Money transfer business to the Arab states
Regional, Business, 2/21/2003

Money transfer in the Arab states is a function of the large number of expatriate and immigrant community in the US, Europe, Canada and the other countries through Africa and South America.

The major business plays in the US are Western union and Moneygram, with new niche and smaller regional players.

Kathy Rebuffony, from MoneyGram, a VIAD Corp subsidiary, says the company has 55000 agent locations worldwide for money transfer, and are located in 155 countries. The company considers Western Union to be its main competitor.

Moneygram has taken the approach of partnering with major companies in order to facilitate money transfer. It has partners such as Canada Post, and the UK post office, and Walmart in the USA as agents to send money from. The company also partners with companies in the Arab states,where is has some 1100 agents. In Morocco, it has some 487, and works with Banque Populaire / Credit Du Moroc SA. It has the next highest number of agents in Jordan and Tunisia followed by Saudi Arabia where it partners with Alrajhi Foreign Exchange / Almoudi Exchange. US companies do not work in certain Arab states that have trade restrictions with the USA.

Moneygram's name brand is less known than that of its major competitor Western Union; so company is trying experimenting in targeted marketing in communities, says company officials.

Emeka Ohuche, CFO for Ikobo, an online money transfer company, said the business of remittance and individual money transfer is about $150 billion internationally, according to some estimates, with his company growing 300% on a month to month basis. The privately held company says that it charges 3% for domestic transfers (transfers within the same country), and 4 to 8% average internationally, depending on the transaction. The company operates anywhere there is a VISA network, and is therefore limited to the Arab states that have VISA partners such as Saudi Arabia, Morocco, UAE, Oman, Jordan, Qatar, Lebanon Bahrain, and Kuwait. The individuals transfer funds by providing a VISA card account or a checking account, and the intended recipient of the funds is mailed from the US or from the local country, if a local partner exists, a credit card that they can use at any ATM machine to withdraw the funds, or to use the card to make purchases. The recipient can use the same card on subsequent money transfers says Ohuche.

Western Union, a dominant name in this business, is active in the Arab states as well. Company officials with Western Union, say the company is the largest non-bank company for money transfer with 150,000 agents worldwide. The company has focused within the last 10 to 15 years on the international market, with growth growing notably in that area within the last 6 years, with last year seeing 32 percent growth in transactions. The company serves over 159 countries, with total revenue growth put at 24% for last year.

Competitors are regional and local niche players who may be located in certain ethnic areas, and tend to focus on transfers to a certain location or city.

Ruchika Kohli, assistant manager, marketing for the Middle East Region, said there are more than 1500 agents for Western Union in the Arab states, covering most of the Arab states. The company says that Lebanon has the most agents numbering 400, followed by Morocco with 336 locations. The company partners with companies locally, such as in Saudi Arabia with SAMBA (Saudi American Bank) with its 29 locations.

Western Union says it has a 96% brand name awareness in the US, and has an agent network of some 50,000 agents in the US that constitute partnerships with grocery stores, supermarkets, check cashing companies and independent mom-and-pop shops in the local communities. Western Union says that it invests in the local communities it serves, and sponsors local events such as the Arab National Festival in Detroit, and the Arabic Film Festival and backgammon tournament that are popular with ethnic Arab Americans, and the company sponsors major events and concerts as well.

According to some sources Arabic News (ArabicNews.com) talked to, the money transfer remittance business internationally is estimated at about 55% percent originating from the US and Canada and is projected to grow globally at the rate of 40% annually.

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