MoneyGram International Inc is moving expeditiously to get its systems back online after a cybersecurity issue forced it to take its global systems offline.

MoneyGram first publicly acknowledged the issue on X (formerly Twitter) on Sunday when it pointed to a network outage impacting connectivity to a number of its systems. It noted then that it was diligently working to better understand the nature and scope of issue.

However, MoneyGram then posted an update on Monday, stating, “MoneyGram recently identified a cybersecurity issue affecting certain of our systems. Upon detecting, we immediately launched an investigation and took proactive steps to address it, including proactively taking systems offline which impacted network connectivity. We are working with leading external cybersecurity experts and coordinating with law enforcement.”

The Bank of Jamaica (BOJ), the regulator of the foreign exchange and remittance market, published a notice on its website on Monday stating, “Bank of Jamaica (the Bank) has been informed that one overseas remittance service provider, MoneyGram Payment Systems Inc (MoneyGram), is currently experiencing a global network outage, rendering their services temporarily unavailable. As a result, remittance companies (primary agents) that offer MoneyGram services in Jamaica are unable to access the MoneyGram platform to send remittances abroad or disburse remittance proceeds to recipients in Jamaica.”

The BOJ noted that customers could consider using other remittance transfer options in the interim while MoneyGram continues to have dialogue with the primary agents in Jamaica on when the systems should be restored.

Some of the other options include Western Union, Xoom, Ria, WorldRemit, Transfast, Boss Money, Remitly, Union Caribe, and the other range of options which can be found on the BOJ’s website at https://boj.org.jm/core-functions/financial-system/list-of-remittance-companies/. Another option individuals can explore to send money is through Visa Direct, which allows for someone to send money to another person with a Visa card connected to a bank account.

MoneyGram then posted a new update on Tuesday stating, “We continue to make progress in successfully restoring some of our key transactional systems. Our dedicated team is actively working around the clock on resuming normal business operations. Once all systems are fully operational, transactions that are currently pending will be made available to customers. We apologise for any inconvenience and will continue to share relevant updates as available.”

When the Jamaica Observer reached out to the different MoneyGram agents, several noted that they were in communication with MoneyGram but were unable to say anything else since it was out of their control.

Jacinth Hall-Tracey, managing director of Lasco Financial Services Limited, told the
Business Observer, “As of today, our network is still down. However, we have seen communication from MoneyGram a few hours ago that they’ve successfully started to restore some of their transaction systems. So, we remain hopeful that in short order we can be able to serve our customers in our normal way. We rely on what MoneyGram shares with us, and they’ve been very communicative.”

Remittance makes up 43 per cent of Lasco Financial’s revenue which totalled $2.20 billion as of the March 2024 financial year (FY). Another 34 per cent of the company’s revenues originate from its cambio business, which is affected by the inflows of foreign exchange with regular customers, but also the inflows of remittances.

Lasco Financial as a remittance provider receives a commission from MoneyGram for the disbursement and processing of remittances by customers. However, the company’s business was impacted by a 17 per cent cut in remittance commissions by MoneyGram in April 2022. Thus, this disruption has significantly impacted the remittance provider and its sub-agents which are licensed through Lasco Financial who is the primary agent. Lasco Financials’ annual report mentions how it is a top receiver for Ria and MoneyGram in Jamaica. Remittances and bill payment services act as a feeder business for sub-agent locations and can sometimes constitute a significant amount of their revenue.

Omar Brown, chief executive officer of Alliance Financial Services Limited, noted that he was currently awaiting subsequent updates from MoneyGram International as to the developments happening for the restart of its systems. Alliance Financial is another major MoneyGram remittance company in Jamaica with more than 50 sub-agents.

According to the BOJ’s website, JMMB Money Transfer Limited, TFOB (2021) Limited, JN Money Services Limited, Paymaster (Jamaica) Limited, and VMBS Money Transfer Services Limited are the other primary agents that use MoneyGram. There were 233 listed companies with 493 locations across Jamaica for remittance services, as of Tuesday. Checks by the Business Observer revealed that 262 of these locations listed MoneyGram as an offered remittance service.

The only two primary agents with Western Union are GraceKennedy Remittance Service Limited and TFOB (2021) Limited. TFOB (2021) is the operator of the Lynk mobile application and was onboarded in May as GK’s first digital agent via a partnership which allows for remittance recipients to receive remittances digitally. There were 231 locations mentioned as offering Western Union as a service.

While the distribution of the remittance market between Western Union and MoneyGram is not publicly known, it has been estimated in previous publications that Western Union is the dominant remittance service in Jamaica. This goes a long way for persons who need the funds sent from family and friends in overseas countries to assist them in taking care of their daily expenses. This disruption will not only significantly impact the remittance companies, but the ordinary person who needs the remittance in what is typically described as month-end when most bills need to be paid.

BOJ data noted that remittance inflows totalled US$3.34 billion in 2023 with remittance inflows down five per cent to US$1.94 billion between January to July 2024. 68 per cent of remittances originate from the United States of America with most remittances collected between Kingston & St Andrew, St Catherine and St James.

MoneyGram International was acquired in June 2023 by Madison Dearborn Partners, a Chicago-based private equity firm, for US$11 per share or US$1.8 billion and taken private. MoneyGram’s last 10-K or annual report noted that its global money transfer services represented 91 per cent of its US$1.31-billion total revenue in 2022. MoneyGram also offers bill payment services, money orders and services with digital wallets. MoneyGram processed over US$40 billion in over 200 countries through more than 440,000 agent locations.

According to the Inter-American Dialogue, Western Union processed over US$99 billion in 2023 which was 12 per cent of the global transfers market which was valued at US$669 billion. Western Union earned US$2.12 billion for the first six months of 2024 and had US$7.97 billion in assets at the end of June 2024.

This is the second major global outage experienced in 2024 following CrowdStrike Holdings, Inc’s fault update of its Falcon Sensor security software that caused significant global disruptions on July 19, and subsequent days. That event resulted in numerous flights being grounded, disruption to emergency services, limitations to pay for transactions, inability to access hotel rooms, and so on.