Friday , March 29, 2024

Western Union and MoneyGram Report Digital Growth, but Falling Revenues

The big wire-transfer providers The Western Union Co. and MoneyGram International Inc. continue to develop their digital services as their agent-based business models struggle in a fast-changing market against rising online players. The two firms on Thursday both reported declining revenues in the third quarter, but Western Union made money while MoneyGram didn’t.

Western Union said its digital money-transfer revenues increased 20% in the third quarter from a year ago. That includes transactions made on WesternUnion.com and through third-party white-label services.

The Denver-based firm did not release specific amounts but said WesternUnion.com generated 16% more in consumer-to-consumer revenue than last year. Revenues for the site represented 16% of the total consumer-to-consumer revenue in the quarter. WesternUnion.com is now available in more than 75 countries and territories.

Western Union executives remarked that the loyalty of WesternUnion.com users is a significant asset. “The loyalty is huge within […] WesternUnion.com,” said Raj Agrawal, chief financial officer, during a conference call with analysts Thursday, according to SeekingAlpha.com transcript. “The loyalty is definitely something we admire.”

The number of online transactions through the Web site also increased 16% in the quarter, and cross-border transactions rose 25%. 

Overall, Western Union posted $1.31 billion in third-quarter revenue, a 5.8% decrease from $1.39 billion a year ago. Its net income fell 35% to $135 million from $208.6 million.

Dallas-based MoneyGram also reported strong digital growth in the third quarter, but the firm continues to struggle with re-energizing its slow-growing U.S. operations, which accounted for 51% of total revenues in 2018. Digital payments now account for 20% of money-transfer transactions, and MoneyGram Online is now enabled in 25 countries.

MoneyGram also said its partnership with blockchain-services developer Ripple Labs Inc. is progressing. Announced in June, MoneyGram is using Ripple to execute some foreign-currency trades on a 24-hour, 7-days-a-week schedule, and for so-called on-demand liquidity for part of its daily funding needs in Mexico. Next up is expansion of the Ripple service to more corridors, and usage of the RippleNet network and on-demand liquidity for improving digital payments.

Non-U.S. money-transfer transactions grew 7% year-over-year in the third quarter, and MoneyGram said 60% of its money-transfer revenues now comes from business generated outside the U.S.

“Our third-quarter results reflect the continued transformation of our business as we increasingly focus on customer-experience improvements, cross-border digital growth, and industry-leading innovation through our strategic partnership with Ripple,” MoneyGram chairman and chief executive Alex Holmes said in a news release. “While the U.S. market, which continues to be our primary challenge, showed signs of improvement on a sequential basis, we are very pleased that our non-U.S. business achieved year-over-year growth for the quarter.”

MoneyGram reported total quarterly revenues of $324.6 million, down 7% as reported or 5% on a constant-currency basis from $347.2 million a year earlier. The net loss of $7.7 million marked an improvement from a $20.9 million loss in 2018’s third quarter.

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