MoneyGram Ties Up to Tap Saudi Arabia Remittance Market
MoneyGram International, Inc. MGI collaborated with Al Rajhi
Bank, headquartered in Saudi Arabia, and also with the bank’s remittance
division, namely Tahweel Al Rajhi. Notably, the remittance arm has a vast
branch network in Saudia Arabia, consisting of more than 230 centers as well as
110 correspondent bank relationships.
The tie-up entails the introduction of both digital
capabilities and walk-in channels for offering seamless money transfer services
to customers in Saudi Arabia. Both partners will employ innovative technologies
to roll out a diverse range of payout services such as cash, account deposit
and digital wallet capabilities.
Through the tie-up, MoneyGram is eyeing the remittance
market of Saudi Arabia that is worth $33.6 billion in remittance outflows, per
the World Bank. Notably, the remittance market usually indulges in huge volumes
of cash outflows globally.
MoneyGram, which facilitated digital transactions in over 70
countries, has certainly provided relief to its customer base. The partnership
is apt for the ongoing pandemic, where customers can engage in money transfer
transactions from the safety of their homes.
Shares of this Zacks Rank #4 (Sell) company have surged
142.7% in a year against the industry’s decline of 13.5%.
Similar Initiatives Taken Up by MoneyGram
The company has always been in a bid to enhance its digital
services suite, backed by partnerships and constant technological upgradations.
Similar to the Al Rajhi Bank tie-up, MoneyGram tied up with E9Pay last month,
the largest money transfer and payment fintech company in Korea, with an
intention to tap the Korea remittance market. Last week, it partnered with Uber
Technologies, Inc. UBER to enable hassle-free digital transactions for
individuals working at Uber.
Riding on such strong digital business, MoneyGram witnessed
81% growth for its digital business in April. The figure implies an improvement
from 57% transaction growth recorded in the first quarter of 2020. Likewise,
favorable trends have followed into May.
However, media sources recently reported that the world’s
leading money remittance company — Western Union Co. WU — made a takeover offer
to MoneyGram. This will be a great deal for both companies if it materializes.
MoneyGram, which has been facing financial crunch for quite a long time due to
weak revenues and high costs, will find a stable partner in Western Union,
which has a better financial position.
Also at the end of April, the World Bank projected a 20%
decline for global remittances in 2020 mainly due to the financial turmoil
induced by the COVID-19 pandemic. Therefore, to cope with the prevalent
difficulty in the operating environment, the partnership with a stable company
will be best suited for MoneyGram.
A Stock to Consider
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