MoneyGramPeople who regularly use money transfer services just got another digital leg up.

MoneyGram International (MGI) has partnered with Dutch digital security provider Gemalto to allow mobile money transfers over it's LinqUs Mobile Money payment platform. It's yet another example of how the mobile wallet can work for the 99% -- and a clear push back against competitor Western Union (WU), which has been offering a similar service since 2008, and launched it in the U.S. in May 2011.

A year after its U.S. mobile launch, 10% of Western Union's online customers had begun using the app, and were making transfers at a slightly greater frequency, according to Khalid Fellahi, head of Western Union's digital group.

That success, in part, likely induced MoneyGram to go mobile as well.

Now, instead of accepting the inconvenience of running to a physical MoneyGram vendor and filling out annoying paperwork, MoneyGram customers can simply whip out their smartphones. Using the Mobile Money digital wallet, they'll be able to rapidly send money to any of the company's 284,000 locations worldwide.

Introducing mobile money transfer is a winning strategy because it offers convenience, reliability and flexibility, said Anindya Ghose, a professor at NYU's Stern Business School. "By going the mobile wallet way, MoneyGram will enable their customers in any part of the world to provide their end-users with convenience to get money when it's needed where it's needed, securely. This new technology is going to be a game changer."

And the joint effort will allow both companies to leverage their extensive combined networks to tap into the market of unbanked and underbanked.

It's a surprisingly big market: Globally, the amount of cash transferred using mobile money apps is expected to reach $47.9 billion by 2013, according to Ghose. International remittances are a big part of that total.

In the wider context of increasingly popular mobile wallets and peer-to-peer exchange apps, MoneyGram's move was essential if it was to stay current.

"Almost every payments-related company has a digital wallet of its own," Ghose said.

According to John Pironti, security and risk advisor with Information Systems Audit and Control Association, MoneyGram's mobile app will be "an important gateway to a new generation of customers who have no interest in visiting a physical location or interacting with a human to access their products."

But the challenge for MoneyGram may be tapping into the right mobile provider market, according to T.K. Keanini, chief research officer at nCircle, a provider of information risk and security performance management solutions.

"This partnership is very complementary and again, I think picking the right mobile platforms will be important, because the target market is the unbanked and underbanked regions of the underdeveloped and developing economies. I'm guessing this is not the iPhone5 market."




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