Transfer service expands

John Hempsey, CEO of MoneyGram International, the second largest money transferring service after Western Union, is unfazed about China's slowing economy and plans to double his company's network in the country over the next 12 months.

"I am here seeking an increasing share of a declining market," he said during a recent Beijing tour. MoneyGram's customers are mostly people without traditional banking accounts who are overseas but need to send money back to their home country.

"There are as much as 50 million Chinese who work, live or study overseas, and that is a huge market, even if it is declining," the CEO said.

"Immigrants are, for the most part, more flexible in finding jobs, so the slumping economy might not affect us too much," he added, "although some of our clients are involved in the construction businesses and may soon be unemployed."

The company has already partnered with 10 Chinese banks and developed hundreds of locations across the country providing person-to-person money transfer service.

It is expected to sign a strategic cooperation contract with one of the Big Four Chinese banks to expand its network in the next few weeks.

"At first we focused on Chinese cities, but now we want to explore the rural areas, because a lot of Chinese immigrant workers overseas come from the countryside," said Hempsey.

Some of the company's partnerships are with smaller regional banks to gain access to specific areas of China, such as Shengjing Bank and Anshan City Commercial Bank (Northeast China), the Shenzhen-based Ping An Bank and Guangdong Development Bank (South China) and China Zheshang Bank (East China).

MoneyGram also recently joined hands with Fujian Rural Credit Cooperative and is talking with as many as 35 to 40 rural credit cooperatives across China.

The company needs to be cheaper and more convenient for rural users than Western Union to compete; the company's goal is to complete transactions in dollars (or euros or pounds) in under 10 minutes, said Hempsey.

MoneyGram has agents in approximately 176,000 locations (banks, post offices, currency exchange bureaus, grocery stores and other retailers) in 180 countries.

But in China financial regulations restrict MoneyGram agents to just banks and merging operations with smaller Chinese banks often takes several months due to local red tape and language barriers, said Hempsey.

(China Daily 03/09/2009 page4)