Payment Methods

Bridging The Great Payments Digital/Physical Divide

Cash may still be king on the receiver side when it comes to cross-border remittances, but that’s changing. In Friday’s episode of Topic TBD, Karen Webster and MoneyGram CEO Alex Holmes chatted about how a dominant physical player in the space is navigating the need to be both physical and digital on a global scale.


Payments have not crossed the digital Rubicon just yet. And with 2 billion people in the world who still transact primarily with cash, global players must operate with one foot in the virtual space and one foot firmly in the paper trade — in other words, hard currency.

In last Friday’s Topic TBD episode, PYMNTS’ Karen Webster and MoneyGram CEO Alex Holmes chatted about that great digital/physical divide — namely, the continued use of cash, which many contend is not exactly the most efficient method of transactions, even though it is, for now, a necessary one.

Cash, Holmes said, has to be in the mix because that’s what many of MoneyGram’s customers use, even if the transaction originates via a mobile phone to a receiver who is alerted on her mobile phone that funds are available for her. The ability for her to go to an agent location and get her cash is not only important but the only way she can actually get her hands on a payment method accepted where she lives.

“When you look at the form factor for payments around the world, the vast majority of transactions are still done in cash,” Holmes said. “These smaller, high-frequency dollar transactions are great for us because we still have the physical locations around the world and the ability to accept cash into our system. In 10 minutes, we can move it from point A to point B around the world.” MoneyGram operates in over 200 countries around the world with 350,000 physical agent locations.

Holmes was also quick to point out that “the world is changing quickly, and new technology continues to pop up in a number of markets around the world.” That, he said, has given MoneyGram the chance to “evolve our business,” investing in technologies that don’t just give receivers cash but deposit funds directly into bank accounts. Holmes noted that MoneyGram now reaches 2 billion accounts across 27 countries.

Holmes also emphasized MoneyGram’s investments in mobile wallets and self-service kiosks, which Holmes said offer “more control of transactions at the point of sale and direct transfers.” In the case of the latter, Holmes said that the goal is to have 15–20 percent of money transfer revenues derived through self-service by the end of next year. Holmes also said that the firm has particularly made strides in Africa across mobile wallet platforms, with a nod to the fact that younger demographics may be relatively more comfortable than older consumers using technology as a digital payments springboard there.

But it’s what Holmes calls a “hybrid approach to money transfers” that delivers the “optionality” that allows MoneyGram and its customers to navigate the physical and digital conduits.

“The reality is that many people are living on dollars a day,” Holmes said. “There are 2 billion unbanked and underbanked [people globally] and 250 million migrant workers who cross borders every year for the opportunity to pursue a better life and to send money back to loved ones who are elsewhere so that they can pay for essentials, such as food, water, rent or education back home.” Giving senders and receivers the ability to do that in whatever payment method or form factor makes sense and is accepted is what Holmes says MoneyGram is focused on.

Holmes has a long list of things that he says he and his team are working very hard at accomplishing so that consumers have the optionality that they need. That list ranges from partnerships to kiosk expansion and customer loyalty programs, with attention to seamless transactions “allowing customers … to have more control in their hands as to form factors that they want to send and receive.”

When asked by Webster to narrow that list down to a few of the most important ones, Holmes zeroed in on compliance as funds go digital — think Know Your Customer relationships and partnerships with banks and retailers globally — and something he called MTaaS (Money Transmission as a Service), which will extend MoneyGram’s reach and create new revenue opportunities.

Operating at the intersection of technology, compliance and financial inclusion, said Holmes, “we’re being asked to do more for our customers. And the investments we’re making are all designed to ensure that we continue to have safer transactions and that the transactions for our customers are delivered where they need them to be and via the method of payment they want to use.”

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