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Visa Inc. announced a partnership this week with MoneyGram International, a major competitor in funds transfers, to drive more volume to its prepaid debit card-reloading network.
The two companies announced that MoneyGram has agreed to enable consumers to use its 40,000 U.S. sites to reload their Visa prepaid debit cards on the card brand's prepaid reloading network, Visa ReadyLink.
The agreement, which is to take effect this summer, quintuples the number of sites where consumers can use the ReadyLink network. (It now is available in 7-Eleven Inc. stores and in grocery stores that offer prepaid cards from Safeway Inc.'s Blackhawk Network unit, among other sites.)
The partnership "gives us a national footprint of locations across the country,"says Nizam Antoo, Visa senior business leader for underserved products. "It provides really an excellent value proposition for all the participants."
MoneyGram, which offers its own reloading service for a variety of individual prepaid providers and processors, says the deal will let it reach more prepaid card providers and their customers. Greg Waltz, MoneyGram vice president and general manager of payment products, says he also expects the deal to increase volume–and revenues–for both companies.
"Especially from a Visa perspective, it's difficult to say, 'Go find a participating location.' If you can say, 'Go find a MoneyGram location, any MoneyGram location accepts it,' that helps a great deal," Waltz says. "For us, on the other side of that, it helps to be able to say, 'reload any Visa ReadyLink-enabled card at any MoneyGram location.'"
As with its own reloading service, Money-Gram will make money from the fees it charges cardholders to reload their cards; Waltz would not disclose the exact fees it plans to charge but says MoneyGram generally charges $3.95 to $4.95 per reload. Visa, not MoneyGram, will process the reloading transactions, and it potentially will benefit from increased transaction volumes as more cardholders reload and reuse their prepaid cards.
Both Visa and MasterCard Inc. have in the past year expanded their own remittance and funds-transfer operations, which compete with MoneyGram. Eric Grover, a former Visa executive and the principal of the consulting firm Intrepid Ventures, says the partnership offers benefits to both companies.
Many in MoneyGram's customer base "use prepaid products, which have a lot more utility if you can use them over and over," he says. And for Visa, "They want to move to a point where a reload facility is convenient." Right now, "Visa, it's anywhere you want to be–but the reload network isn't."The deal to open up MoneyGram reload sites is "incremental, but it certainly helps," Grover says. ATM
