Western Union-MoneyGram Merger Deal Will Stifle Competition In The Remittance Market, Says WorldRemit’s Founder

Western Union is said to be in talks to acquire its largest competitor MoneyGram, according to a report byBloomberg, although the world’s largest money transfer service has denied such reports in a statement on Wednesday, saying that they “are not accurate”.

While the talks may fall apart, concerns have grown over the kind of monstrous monopoly it would create if the rumour is true and the deal is approved by antitrust regulators. Bloomberg notes that Western Union and MoneyGram — the two dominant players in the remittance industry — are facing price competition from companies such as WorldRemit and TransferWise, both giving their customers new and affordable options for money transfers.

Commenting on the potential merger talks between Western Union and MoneyGram, WorldRemit’s Founder and CEO, Ismail Ahmed told TechLoy that the move would have profound consequences for competition in the remittance market, especially in Africa.

“If the deal is approved, it would create a monstrous monopoly that would impact the livelihoods of millions around the world,” Ahmed said.

He further cited their [that is, Western Union and MoneyGram] extortionate fees amount to an annual ‘super-tax’ costing Africa alone an estimated $1.8 billion every year, but notes that alternatives such as WorldRemit are drawing away their customers with greater convenience and honest pricing, although more than 95% of remittances are still sent offline, primarily through these two companies.

In his opinion, the merger would eliminate the limited competition that currently exists.

“We call on regulators to block this deal unconditionally – in the interests of migrants and expats around the world who rely on international money transfer services to support friends and family in their homelands”, he argued.

More than 50% of all WorldRemit transfers to Africa are received in Mobile Money accounts or as mobile airtime top-ups and remittances to Sub-Saharan Africa are expected to reach $33 billion by 2015, according to a World Bank report.