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Paypal, backed by Moneygram takes on Skype through partnership
The above picture does not seek to portray paper money as play money due to quantitative easing, but rather to illustrate a new game which has commenced following an interesting announcement.
There are some services on the internet who are not necessarily supported because they are competitively priced but rather because they are conveniently placed. In fact: I remember in 2008, attempting to make my first convenient money transfer via Skype to a family member abroad, when their account was unconfirmed and the transaction refunded to me – but wait: Skype did not seem to quibble about keeping their commission, unlike Paypal, who might be expensive but at least they would provide a 100% refund when any deal is cancelled.
Now Paypal has teamed up with MoneyGram to make use of their combined weight and strategic positions to become leaders in a very big market: Online money transfers between different countries. What makes MoneyGram and Paypal the perfect match is the fact that each has a unique position in the market, which when combined, would raise the barriers to entry to an all new level for any corporation dreaming of competing.
What is so unique about MoneyGram?
It’s simple: Presence.
MoneyGram can be found from the bazaar’s of Pakistan to the spaza shops of South Africa and the shopping malls in Australia. Where HSBC and other corporations seems to lose their reach, Moneygram is different: It has several locations covered. It seems that much like Western Union, MoneyGram has the flexibility of being set up as a stand along business for example the high streets of London but also to be run as a smaller add on activity to an already existing business such as a hotel or mobile phone shop in countries where it simply is not worth it for HSBC to open a bank.
What is unique about Paypal?
Whereas MoneyGram has the physical presence, Paypal boasts online presence. There is not a merchant in the world with so many users and retailers making use of it’s services, meaning Paypal is well placed strategically to roll out a new service to a market of already loyal supporters.
Online presense + Physical presence = Market domination.
It is clear that the convenience factor of Paypal and Moneygram partnership, combined, is likely to be the foundation for another success story and that Skype would have to come to the party for outstanding service if it was to keep a small share of the money transfer market.