Western Union, MoneyGram interests in Bitcoin for Money Transfer
Western Union and MoneyGram are studying ways their customers could use their services to send and receive money transfers denominated in bitcoins, the digital currency.
The fervor over the digital currency bitcoin has drawn interest from two of the world’s largest movers of money.
Western Union Co. (WU) and MoneyGram International Inc. (MGI) are studying ways their customers could use their services to send and receive money transfers denominated in bitcoins, the companies’ executives say.
Both companies run remittance networks commonly used by immigrants to send money to friends and family members in foreign countries. Western Union also operates a business-solutions unit that sells services to companies for sending payments to other businesses.
The firms have no immediate plans to add bitcoins as a currency option for customers, though both say the increasing popularity of the virtual money has prompted them to consider whether they should make it available in the future.
“If bitcoin continues to grow and the value is defined more internationally, we may find an opportunity for bitcoin to be used to pay for commerce transactions through a Western Union business solution,” David Thompson, an executive vice president and chief information officer of Western Union, said in an interview this week.
The Englewood, Co.-based company is primarily exploring ways its commercial customers may want to use bitcoins, Mr. Thompson said.
Bitcoin is the name for both the peer-to-peer payments system that allows people to pay each other from virtual accounts accessed online and on mobile devices as well as the digital currency itself. Launched in 2009 by a developer whose true identity remains unknown, the digital money is not backed by any central governing body, such as the Federal Reserve, and allows users to remain mostly anonymous–save for their “bitcoin address”–in transactions.
Buzz about bitcoins has grown in recent weeks due to wild swings in the currency’s value, driven by economic turmoil in the euro zone, outages at the largest bitcoin trading exchange and U.S. Treasury Department guidance stating money-transmitter rules that apply to the likes of Western Union and MoneyGram also apply to exchanges and sellers dealing with the currency.
“We’ve been contacted by folks who are doing various things in this space to see if there’s opportunities for us to help enable greater functionality for some of these [bitcoin companies] but we’ve not committed and don’t have any imminent plans to announce anything,” Peter Ohser, senior vice president of U.S. and Canada for MoneyGram, said in an interview.
While MoneyGram has no direct relationships with bitcoin companies currently, its money transfer agents can already help people complete the purchase of bitcoins if they’ve made arrangements in advance with a payment processing company called BitInstant LLC.
BitInstant has a deal with a company called ZipZap Inc., which in turn has a relationship with MoneyGram to allow consumers to pay bills and purchase goods from online merchants with cash. That means a BitInstant customer can place an order for bitcoins on its website and then complete the transaction at a participating MoneyGram location with cash, the same way they would pay a bill.