In an effort to provide easy recharge facility to its MasterCard rePower cardholders, MasterCard Inc. (MA - Free Report) has made an agreement with the world’s leading money transfer company, Western Union Co. (WU - Free Report) .
Per the agreement, the cardholders can reload funds on their cards at any of the 45,000 Western Union agent locations in the U.S.
The agreement with Western Union will enable MasterCard to offer its customers with the largest reload network in the U.S with more than 100,000 locations. The agreement will also make it very convenient for other cardholders to recharge their card by visiting the nearest Western Union agent locations and getting funds loaded within a few minutes.
Last year, Western Union and MasterCard formed an alliance to offer consumer-friendly prepaid card service across the latter’s multiple non-US locations. According to the agreement, the prepaid card enabled cardholders to move money from Western Union directly to MasterCard’s credit, debit and prepaid cards, and vice versa. The prepaid card could be refilled at all MasterCard rePower locations as well as at about 485,000 global agent locations of Western Union.
Yesterday’s announcement to add Western Union’s US locations is a second step of the global partnership of the two companies. Both companies are comfortable with the partnership, with MasterCard preferring Western Union the most for money transfer service and Western Union preferring MasterCard for offering its prepaid programs across the globe.
MasterCard is aggressively penetrating the prepaid market. There is an unexplored market for prepaid cards for the senior group of the society, whereby MasterCard estimated about 2.5 billion adults being underserved within the U.S. itself, while about 25% of this group is devoid of any kind of a conventional financial payment service.
Hence, while a highly developed nation like the U.S. generates a healthy opportunity for the simplified prepaid debit cards, we believe that ample opportunities lay ahead for both these companies in unbanked regions and other under-developed and developing nations across the globe, where ATMs are absent.
Western Union currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on its shares.