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Money transfer company MoneyGram is betting on its ability to offer cash remittances to stay ahead of smaller fintech challengers in Africa, its CEO told Semafor.
Anthony Soohoo said the company’s “omnichannel” approach — whereby it offers access to digital and cash transfers — is crucial because physical money is likely to remain popular in African countries for many years to come.
MoneyGram, which is more than 80 years old, has developed a business model over several decades based on remittances that allow customers to deposit money and receive cash. The company has rolled out new digital services following the appointment of Soohoo — who previously held senior roles at Apple and Yahoo! — as CEO in October 2024.
Fintech companies such as Wise and Flutterwave are also entering African markets for cross-border payments with the offer of low-cost transfers. But MoneyGram’s CEO said his company’s ability to provide access to physical cash, with some 500,000 branches worldwide, was an advantage. “In some areas also, you do see people feel more comfortable with cash. And I don’t think that’s going to end any time soon,” he said during an interview on the sidelines of Abu Dhabi Finance Week. “We’re going to have an advantage in terms of convenience.”
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MoneyGram has rolled out new digital products this year under Soohoo’s leadership. In May, it launched MoneyGram Ramps, a developer‑focused product that enables cash to be converted to stablecoins — digital tokens pegged to the US dollar — and vice versa, through third-party apps. And in September it launched a new app that integrates stablecoins.
Soohoo said stablecoins were set to “touch every part” of MoneyGram’s operations but the company was in talks with African financial regulators to get more clarity on regulations around their use. “We’re waiting and working with a lot of the regulatory agencies to make sure that we follow any rules,” he said.
The CEO said Africa offers the cross-border payments industry “one of the biggest opportunities in the world over the next 20 years” because “we’re expecting to see a good size of population growth of consumers who are spending in that area.” But he said it was not yet clear how quickly the continent’s economies would modernize.
Alexis’s view
MoneyGram is ideally placed to remain a dominant player in the money transfer industry. Its longstanding business offers huge scale: The company says it serves more than 50 million customers. And its CEO’s proven track record in tech companies means he has the experience required to rebuild the firm as a digital payments behemoth.
MoneyGram’s focus on stablecoins is astute: The passage of a US law in July regulating the digital asset has brought a framework and legitimacy to this financial gray area, which will encourage companies, and users, to double down on their use. Crypto has already proven to be popular among digitally-savvy Africans trying to hedge against currency volatility. Nigeria’s Securities and Exchange Commission estimated that residents carried out $50 billion in crypto transactions in the 12 months to June 2024. The use of stablecoins — which are particularly attractive due to the dollar peg and US regulation — is likely to skyrocket among consumers and businesses in the world’s youngest continent.
Despite the golden opportunity presented by stablecoins, Soohoo expressed caution throughout our interview when discussing financial regulators in Africa, stressing that the company was engaging policymakers across the continent. He’s right to be wary. Nigeria’s row with Binance is a cautionary tale. Nigerian authorities have filed a $81.5 billion lawsuit against the world’s largest crypto exchange over economic losses and also detained one of its employees for several months last year.
MoneyGram’s CEO is also right to bet on cash remaining a key part of African transactions for several years to come. Even with increased mobile phone penetration, network connectivity is patchy outside urban areas, so the convenience of cash gives MoneyGram an advantage. But the company’s market dominance, alongside other established remittance players like Western Union, looks set to be eroded far more than Soohoo predicts. Fintechs offering instant, cheaper transfers offer more choice, eating into MoneyGram’s market share. With time, smaller players will be acquired by bigger companies like Wise and Revolut, while cash use will account for a decreasing part of the transfer business.
Room for Disagreement
Smaller fintechs offering remittances are in a “race against time” to survive because much larger, established companies, like MoneyGram and Western Union, can spread fixed costs over much higher volumes, according to the SaveOnSend blog. It points out that even relatively scaled challengers such as Wise and Remitly took many years to reach or approach profitability.
“The lack of disruption so far is partly caused by traditional players not standing still,” the blog argued. “They are typically slower than fintechs in launching new features, but eventually, they catch up by observing startups and copying what works.”
The View From Nigeria
Fintech company Flutterwave, which operates in more than 30 African countries, in October announced plans to allow payments on its platform via stablecoins, to make cross-border payments that are faster and cheaper than traditional providers. The company is partnering with US-based Polygon Labs, which develops the software for the product.
Flutterwave’s CEO Olugbenga Agboola said the adoption of stablecoins for cross-border payments “will drive more flows into Africa.”
Notable
- Western Union said in August that it was considering launching its own dollar-backed stablecoin amid growing competition from cryptocurrency products, Bloomberg reported.