Lawmakers believe MoneyGram acquisition is a threat

, Internet, Modernización de Empresas, Tarjetas y Pagos Electrónicos, Telecomunicaciones

Ant Financial, the parent company of top Chinese mobile wallet Alipay, has received renewed criticism from several US lawmakers in its ongoing attempt to acquire legacy remittance firm MoneyGram, according to the Financial Times. MoneyGram Revenue GrowthThese critics, who include Republican senators Pat Roberts and Jerry Moran, argue that this deal wouldn’t only hurt US payment infrastructure, but it would also put US citizens’ sensitive financial data in the hands of the Chinese government, which has a stake in Ant Financial.
Fears over an acquisition of this magnitude are understandable, so Ant Financial has tried to pacify these concerns on a newly launched site.

  • According to Ant, consumer data will be safe from not only the Chinese government, but also from any outside forces. Ant Financial has attained more than 630 million global users largely by building consumer trust. The company has affirmed that the Chinese government doesn’t have any participation in Ant’s management or board, and for this specific acquisition, consumer data generated by MoneyGram in the US will continue to be stored on US servers.
  • Ant and Jack Ma, who controls the company, plan to advance US interests by investing in local business and adding jobs. Ant Financial has committed to investing in and developing MoneyGram’s US-based operations, which would likely improve payments infrastructure. This would also help Jack Ma reach his ambitious goal of creating 1 million US jobs.

Alleviating fears is extremely important for both companies because this deal has tremendous implications for their future success.

  • Ant’s impressive digital presence would give MoneyGram a world-class digital segment. Ant is the parent company of Alipay, which is arguably the world’s most popular mobile wallet — Alipay counts over 450 million active users. MoneyGram’s services would likely be integrated within Alipay’s platform, allowing the remittance firm to boost its slowing digital growth; MoneyGram’s digital growth was just 13% year-over-year (YoY) in Q1 2017, down from 31% a year earlier.
  • MoneyGram’s massive global network would significantly expand Ant’s reach. If this acquisition were to go through, Ant would get access to a network, which consists of 2.4 billion bank and mobile accounts in over 200 countries and territories. That would immediately help the firm rapidly expand its presence outside of China, where Ant aims to have 60% of its transaction volume come from by 2026.

Peer-to-peer (P2P) payments, defined as informal payments made from one person to another, have long been a prominent feature of the payments industry.
That’s because individuals transfer funds to each other on a regular basis, whether it’s to make a recurring payment, reimburse a friend, or split a dinner bill.
Cash and checks have historically dominated the P2P ecosystem, and they’re still a popular tool. But as smartphones become a primary computing device, top digital platforms, like Venmo and Google Wallet, have enabled customers to turn away from cash and make those payments digitally with ease. Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket.
That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it’s a low-friction way to onboard users and won’t catch on unless it’s free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms’ traditional streams of revenue, finding ways to monetize is increasingly important. That could mean moving P2P functionality into more profitable environments, leveraging existing networks of friends to encourage spending, or offering value-added services at a nominal fee.
Jaime Toplin, research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on mobile P2P payments that examines what’s driving this shift to mobile P2P and explains why companies need to find a way to capitalize on it quickly. It discusses how firms can use the tools they have to gain in the P2P space, details several cases, and evaluates which strategies might be the most effective in monetizing these platforms.

Here are some key takeaways from the report:

  • Consumers still want mobile P2P services, and they’re turning to them. Individuals pay their peers on a regular basis, and as smartphones are increasingly used as computing devices, these consumers look to such services for fast and easy ways to pay.
  • Monetizing P2P is more important than ever. Initially, P2P was a valuable onboarding tool for companies, and when it was still a small segment, taking it on at little value or a loss didn’t have major implications. But as volume grows and user bases scale fast, finding ways to monetize quickly should be a priority for firms looking to stay ahead.
  • New technology could put some apps ahead of their peers. P2P continues to rely on networks, especially for informal, social transactions. But rather than having a large network, it’s becoming important for firms to understand their user bases and the networks within them. This means that chat apps, and leveraging bot and AI technology, may offer a distinct advantage.

In full, the report:

  • Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
  • Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
  • Evaluates why mobile P2P isn’t profitable for companies, and details several cases of attempts to monetize.
  • Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
  • Provides context from other markets to explain shifting trends.

Source: http://www.businessinsider.com


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