And while Western Union has a fairly developed digital platform, it recognized that adapting to new technologies "poses a challenge to our business" in its 2014 10-K filing. MoneyGram, for instance, doesn't even have a mobile transfer option yet. Nevertheless, it seems likely that digital-native, cross-border transfer firms will continue to exert pressure on the legacy players by forcing them to further develop digital products which are outside of their core service offerings. However, Western Union still generates the most. Xoom, founded in 2001, already generates more revenue from electronic channels than 70-year-old incumbent, MoneyGram. Xoom facilitates cross-border transfers via mobile and online, making its service more cost-effective, since it doesn't have to pay a commission to brick-and-mortar agents that originate the transfers for legacy remittance firms.Ĭompanies like Xoom are well positioned to continue disrupting this industry, as consumers across the globe continue to migrate to mobile and online channels. Meanwhile, Western Union continues to hold its own against new remittance startups, but is undoubtedly feeling pressure to bolster itself in any way it can. Acquiring MoneyGram and its 349,000 locations (as of the end of Q1 2015) would expand Western Union's retail network.Įven though Western Union has fared better than MoneyGram, both firms are facing increased competition from digital-native remittance companies like Xoom.
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To read more of my research on Payments, please sign-up for a trial subscription.Īlthough the deal is being sharply denied, it's still worth noting because MoneyGram's business has plummeted since the loss of its exclusive partnership with Walmart. This research post originally appeared on BI Intelligence. However, on Wednesday, Western Union stated that the merger rumors were "not accurate," shutting down the speculation.
The talks were in the nascent stages, and no deal specifics had been determined. Bloomberg Business initially reported the rumor, citing people who wished to remain anonymous. Rumors were swirling Tuesday that Western Union, the global remittance firm, was in talks to acquire MoneyGram, one of its longest-standing rivals.