MoneyGram doubles digital growth amid rumored Western Union deal
In a sign of the rapid shift to digital transactions, MoneyGram reported that its digital transactions grew by 100% in May, compared to the same time last year.
The increase highlights a continued acceleration of its clients transitioning to its digital channel even compared to the first quarter of 2020, which saw a 57% growth in digital transactions year-over-year.
The announcement comes on the backdrop of mounting pressures for Western Union to buy MoneyGram in a possible effort to help both companies survive the coronavirus crisis, as consumers are increasingly staying away from physical agent locations and opting to utilize online and mobile apps instead. Reports surfaced this month that Western Union was looking to acquire MoneyGram, according to Bloomberg.
"I'm excited to report that our strong digital growth continued to accelerate in May, highlighting yet again the incredible progress we've made as an organization to focus on our strategy to lead the industry in digitizing the movement of money," said Alex Holmes, chairman and CEO of MoneyGram Chairman in a press release. "Our digital business growth in May is particularly notable as we not only increased our active digital customer base, but also continued to see these new digital customers return and transact more frequently due to our seamless customer experience and global platform."
According to Yahoo Finance, MoneyGram Stock closed at $3.74 per share on Tuesday, leaving it with a market capitalization of just roughly $237 million. While up from $1.18 per share stock price and market capitalization of just $75 million on April 1, 2020 , it is still a far cry from the initial $880 million that China's Ant Financial offered to buy the company in 2017. When smaller rival Euronet entered a competing offer, Ant Financial was forced to raise its offer to $1.2 billion. Ultimately, the deal was scuttled in 2018 as it ran afoul of U.S.-China tensions.
At the time Holmes said of the failed Ant acquisition bid, “despite our best efforts to work cooperatively with the U.S. government, it has now become clear that CFIUS (Committee on Foreign Investment in the United States) will not approve this merger.”
In the intervening years, Kamila Chytil, chief operating officer at MoneyGram, has been very vocal about the company’s effort to shift from a heavily transaction-focused agent-centric model to one that was more digital and customer centric.
“We began communicating with our digital customers in a personalized way in their own language via emails, SMS and chat,” said Chytil. “It’s been a ton of work, but it’s paying off, and we’re seeing major growth in our digital business."
MoneyGram’s competitors such as PayPal’s Xoom, Remitly, WorldRemit, and Transferwise, have all been benefiting by largely being digital-only and partnering with companies such as Alipay and Visa to drive remittances through digital channels.