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MoneyGram's Digital Platform Expansion to Augment Growth

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MoneyGram International Inc. (MGI - Free Report) has expanded the reach of its digital platform, MoneyGram.com in seven new countries. These regions are        Estonia, Finland, Latvia, Lithuania, Malta, Slovakia and Switzerland.

Customers in these regions can send money anytime to over two billion bank accounts and mobile wallets or to any MoneyGram location in more than 200 countries and territories.

This expansion is in line with MoneyGram’s efforts to grow its digital money transfer service. The company has been seamlessly working on deepening its reach in the digital payments space, which is evident from the availability of MoneyGram.com from three to 24 markets in just 10 months.

MoneyGram is also reaping the benefits of its investment in digital services. This is evident from an increase in online and mobile transactions that have increased 16% year over year. Moreover, digital accounts form 16% of total money transfer revenues for the company.

Customers find it easy to use MoneyGram.com since it offers features like the ability to find a convenient location, check the status of transactions and estimate transfer fees.

Per NB Financial Health, over the past five years, the industry has seen a push toward digitizing remittances. User-friendly apps and new processes to onboard clients, smarter ways to connect to domestic payments systems and new business models are trending.

Money transfer companies are collaborating with mobile money providers for remittance payouts and with companies that use cryptocurrencies as an instant settlement mechanism (reducing the need to maintain bank accounts in multiple countries). Increased adoption of the money remittance industry of technologies, like machine learning and remote digital identity verification, can provide efficient, secure and speedier services to customers.

The industry has also seen the entry of a number of fintech players, using cutting-edge technology to provide superior money remittance service to customers at low costs. Money transfer via brick-and-mortar locations through physical agents is costly compared with digital remittance, which has enabled a shift in customers’ preference from traditional to new modes of money transfer. Incumbent players like MoneyGram and Western Union Co. (WU - Free Report) have thus been compelled to expand and develop their digital platforms to protect and increase their market shares.

The shift from physical money transfer to digital has begun and is expected to further grow at a rapid pace. We, therefore, expect continued investments in technology from these players. Though these investments will weigh on the margins, these are expected to contribute to top-line growth.

Year to date, the stock has lost 84% compared with the industry's decline of 20%.

 

Zacks Rank & Stocks to Consider

MoneyGram carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Synchrony Financial (SYF - Free Report) , and On and Deck Capital, Inc. (ONDK - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy) and have surpassed estimates in each of the trailing four quarters with average positive surprise of 12.31% and 109%, respectively.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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