Western Union has made a takeover offer to MoneyGram, but nothing has been made official, Bloomberg reported, citing a source who asked not to be identified.
MoneyGram has been struggling during the pandemic, with its physical locations having to close around the world as governments impose stay-at-home orders. Digital services have gotten a boost, but MoneyGram reported that those made up just 18 percent of its earnings in the first quarter.
The money transfer business has been taking a beating as of late as eCommerce’s new FinTechs make it easier to move money around the world. More people are using online payments now than ever, with the coronavirus spurring fears of infection via touching surfaces that many other people have also touched.
Policy makers have looked into ways to cut the fees associated with transferring money worldwide, as well. For years, companies and governments looked to decrease the costs associated with remittances, which have always been associated with minority immigrants who don’t use traditional banking services. On average, it costs $6.79 for every $100 in remittances sent overseas, according to data from the World Bank, Bloomberg reported.
Western Union CEO Hikmet Ersek has promoted the virtues of going digital. In a PYMNTS interview just before the pandemic fully hit, Ersek said the company had the idea to “make digital a strength,” seeing that FinTechs and traditional banks both wanted ways to take financial services to new, wider global bases.
Ersek said the move to digital should also not be about forcing customers to choose between electronic payments and cash. Instead, he said the issue has to be about “moving money or making payments for people everywhere in whatever way they want and need it,” and that the focus of Western Union is always giving people the choice.