Burning 40 million a year! Ripple pays MoneyGram $15.1 million in "development fees" with XRP

Ripple's official partner MoneyGram recently released its second-quarter report, in which Ripple paid $15.1 million to MoneyGram in the form of Ripple's cryptocurrency XRP. Despite the potential for Ripple's long-term profitability from token sales, XRP has performed well since July, with a gain of over 50%, and is set to challenge its previous high in February.

Ripple's "Market Development Fee"

Last Thursday (7/30), the international remittance service provider "MoneyGram" released its second-quarter report. Despite the uncertainty brought to the global financial system by the novel coronavirus, MoneyGram performed strongly in the second quarter with a 109% year-on-year increase in transaction volume.

The report indicated that MoneyGram's revenue in the second quarter was $22 million, which included $15.1 million worth of Ripple's XRP. After deducting related transaction fees, there were still approximately $8.8 million worth of XRP. Overall, Ripple paid MoneyGram four installments of funds in their partnership:

• Q3 2019: $2.4 million
• Q4 2019: $8.9 million
• Q1 2020: $16.6 million
• Q2 2020: $15.1 million

Totaling $43 million, not including Ripple's $50 million investment in MoneyGram in June last year, which included $30 million to purchase 10% of MoneyGram's shares at $4.10 per share. MoneyGram referred to the funds from Ripple in the second-quarter financial report as "Market Development Fee."

Ripple had previously explained that the "Market Development Fee" would facilitate the adoption of its On-Demand Liquidity (ODL) platform. MoneyGram defined this fund as compensation for "providing liquidity to the ODL platform," claiming that they have been using ODL in global remittance business since last year, using XRP as the transaction medium for cross-border payment settlements.

XRP Price Surged Significantly in the Second Quarter

Ripple has been embroiled in controversies over selling tokens, with the company controlling 55% of the total circulating supply, which has been criticized by the crypto community. Despite this, Ripple's XRP performed well in the second quarter, trailing slightly behind Bitcoin's price surge.

Furthermore, after entering July, Ripple's price surged by 67.34% before the deadline, reaching $0.294, while Bitcoin's surge in July stood at 22.09%.

Ripple Still Below Historical High by 90%

However, comparing their historical highs, Bitcoin is about 40% below its peak, while Ripple is still more than 90% down from its peak of $3.43 on January 5, 2018.

According to Ripple, the ODL platform converts the sender's currency into XRP, transfers it using XRP, and then converts it into the target currency for efficient real-time settlement. By further promoting the ODL platform to foreign exchange activities through MoneyGram, the possibility of adoption is enhanced.