Over the last few days we have heard the news that MoneyGram is partnering with Stellar to provide payments using the stable coin USDC for the likes of El Salvador. When El Salvador made Bitcoin a legal tender one of the companies to be directly affected was MoneyGram with an estimated loss of $400 million shared with other service providers in their field.
The problem is MoneyGram is a service provider for internal and cross border payments that charges fees for that service. Everyone knows crypto and digital payments are the future so MoneyGram has to try and muscle back in or they as a company are history. I see this as a desperate move as if this can't save them then they are gone for good.
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I do see them having a small window of opportunity right now, but later down the line I just don't see them existing. If we think about technology and how crypto works why would anyone need a third party providing a service when I can just send directly to you.
Where they would fit in currently is by providing the exchange from USDC to FIAT and FIAT to USDC which doesn't exactly make them unique. Surely it is only a matter of time before countries have their own digital currencies and using FIAT as we know it vanishes for good.
Funny enough MoneyGram was an option in South Africa to avoid using the banks for sending money overseas and I rejected their service and used the underworld instead. Their fees were just too high along with a list of forms to fill in and saw this as no difference from the bank I was trying to avoid.
They tend to sting you on the conversion rate of foreign currency so there has to be a profitable angle they are trying to exploit in this scenario with El Salvador. A service fee from FIAT to Bitcoin or USDC or from USDC to FIAT is there only earning potential and as I mentioned above will be for a limited time only until CBDC's are launched.
The good old days have certainly gone and are heading towards the exit door at speed.
I personally see this as a desperate move to find a way of facilitating their services in an area that this type of service will be null and void in 5 years from now. The likes of ADAPAY are already establishing themselves in Africa as the gateway for crypto payments which would limit MoneyGram making it non profitable to compete.
In 2020 MoneyGram lost $7.9 Million and last year $38 million so they are on a big slide even though they had $1.3 billion in revenue. This is a business that will disappear as they cannot reinvent themselves due to their services they offer. This business model is outdated and similar to what happened to old established companies like Kodak.