Western Union is preparing a deal to buy MoneyGram. Read my article how this acquisition can affect the financial market.
After the news about potential acquisition the Western Union (WU) stock rose by 11% and MoneyGram also recorded a spike of 38%. The acquisition is not confirmed officially, but there are positive reactions in the market.
MoneyGram International, Inc. is an American money transfer company based in the United States with headquarters in Dallas. It has offices around the world, in more than 200 countries. MoneyGram businesses are divided: Global Funds Transfers and Financial Paper Products. The company provides its service to individuals and businesses through a network of agents and financial institutions.
Benefits of acquisition
The two companies have been competitors for a long time but more recently have faced up to competition from other digital products. Western Union is the largest remittance service provider in the US worth of $8.6 billion. And as the Moneygram is the second-largest remittance service in the U.S, the union of these 2 fintech giants can control financial space and offer better products range and more attractive offerings. Let’s look back to the statistic Western Union brought in $4.4 billion in revenue from its consumer-to-consumer (C2C) segment in 2019, while MoneyGram recorded over $1.1 billion in money transfer revenue last year.
Both are launching more digital-focused features, like bringing agents online and enabling transfers to be sent to phone numbers. Their union can strengthen their presence in financial market leaving behind their competitors, like PayPal's Xoom, Remitly.
If MoneyGram and Western Union will join their networks of agent locations, they would build a huge reach that would make their services more convenient to consumers. Thus, they can attract even more customers which is very important now during post pandemic crisis.
MoneyGram and Ripple
As many people know Ripple owns about 10% of MGI stock (MoneyGram International Inc (NASDAQ: MGI). Ripple agreed to invest up to $50 million in MoneyGram as part of a two-year partnership. MoneyGram uses blockchain startup's XRP digital currency for cross-border payment and foreign exchange settlement. The acquisition can benefit Ripple as well.
Nowadays Western Union is testing Ripple’s Technology. If everything goes smoothly this could create a new paradigm for near-instant payments over the globe. The use of Distributed Ledger Technologies (DLTs) will change the speed of these transactions. Faster transactions will occur due to Ripple Lab’s Protocol Consensus Algorithm (RPCA).
So as the Western Union-Moneygram deal is moving forward we see a number of potential advantages for both. What do you think about potential deal between Western Union and Money Gram? Share your opinion in the comments below! If you have your question, please write it below, I would be glad to answer your questions or to introduce your project to my team at Astorts Group to be evaluated.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East and New Zealand as area of interest! At the moment is the CEO of Astorts Group. He is an UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.