli mentioned this revenue during the third-quarter earnings call on November 1, 2019. According to the public transcript from that time, Angelilli stated:

"We are compensated for developing and bringing liquidity to these markets and providing a reliable level of funding by engaging in foreign exchange trading on a daily basis. We recognized this revenue for the first time in this quarter."

MoneyGram Satisfied with Collaboration

MoneyGram CEO Alex Holmes expressed satisfaction with the partnership during the earnings call, stating that the remittance company would continue to expand its use of the Ripple platform in the coming year.

"I am very pleased with our partnership with Ripple and the success we have achieved. Our transaction volume continues to grow, and we are working to expand services to more corridors. I am also pleased to announce that we plan to integrate RippleNet into our account-to-account transfer system in 2020. This new integration will further accelerate our progress towards achieving real-time global settlement."

The collaboration between MoneyGram and Ripple was announced in June last year. At that time, Ripple made a $50 million investment in MoneyGram for the partnership, including purchasing newly issued shares of the company at $4.10 per share, a price significantly higher than MoneyGram's market valuation at the time. Following this investment, MoneyGram also agreed to use XRP as a settlement tool in its core remittance business.

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