MoneyGram is poised for growth

Dallas Morning News

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In Italy and the United Arab Emirates, MoneyGram consumers use their smartphones to transfer money to more than 190 countries.

In Saudi Arabia, customers send cash at any time using an ATM. At some grocery stores in the U.S., shoppers use a touch-screen kiosk to send money domestically and abroad.

As more of the world becomes tied to mobile phones, tablets and computers, MoneyGram International Inc. is looking to expand the ways customers send and receive money. In doing so, the money transfer company is using technology and other product innovations to position itself for growth in the electronic age.

“We want to make the arena we play in bigger by virtue of technology and product offerings,” MoneyGram chairman and chief executive Pamela Patsley said in a recent interview at the company’s Dallas headquarters. “That’s clearly mobile. It’s clearly kiosks. It’s online channels. “I think we’ve done a good job in being efficient and opportunistic about tackling new opportunities.”

In the past year, MoneyGram has inked deals for several products and services that marry brick-and-mortar operations with online capabilities as well as push its reach beyond cash-to-cash transactions. They include:

A deal with PayPal that will allow consumers to load and withdraw money from their online payment service accounts at a MoneyGram storefront. The new service will be piloted at MoneyGram’s U.S. locations in early 2013.

A partnership with Gemalto, an Amsterdam-based digital security company, that will allow MoneyGram customers to conduct international money transfers from their mobile devices and receive money directly on their mobile wallets.

An expansion of its online money transfer service to customers in the United Kingdom. That service allows users to send money using credit or debit cards and bank accounts.

By the end of the year, MoneyGram said, it also expects to roll out a mobile version of its website to make it easier for registered U.S customers to send money.

The company plans to launch a mobile application in early 2013.

Such efforts appear to be showing positive results.

In the past year, revenue from online, mobile and kiosk transactions has increased by double digits.

In the June-to-September quarter, revenue from those alternative channels grew 40 percent from a year ago. Overall, these transactions represented 5 percent of $291 million in money transfer revenue in the third quarter.

Revenue last year grew about 7 percent to $1.25 billion, and more than 80 percent of that came from its core global transfer business. The remaining sales were bill payment services, money orders and check business.

Brett Horn, an analyst at Morningstar, sees MoneyGram’s push into electronic channels as twofold.

For one thing, the company wants to be ready as more customers start using electronic money-transfer services. But given that traditional cash-to-cash transfers still make up a bulk of MoneyGram’s business, Horn expects the shift to happen slowly.

At the same time, electronic options are attracting new customers outside the company’s core customer base, many of whom are immigrants sending remittances to their home countries and people who do not have or use traditional bank accounts.

While MoneyGram has not disclosed what types of customers are using electronic and mobile services, Western Union has indicated that 80 percent of similar users are new customers, Horn said.

MoneyGram recently started putting self-service kiosks at U.S. retailers such as Albertsons Market where customers can make transfers without using a red phone to call an agent. They then pay for or receive money through a clerk.

The push into alternative money transfer sales, however, isn’t come risk-free.

As newer technology becomes available, Money- Gram faces increasing competition not only from industry leader Western Union but also smaller regional and niche players. MoneyGram is the second-largest global money transfer company.

Last month, MoneyGram agreed to pay $100 million to compensate victims of money transfer schemes carried out by some of its agents under a settlement with federal prosecutors.

With that settlement, Patsley believes MoneyGram has turned the corner in resolving its major legacy issues since she joined the company as chairman in early 2009 and became chief executive later that year.