Back to top

Image: Bigstock

MoneyGram (MGI) Gains on Constant Strength on Digital Platform

Read MoreHide Full Article

MoneyGram International, Inc. (MGI - Free Report) is witnessing strong growth in its business, led by its digital channel named MoneyGram Online (MGO).

The company’s online services are in high demand because of its ease of use via the MoneyGram mobile app. It enables fund transfer on a real-time basis. This convenience and speed in turn, lead to high customer retention.

MoneyGram’s digital platform is therefore growing at a breakneck speed.
Monthly Active Users, which show the number of people using its mobile app, have been on a rise for the past many months. Its partnership with Visa, which helps the company’s customers to send money via Visa Direct, a real-time push payments platform, drove cross- border transactions.

At the end of June, digital transactions accounted for 33% of all the money transfer transactions, reflecting an increase of 18% from the prior-year reading. The company expects to continue reporting double-digit growth rates across the MGO channel, considering the consumers’ shift toward adopting digital transactions and receiving money in their accounts directly. It remains optimistic that the digital business will reflect above 50% of all money transfer transactions in 2024.

The company began laying the groundwork for its digital transformation five years ago to embrace the rapid changes brought about by the integration of technology in the remittance industry.

The remittance space was invaded by many fintech players with the likes of TransferWise, Green Dot Corporation (GDOT - Free Report) , WorldRemit, PayPal Holdings, Inc. (PYPL - Free Report) and many others jostling for space.

The company’s revenues declined every year from 2017 to 2020 and the only way to stay afloat in this rapidly-changing remittance realm was to change the way it maintained its traditional business set-up. Its close peer Western Union Co. (WU - Free Report) is also facing the same rivalry and has been chasing technological investments over time to lead the pack.

Of its agent locations in 200 plus countries and territories, 94 are now digitally enabled. The transition from once solely brick-and-mortar format to a hybrid combo of online and physical existence is slowly paying off. An amalgamation of its cash and digital capabilities will make it stand out from the queue of digital-only competitors who are unable to serve a significant portion of the remittance market that relies on cash alone.

After remaining under pressure, revenues are finally showing up and already grew 6.5% in the first quarter of 2021. We now expect topline growth to continue.

Via its digital business, MoneyGram is exploring uncharted geographies and continuously wooing a completely new customer base. Digital business is a key to customer wins and reaping incremental profits.

Investment in mobile apps and integrations with mobile wallets plus account deposit services will drive its digital business.

Other than its proprietary use, MoneygGram is monetizing its wide API-driven digital network by enabling other companies to access its leading global money transfer network. Called MoneyGram as a Service, the business provides a new revenue source and was launched in March this year.

The new business line represents a significant growth opportunity for MoneyGram as it enters a market estimated to be valued at $17 billion in 2024, seeing a CAGR of about 24% over the forecast period.

Year to date, the stock has rallied 52.9% compared with its industry’s growth of 21.1%.


Zacks Investment Research
Image Source: Zacks Investment Research

MoneyGram carries a Zacks Rank #3 (Hold) at present.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.