Transacting money to and from Africa comes in a variety of flavors. Generally, besides country-specific solutions, there are: bank wires, Western Union or MoneyGram, buying phone cards in-country that can be resold, cash in a suitcase, mail a check (that will be stolen in the post office), etc.
As you can see, there are limited practical ways for getting money transferred internationally on a regular basis. It’s no wonder then, that even with the transaction costs ranging from $15-70, people tend to use the safer, more secure methods of banks, and money transfer businesses like Western Union and MoneyGram. I’ve used all three of these, and over time have started to drift towards MoneyGram as my favorite. They have a cheaper transaction cost than the other two, and I’ve experienced a much easier time with them over the hurdles that Western Union decides to throw in your way.
All this to say, if we consider banks wires a static white-collar service, then MoneyGram is quickly becoming the best option as the common man’s way to transfer money internationally. As such, I’ve been getting deeper into their services, seeing what types of API and digital offerings that they have which could be useful.
Currently, MoneyGram has around 180,000 agent locations around the world. More importantly, they’ve just announced that they are set to tackle the mobile payments space by creating relationships with the mobile networks.
â€œMobile money transfer services are an emerging part of our product offering and we are eager to bring these services to the Middle East. Overall, we expect mobile service to be in highest demand in developing economies where individuals are more likely to have mobile phones than bank accounts.â€
This is an important point, as it merges two different ecosystems of payments. At the local level, in countries that have the right tools and cultures for them, mobile payment solutions act as transfer services for people within the country. Traditionally, this local mobile payment system is not available for use by those internationally.
Right now MoneyGram’s connection to the mobile payments agents is focused on the Middle East and Asia, my hope is that countries in Africa will soon follow. My guess is that Zain’s Zap service might be one of the first, due to their connection to the Middle East, but no one knows for sure yet.
[Update: Just before posting this I heard about a couple of banks and Western Union in the UK working with Mpesa in Kenya to do transfers via mobile. Others are working hard in this space too, and for good reason, it provides a great deal more usability for end-users on both sides of the ocean. If one entity catches that mindshare, they’ll have a lot more profitability in the space)