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MoneyGram (MGI) Expands P2P Money Transfer Service With Visa

Zacks Equity Research

MoneyGram International, Inc. MGI has partnered with Visa Inc. (V) for the expansion of its person-to-person (P2P) debit card deposit service internationally.

A debit card deposit service allows customers to transfer funds to a bank account linked to the eligible debit card at any time, including weekends and holidays.

Per the pact, MoneyGram’s digital network will use Visa's real-time push payments platform, Visa Direct, to enable cross-border transfers from the United States to Spain and the Philippines. The company expects to launch the service in additional countries in the coming months.

Visa Direct services will allow MoneyGram customers to send money in real time to more than a billion Visa branded cards worldwide. MoneyGram customers can use the app or its website to send funds to other recipients' eligible Visa-branded debit cards.

This move is in line with MoneyGram’s efforts to grow its cross-border digital business. The successful launch of the service in the United States, which helped the company to increase its customer base by 50%, is another positive. Solid customer retention rates coupled with good customer response has prompted further roll out of this service.

The company expects to gain from the partnership with Visa given its strong brand name and image that provides safety and security for MoneyGram’s customers.

The extension of partnership between Visa and MoneyGram points to their intent in making it big in the expanding P2P payments market, which is highly dominated by cash and checks. Real time P2P is attracting huge customers due to the widespread use of mobiles to make transactions.
The offering of real-time P2P payment services along with Visa will help MoneyGram to fight against rising competition from players such as Paypal, Zelle and Venmo.  

The agreement with Visa is one of the many measures that MoneyGram has undertaken recently to turnaround its business to profitability after revenue declines in 2017 and 2018. Also, in the first nine months of 2019, its revenues decreased 13%.

Several initiatives such as loyalty program, referral programs, new app and website, win back campaigns, partnership with Ripple and significant cost cuts should aid the company’s earnings.

Year to date, the stock has gained 26% compared with its industry’s growth of 18.8%.

MoneyGram carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space are Lending Club Corporation LC, Globe Life Inc. GL and On Deck Capital, Inc. ONDK.

Each of these stocks carries a Zacks Rank #2 (Buy). Lending Club, Globe Life and On Deck Capital have surpassed estimates in the last reported quarter by 800%, 1.76% and 42.86%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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