Launching in October in two key markets, Mexico and the Philippines, MoneyGram will expand its options in which receivers from those markets may receive and use funds instantly — via their bank-issued Visa-branded debit card or Visa-branded prepaid card — and senders may choose the option by which to send those funds. The partnership leverages the trust that consumers globally have in the MoneyGram and Visa brands, as well as the ability for receivers to access funds 24/7/365 without having to visit an agent location to pick up cash.
MoneyGram CEO, Alex Holmes, and Cecilia Frew, senior vice president and head of Visa’s North America Push Payments, told Karen Webster that this is just the first step in expanding this capability to more global markets.
“MoneyGram is the first cross-border use case for Visa Direct,” Frew told Webster. “One of the reasons we are so excited to partner with MoneyGram is because they are so passionate about innovating this space forward.”
Remittances As Global P2P On Ramps
Remittances have always been about people sending money to other people. However, rather than splitting the check with another person, senders are mostly expats working abroad and sending much needed funds back home to family — usually between $300 and $500 a week. That makes global remittances a large, growing and important market worldwide.
According to the World Bank’s 2017 “Migration and Development Brief,” global remittances have grown to a record-setting $613 billion, up 7 percent from 2016. Top receiving countries are India ($69 billion), China ($64 billion), the Philippines ($33 billion) and Mexico ($31 billion).
It’s a market with room for both expansion and innovation, Holmes told Webster. That includes using technology to take the notion of simply moving money from one country to another to a new level, including sowing the seeds for the ignition of a real-time global, mobile P2P network that offers senders and receivers optionality, convenience and security. It’s an opportunity that MoneyGram, with Visa, is well-positioned to seize and scale, Holmes told Webster.
“When we look at P2P on the domestic front, for example, what we see is that it has taken off because people want to be able to have the money put right [into] their bank account,” Frew explained. “They aren’t looking for an extra step where they have to take cash and go make a deposit to get it into their bank account where it is safe.”
Using the Visa Direct rails, MoneyGram customers can still go to a cash location if that is their first choice. However, Holmes noted, they can also send that cash to a bank account associated with their Visa-branded debit card or load it onto a Visa-branded prepaid card. All of those transactions will happen in near real time, he explained.
The power of choice and convenience, via a digital channel, is reciprocal — the sender has the same range of options open when transmitting funds to their receiver.
The Digital Cash Corridor
Accessing and moving cash is, and always will be, part of MoneyGram’s business — the firm isn’t embracing digital with an intention to leave cash in the cold. Holmes noted that the firm has, and will continue to have, an “awesome” cash network, one they are focused on optimizing continually.
“The point isn’t just to offer cash, but to start thinking about the sending and receiving options that are the most convenient, and to simplify the ways in which consumers can receive money in various markets around the world,” Holmes said.
That’s especially important to younger workers, Holmes noted, as they are more likely to want to use smartphones to make and receive those payments. Visa Direct, he said, gives these users the ability to do that, with the certainty that funds will be available in the receiver’s bank account within minutes of sending them. That, Frew remarked, can unlock new digital payments and commerce options, including savings, investing, bill pay and expanding the use of digital payments to shop and pay for items at merchants.
Not only will this improve the way in which remittances are done today, but Frew and Holmes believe that it will accelerate the move to digital for entire economies, providing access to real-time P2P payments for an entirely new class of customers.
Building Better Global Payments Bridges
Customers like cash because it is predictable. It works whenever one wants to use it, barring extreme circumstances, and consumers trust it. Likewise, MoneyGram is a trusted partner, as it has been moving remittance funds for seven decades all around the globe.
“I think the complexity of the cross border market can be easy to overlook ,” Holmes explained. “It’s really hard to securely move money around the world and provide receivers with instant access to those funds so they can pay their bills. Dealing with things like settlement, pre-funding and compliance on top of solving for a host of standardization issues – at scale, takes scale.”
In markets, banks need to drive affinity to their brands. The known commodity that is MoneyGram, wedded to the secure payments promise associated with the Visa brand, gives consumers more reason to use their bank accounts, prepaid cards and debit products, particularly in developing markets where some consumers may not be entirely comfortable with traditional banks and banking services.
“This is about putting the digital option out in front of consumers in a way that is familiar — two global brands that consumers know and trust — and [that they] can grab onto,” Holmes said.
Frew noted that the capacities MoneyGram and Visa are rolling out in the next few months are the start of the story, not the end. The potential for creating and expanding P2P markets on a global scale is evident, she said, because MoneyGram riding on the Visa Direct rails can create the immediacy and digital connection for which P2P customers are looking.
But beyond that, she added, the new capacities can support a wide range of payment types that now need to happen cross-border, particularly in the B2C arena. As one example, Frew cited the marketplaces that are paying people for home sharing or ridesharing, which need a secure, immediate and always-on method to pay those hosts and drivers.
The opportunities, she noted (and Holmes agreed), are ever-growing, but so are consumer expectations.
“We believe that the cross-border piece of the mobile money change-over has tremendous potential, and I think we will see that first in P2P, and soon in B2C or even business to small business. What we are announcing today is really just the beginning,” Frew said.