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
A better-ranked stock in the same space is Virtu Financial, Inc. VIRT, currently sporting a Zacks Rank #1 (Strong Buy). It also surpassed earnings estimates in the last reported quarter by 35.76%.You can see the complete list of today’s Zacks #1 Rank stocks here.
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