The X Factor contestant was first linked to Hagan back in October, when they were said to be exchanging 'steamy' text messages.
He later told The Xtra Factor that he "met her and banged her", to the shock of presenters Caroline Flack and Olly Murs.
However, the Celebrity Big Brother runner-up has since claimed that the relationship was set up for publicity, with Hagan's management team offering him the money for the pair to kiss in front of photographers.
"I got a grand off Holly's agent for kissing her in the street. They gave me the money that night for doing it. I just did it because I was pissed, to be honest," Cocozza told the Daily Star Sunday.
"The next day I regretted doing it. I know a lot of celebs set up pap shots on a regular basis and make money from it but I'm not normally into that. I just did it the once."
An TV insider told the paper: "Frankie was on The X Factor at the time, so he was very hot property. He was on the front page of the papers almost every day. It's no surprise a reality star like Holly would want to cash in on that by being seen with him.
"A grand was a small price to pay for the publicity. Anyone who watches Geordie Shore knows how much Holly likes sex. She's always talking about being horny and asking her co-stars to get in bed with her."
Hagan later discussed her night with Cocozza in the tabloids, rating him as a "four out of ten in bed".
The rest of the Geordie Shore cast recently told Digital Spy that they are still angry with Cocozza for revealing the fling on live TV.