This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Why Western Union and MoneyGram Investors Shouldn't Panic

NEW YORK (TheStreet) -- Walmart (WMT) will launch its new money-transfer service Thursday. What will this mean for long-time stalwarts Western Union (WU) and MoneyGram (MGI)?

Walmart has the size to make it in this business and will offer low transaction costs, but that doesn't mean doom for the traditional players although MoneyGram does operate out of Walmart stores.

The service, which allows consumers in the U.S. to transfer money up to $900 to any one of the 4,000 domestic Walmart stores, is a smart move on the part of Walmart because it will help drive store traffic.

However, the impact on Western Union and MoneyGram won't be as huge as the investment community projects. Here's why.

The Walmart service will only be made available in the U.S, which means only the U.S. segment of Western Union and MoneyGram that will feel the impact. Both of these companies have a strong multinational presence. In fact, North America is not even the largest portion of their revenue.

In addition, both companies have strong agent networks, which is their biggest asset in this case. Western Union and MoneyGram, as of the end of 2013, have 500,000 and 336,000 agent locations across 200 countries, respectively. None of these agents will automatically start using Walmart's payment service.

In fact, these agents would reduce the extent to which Walmart can gain entrance into the U.S. money transfer market. I mean, customers don't have a choice with Western Union and MoneyGram agents that use the services of these companies as a part of their businesses.

For instance, Axcess Financial, the operator of Check 'n Go with over 1000 locations in the U.S., has a deal with Western Union. The introduction of Walmart's service will have little to no effect on how the financial services provider does its business.

Let's look at the annual reports of these companies.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,113.54 +61.81 0.36%
S&P 500 1,983.53 +9.90 0.50%
NASDAQ 4,456.0160 +31.3120 0.71%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs