Western Union Seeks to Buy Ripple Cross-Border Remittance Partner MoneyGram
A recent report by Bloomberg has revealed that Western Union is seeking to acquire MoneyGram International in a new takeover offer. The details of the proposed deal were, however, not highlighted as the source sought to be anonymous and could only reveal so much of a matter that is yet to be public.
Should the move be successful, it will bring together the two largest payment transfer firms in the United States. While it may seem promising for both firms, the source noted that Western Union could abandon the potential deal altogether,
“No decision has been made and Western Union could opt to proceed without a deal.”
The Value Proposition
As expected, an acquisition move is normally prompted by certain factors. In this case, both Western Union and MoneyGram are facing stiff competition from upcoming FinTech solutions for the payments’ networks. MoneyGram for instance is still recording as low as 18% in digital payment transfers.
Notably, the COVID-19 pandemic has also affected the performance of both MoneyGram and Western Union. As remittances fell, the two firms were starved off their high revenue generating operations. In addition, the recent approach by regulators to reduce cost of remittances is slowly catching up with the money-making models of these companies.
Currently, the latest MoneyGram valuation places the firm at $164 million after gaining 6.2% on June 1 to close the day at $2.59. Western Union on the hand is valued at $8.5 billion with its share price trading at $20.71.
MoneyGram's Blockchain Footprint Via Ripple
Interestingly, MoneyGram jumped onto the blockchain bandwagon a while back by becoming a member of RippleNet. In fact, Ripple ‘the entity', purchased around 10% of MoneyGram's stake amidst the developments. Despite reporting a quiet Q1 from this partnership, MoneyGram had earlier on noted that there is some work in progress with Ripple. It recently extended its direct deposit service to clients in India via the Federal bank which is also a RippleNet member.