The news: The two legacy money transfer firms released Q3 earnings—and despite overall mixed results, both companies relayed solid digital remittance growth.
MoneyGram’s total company revenues shrank 2% year over year (YoY) on a reported basis in Q3 due to increased competition and global market headwinds.
- Revenues contracted slightly more in Q3 than the same period last year, when the metric declined less than 1% YoY.
- Total money transfer transactions grew 4% YoY. MoneyGram’s digital transaction volume surged 29% YoY.
- On the company’s earnings call, CFO Larry Angelilli attributed the revenue slip to competitive pricing at Walmart from rival Western Union and temporary physical retail closures in some markets.
- Looking ahead, MoneyGram recently forged a partnership with Stellar Development Foundation, a nonprofit blockchain-based organization, to facilitate cross-border payments using Circle’s stablecoin, USD Coin (USDC). The tie-up can help expand MoneyGram’s digital transformation goal—it wants 50% of its transactions to be digital by 2024—and also gives MoneyGram a first-mover advantage in the burgeoning cryptocurrency remittance space, which should help drive growth in Q4.
Western Union’s total revenues increased 2% YoY thanks to a boost in digital money transfers.
- The growth was a turnaround from Q3 2020’s pandemic-induced 4% YoY decline.
- Western Union’s consumer-to-consumer (C2C) transaction volume declined 1% YoY, but digital money transfer payment volume increased 19% YoY.
- On the company’s earnings call, CEO Hikmet Ersek said Western Union’s digital and business solutions saw double-digit revenue growth, but its retail business line is still struggling under slow economic recovery in select markets.
- Ersek also said that Western Union’s partnership with Walmart—which went live across 4,700 locations in the spring—helped bring new customers to the company’s network.
- Looking ahead, Western Union recently unveiled a shopping platform, WU Shop, in Germany and Austria—with additional rollouts planned. The platform lets customers shop at more than 12,000 merchants in 60 countries and includes shipping and cash-back benefits. WU Shop can help advance the company’s digital business and open up a new revenue stream in Q4 and beyond, especially as global ecommerce volume rises.
Our take: Advancing digital initiatives can help Western Union and MoneyGram compete with money transfer fintechs like Wise (formerly Transferwise), whose digital-first business approach helped it achieve a 25% YoY increase in revenues in its fiscal Q2. Declining cash use globally will also make digital remittance solutions critical going forward.
And more state-backed remittance partnerships—like the tie-up between Singapore’s PayNow system and India’s Unified Payments Interface—may also disrupt business for MoneyGram and Western Union. But new solutions like WU Shop can help diversify business and offset potential revenue losses from these new money transfer schemes.
Go deeper: Check out the C2C Payments section of our “Rise in Real-Time Payments” report and the Remittances section of our “Blockchain in Payments” report to learn more about money transfer innovations.