Cross-pollination in financial services — leveraging payments across digital and physical channels — is an emerging trend, especially when it comes to cross-border transactions, and especially with remittances.
To that end, MoneyGram has received a $9 million investment from The Brink’s Company, which in turn becomes a significant owner with a roughly 5 percent stake in MoneyGram.
The investment was disclosed in Brink’s conference call held Thursday (Feb. 6) to discuss earnings results.
MoneyGram has, over the past several months, picked up significant investment from other companies. As noted in this space in 2019, Ripple Labs, which has been developing and deploying the XRP cryptocurrency, invested $50 million in MoneyGram, in an effort to develop cross-border payments functionality underpinned by blockchain.
Brink’s CEO Douglas Pertz said on the conference call that the company took the MoneyGram stake by acquiring shares during the fourth quarter via transactions on the open market.
“We are in discussions with MoneyGram to explore a long-term strategic partnership agreement that we think will offer significant commercial benefits and long-term strategic alternatives for both parties,” Pertz told analysts on the call. “Developing this partnership is just one component of our near-term strategic 2.0 and longer term payments initiatives.”
Pertz said later in the call that the goal of the partnership would be “to help MoneyGram and its agent partners realize substantial operating efficiencies by improving their cash management processes.” He said there would likely be “joint development of strategies around cash, payments in cash to digital, and digital to cash payments in the long term.”
MoneyGram has been boosting its digital efforts in recent quarters, and said on its last earnings call that its online business has been growing by triple digits and MoneyGram has expanded online to 25 countries. Yet what might be likened to a “traditional” business, done in person, though agents, has had a relatively rougher road. MoneyGram management has stated that competition, with players such as Western Union, has been heightened, along with competitive pricing.
Brink’s, for its part, has been rooted in the physical space, with operations that serve a customer base that spans more than 100 countries. Its offerings might bring the iconic Brink’s trucks (loaded with cash and coins) to mind, but beyond transport the company also offers ATM and vault services.
Though MoneyGram has yet to comment on its own visions of what a strategic partnership might entail (and may do so during its upcoming earnings report), it should be noted here that digital transactions may have a cash “pickup” at the agent location.
In one of its latest announcements, MoneyGram said that in December, 60 percent of its money transfer revenue was international, which means the company also must take into account the market-by-market preferences of end customers (which may include cash). Brink’s, too, gets a conduit to demand for its cash management, and a leg toward more digital services as well.