In an effort to spreading into China, yesterday MoneyGram International Inc. (MGI - Analyst Report) announced the launch of cash-to-account service with Industrial and Commercial Bank of China (ICBC) – a leading Chinese bank – to make money transfers across China.
The company already offers money transfer services to ICBC’s 1,500 locations in over 400 cities. Meanwhile, the cash-to-account service will also be available to more than 269 million personal banking customers of ICBC.
Initially, the service will be offered to MoneyGram’s extensive locations that have vast population of Chinese itinerants and immigrants of the country. Additionally, the service of sending money directly to ICBC accounts has been made available to about 20 global markets, comprising the US, UK, Greece, Germany, Hong Kong, Australia and Japan.
After the successful initiation of the cash-to-account service in select agent locations of Poland, Mexico and the Philippines, MoneyGram now aims to expand its services in China through ICBC. China is said to be the second largest global money transfer receiver with the receipt of more than $51 billion in remittances from all over the world in 2010, according to World Bank.
The cash-to-account service further strengthens the company’s business relationship with ICBC, which has been working together since 1995 as MoneyGram’s cash payout agent. ICBC even believes that this additional service will better help the bank to offer easy and convenient money transfer solutions to its customers across the globe.
On the flip side, the new service is not only expected to enhance MoneyGram’s operating efficiencies in China but will also give a fillip to extend its operations to more and more Chinese living outside the country. Besides, the company also foresees huge opportunity in the region, which will help to boost its competitive leverage against its arch rival Western Union Co. (WU - Analyst Report).
Currently, MoneyGram carries a Zacks #1 Rank, which translates into a short-term Strong Buy rating. However, based on its strong fundamentals, we are maintaining our long-term Outperform recommendation on the shares.