Cross-border money transfers have become an increasingly competitive segment of the payments industry as digital platforms challenge traditional remittance providers. Companies with established international payment networks are seeking acquisitions and partnerships that expand their geographic reach, customer base, and digital capabilities. These transactions are particularly significant as global commerce and person-to-person payments continue shifting toward mobile and digital channels.
Ant Financial’s proposed acquisition of MoneyGram reflected this broader trend. By combining MoneyGram’s established remittance network with Ant’s digital payments ecosystem, the deal had the potential to strengthen international payment capabilities while expanding access to new markets. At the same time, the transaction highlighted how geopolitical considerations and regulatory scrutiny can influence the direction of cross-border payments and international mergers.
This article in Bloomberg Gadfly has several tongue in cheek comments regarding the acquisition of MoneyGram by Ant, a Chinese company, during the Make America Great Again reign of Trump:
“MoneyGram International Inc. — inadvertently one of the earliest targets of Donald Trump’s nationalistic pronouncements on the campaign trail last year — is now selling itself to a Chinese company. Let that sink in for a moment.The deal will strengthen MoneyGram, a money-transfer service, at a time when a chunk of its business is expected to come under pressure due to President Trump’s stance on Mexico with respect to both trade and immigration. Mexico represents 10 percent of all transactions for MoneyGram, according to Bloomberg Intelligence.
The acquirer is Ant Financial, an affiliate of Alibaba Group Holding Ltd., the Chinese tech giant founded by billionaire Jack Ma. Under Ant’s ownership, MoneyGram can probably expand further and faster internationally — or into more “corridors,” to use industry parlance — where it faces stiff competition from larger rival Western Union Co. The deal will also help Ant’s Alipay electronic payments system expand in the U.S.
The strategic logic is plain. But as for the price, it has to be a tad disappointing for MoneyGram’s shareholders. Ant Financial is offering $13.25 a share in cash for the Dallas-based company, which is only 9 percent higher than the stock’s average closing price for the past 20 trading sessions. These days, that’s a minuscule takeover premium, especially for a growing business. Analysts project a 6 percent jump in MoneyGram’s revenue this year, followed by an additional 5 percent increase in 2018 — a faster clip than Western Union.”
Trump has not yet figured out the impact of his tweets, but this article suggests that his tweets and policies may have helped Ant get a better deal.
The proposed MoneyGram acquisition demonstrated that cross-border payments are shaped by more than technology and market opportunity. Regulatory oversight, international relations, and national security concerns can all play significant roles in determining whether major payments transactions move forward.
As competition intensifies among traditional remittance providers, fintech firms, and global payment platforms, acquisitions will remain an important strategy for expanding payment networks and customer reach. However, companies pursuing international growth must navigate not only commercial considerations but also an increasingly complex regulatory and geopolitical environment.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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