MoneyGram, a global money-transfer firm, announced this week that it will now offer real-time peer-to-peer (P2P) direct deposit to Visa debit cards. Using the MoneyGram app or website, users can send money to any Visa debit card, using the 16-digit card number and expiration date.
We talked to MoneyGram executives, who described the company’s push into digital transactions, its efforts to rebrand their business, and how it’s playing catch-up in the P2P space.
You may recognize the MoneyGram logo from their money transfer locations found in nearly every country around the world. The firm has built a huge business moving customers’ money across borders. Say you wanted to send money from New York to a family member in Mexico City. You can go to a local MoneyGram and deposit dollars; your friend then visits their local MoneyGram and leaves with pesos.
“We’ve been unfairly branded as a cash-to-cash business,” said Chairman and CEO Alex Holmes. Through its partnership with Visa, MoneyGram is shifting its focus toward digital. “It’s possible that MoneyGram was late to the game in terms of the evolution of our product,” he said.
In the last 18 months, MoneyGram has increased its focus on digital. This includes a redesign of the website in the second quarter, and launching its own app late last year.
“The new look and feel is resonating extremely well,” said Holmes.
“You have to invest like crazy to make your product as relevant as possible to as many constituents as possible,” said Kamila Chytil, MoneyGram’s chief global operations officer. While digital payments only account for about 20% of global volumes, the firm is spending heavily on new technologies to compete with the growing demand for fast and easy P2P transactions.
Visa Direct technology provides both the infrastructure for near-instant payment processing, and a network of more than 1 billion Visa debit cards. There is a fixed $1.99 fee per transfer.
This service will only be available in the US for now, so MoneyGram will be competing in the same market as Venmo and Zelle.
“If you look at the success of Zelle and Venmo, you can clearly see there’s a huge need for the person-to-person payment platform,” said Holmes.
In July of last year, Venmo, the P2P money-transfer app owned by PayPal, introduced a branded debit card. The card, launched with Mastercard, has no fees associated with in-store and online purchases; there is a minimum $2.50 ATM withdrawal fee.
MoneyGram’s newest offering builds on an existing partnership with Visa. Last year, the company rolled out an initial phase of real-time deposits using Visa Direct technology. That phase targeted two key corridors: US to Mexico and US to Philippines transfers.
With declining revenue in 2017 and 2018, this new service offering may help MoneyGram stay competitive with the likes of PayPal, Venmo, and Zelle. MoneyGram’s stock was last trading around $6 a share, up from a one-year low of about $1.39 in May. Much of this price rise may be attributed to MoneyGram’s recent partnership with cryptocurrency startup Ripple, but the Visa partnership suggests MoneyGram’s digital focus may be starting to pay off.
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