MoneyGram International aims to boost its remittance business by leading more customers to digital tools, which will also draw more consumers into the financial services sphere, one of the company’s executives said Sunday. 

“What we've been seeing is definitely a greater appetite for digitalization of these types of payment flows, not only on the sending side, but on the receiving side,” said Arnoldo Reyes, the general manager of MoneyGram’s business-to-business division, speaking on a panel at the Money 20/20 conference in Las Vegas. “But there's still so much to do.”

The comments from Reyes came before the company announced on Monday that it had replaced its CEO, installing Anthony Soohoo, a former top Walmart executive, to succeed Alex Holmes. The company said Soohoo has “deep expertise leading digital transformations that enhance growth strategies.”

The remittance market, in which consumers send money across borders to family and friends, is at least a one-trillion-dollar market, including all the cash that changes hands outside of the view of official data collectors, Reyes explained.

He noted that since MoneyGram became a privately-held company last year, it has focused increasingly on drawing customers to its digital tools, with more than half of its payments volume now sent via digital means. 

The Dallas, Texas-based remittance company announced the $1.8 billion deal to sell itself to the Chicago private equity firm Madison Dearborn Partners in 2022, and completed the transaction last year.

“Digitalization is, by far, something that MoneyGram is focused, obsessively, on right now — it's the user experience, and it's really giving optionality,” Reyes said.

MoneyGram customers can send money by way of the company’s agents, or digitally from its website or app, choosing whether to have the funds arrive in the form of cash or depositing them in a digital wallet.

With respect to optionality, Reyes rhetorically asked: “Are you providing the best experience for the job that people want done?”

MoneyGram users affected by the company’s system outage over several days last month would probably say “no.” The company shut down its entire system after a cyberattack, and ultimately, disclosed that sensitive customer data had been stolen. Then, customers were uncertain about their money transfers as MoneyGram worked through a backlog of orders.

The company has had little to say publicly about the attack, or the fallout from it. Reyes did not mention the attack during his Money 20/20 panel.

At the time, MoneyGram said this on the social media site X: “We are working diligently to better understand the nature and the scope of the issue,” noting that it understood the “urgency” of the matter for its customers.

The shutdown potentially affected millions of people who rely on MoneyGram to send funds to 200 countries and territories. Such transfer services are commonly used by migrant workers in the U.S., or other countries, to share money with family and friends in their home countries.

Reyes noted most remittance users need the funds for “the most critical basic needs,” such as education, healthcare, food and utilities.

Those consumers are also potentially becoming a part of the financial services ecosystem when they use digital tools to send money transfers, he said. When they use cash, they’re essentially “invisible” to the financial services system, he explained, but digital transactions begin to make them known.

As a result, shifting customers to digital tools is a big opportunity for MoneyGram, but also a positive for consumers that have had less access to such services in the past, Reyes said. “I'm a big proponent of digital inclusion as an on-ramp to financial inclusion,” he added.

Moneygram has invested in adding more features to its digital app in a bid to sell more financial services to users, but Reyes acknowledged it has to have the trust of consumers to sell those services. “Trust is all about getting that transaction to go from point A to point B, quickly, making it seamless,” he said.

Reyes declined to provide further comment to a Payments Dive reporter after the conference panel ended.

By Lynne Marek and Patrick Cooley on Oct 30, 2024
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