The opportunities and risks of online money transfer companies

Today, MoneyGram confirms that it has accepted a buyout offer from Ant Financial at $13.25 per share. The purchase is not officially made yet till it is approved by the regulators including the Committee on Foreign Investment in the US. I think that Ant Financial has a good chance to make the deal successfully given Jack Ma previously met the current US President Trump in personal. The buyout will allow Ant Financial to have the access to an international network of 2.4billion dollars accounts, showing the company’s global ambition. However, how successful this type of companies is in the future is questionable. My today’s article is going to discuss the opportunities and risks these online money transfer companies may have in the near future.

Firstly, the Forex market can bring opportunities as well as risks for these online money transfer companies. With a good trading strategy, online money transfer companies can make extra profits through the Forex market; however, the risk is obvious that it is possible to make losses. Secondly, the increasing American protectionism could increase the uncertainties of the future policy changing in the US. The policy changing does not influence the acquisition and merge deals, but also has influence on these companies’ revenues as tax policies can influence trading across borders. Thirdly, Ant Financial is a Chinese company, the foreign reserves of the Chinese government are decreasing in recent years. If Ant Finanical’s global ambition help more goods and services to be sold to overseas, the Chinese government can receive more foreign reserves and more importantly the Chinese economic growth rate may be increased as well; therefore, if these things happen, Ant Financial could get additional support from the Chinese government. Fourthly,  once online money transfer companies can build a huge market based on their money transfer networks, the networks then become closed economies, while the majority of the money in the networks can remain in the networks, then the online money transfer companies can have provide extra services in the economies they build and gain additional profits. Ant Financial has been doing well in this part, as Alibaba has built a huge online store in China. Fifthly, the challenges from the traditional payment platforms and banking remain.

Overall, online money transfer companies is unlikely to have surprising growth in their industry in the near future, due to the slowdown of globalization. In addition, the Chinese company, Ant Financial, I think has a more complete business structure than other similar companies, including PayPal and Square.