MoneyGram has accused the Post Office (PO) of ‘misleading’ branch owners when it pulled the plug on MoneyGram services with less than a day’s notice.
On 30 September, the PO told branches MoneyGram services, already offline due to a cyber attack at MoneyGram, would become permanently unavailable on 1 October after the two companies failed to renew their contract.
MoneyGram had went down around the world following a cyber attack on 20th September and has been unavailable in PO branches since, pending a review of MoneyGram’s security.
The message from PO product portfolio director Ed Dutton sent to branches on 30 September, seen by Better Retailing, claimed the service would be permanently pulled due to failed negotiations to renew the service. It also warned the cancellation would harm efforts to understand how the cyber-attack could impact its branches.
The statement read: “The contracting process was in the final stages when, unfortunately, MoneyGram suffered the cyber-attack. With MoneyGram services and communication channels severely disrupted over the last 10 days, Post Office offered to extend the current contract for a shorter period to enable us to prioritise the service renewal. This short extension would have also enabled us to understand any longer-term impact of MoneyGram’s incident for our customers, postmasters and partners.
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“Unfortunately, MoneyGram has not accepted our offer and therefore our contract with them will end today. We apologise for the short notice period.”
However on 1 October, MoneyGram sent messages to branches disputing the claims made by PO. The message stated; “We are shocked and disappointed by the message you received from the Post Office, which was both misleading and a breach of the current agreement’s confidentiality… MoneyGram believes it had a binding agreement on a new 12-month extension with the Post Office. However, the Post Office leveraged our unforseen cyber incident to materially alter the duration and terms of the agreement in a way that was detrimental to MoneyGram.”
MoneyGram also reassured PO retailers that the cyber-attack ‘has no effect on any of our agents’ systems.’
Branch owners were quick to criticise the Post Office for leaving negotiations with MoneyGram ‘down to the wire’ with no deal signed with less than two weeks to run on the existing agreement. ‘Another botched negotiation’ said one shop owner.
The axing of MoneyGram leaves PO branches with just one international fund transfer partner – Western Union. However, as of February 2023 Western Union was only to be made available in around a third of Post Office branches, meaning more branches and communities are now completely without a means of sending funds to other countries.
MoneyGram is also featured prominently on many PO partnered stores’ signage, likely creating further customer confusion in branches.
Post Office statement
Responding to Better Retailing, PO refused to say how much the average branch was making from MoneyGram, describing the information as ‘commercially sensitive’, especially due to its relationship with MoneyGram rival Western Union.
A spokesperson from the PO said 6,000 branches offered MoneyGram services, while 4,000 are offering Western Union services. It encouraged branches that offered both to switch customers to Western Union ‘at this time’.
The PO spokesperson added: “We recognise that not all 6,000 Post Office branches that offered MoneyGram also have Western Union – BUT the vast majority had both.”
The PO also shared a statement also shared the following statement, which was sent to branches this week: “Post Office and MoneyGram have been in contract negotiations since June of this year and had expected to agree a new contract to roll-on from 1st October 2024.
“The contracting process was in the final stages when, unfortunately, MoneyGram suffered the cyber-attack. With MoneyGram services and communication channels severely disrupted over the last 10 days, Post Office offered to extend the current contract for a shorter period to enable us both to continue to prioritise the service renewal activity in the coming days.”
Post Office retailers react
CWU branch representative Sean Hudson’s breanch is one of those now without any international fund transfer services. He told Better Retailing: “We had MoneyGram but not Western Union, there’s not too much demand in our area but I know from what other branches have said that in some areas MoneyGram represented a significant chunk of income for them.”
Jino Sebastian, of Town Hill Post Office in Swansea told RN: “We have a large amount of customers with family all over the world, and MoneyGram was very popular. We recently added Western Union through Post Office and are doing our best to switch customers to the service, but many are reluctant, some claim the sending limit is too low or their family are unable to receive the funds in that country with Wstern Union. In the average month, our remuneration for providing MoneyGram services is around £200, so this is a big loss for us. The notice given has been shocking. For branches worst affected they should consider providing compensation.”
S Lekhi, a multi-branch owner in the Birmingham area said: “We were hemorrhaging customers in the first five to six days it was down. PO has been offering MoneyGram for over a decade and while we do have Western Union, it’s MoneyGram that our customers understand and trust. These are now lost customers. They’ve gone elsewhere. MoneyGram was respected by branch owners because their customer service to us and value to the customer were second to none. The remuneration from MoneyGram was very important, even critical, but it’s not just the revenue it brings in but the footfall too. The questions for PO is why were subpostmasters not involved in negotiations, why weren’t we kept updated and why weren’t we warned on 20 September when the risk of contract not being renewed became greater? The PO says it wants us to be partners in their business, but we are given no say in pressing issues like this which affect all of our branches.”
Vince Malone, of Tenby Stores and Post Office is currently standing for election for a non-executive director role at the Post Office. He reacted: “The erosion of services is always going to be a problem . There are circa 6,500 branches that had MoneyGram and the impacts will be varied across them all. For us we also offer Western Union so we can hopefully convert as many of our customers as possible, that’s currently not the case for all MoneyGram branches. The most disappointing aspect I feel is that it’s been allowed to get to the contract end and not sorted out with time to spare. Obviously there’ll be many factors at play but once again it is the individual postmaster, their post offices and our customers that will feel the impact.
Speaking to Better Retailing, a former postmaster wrongly accused of theft during the Horizon scandal, Shazia Saddiq, welcomed the loss of MoneyGram. She stated the service left PO branches open to security breaches. In evidence to the Horizon inquiry, she stated “hackers managed to hack into Horizon using the Moneygram service and transferred money to Pakistan in several transfers.” The PO then tried to make Saddiq pay back more than £33,000 associated with the transfers. It was later claimed 11 branches were targeted by similar instances of fraud.
Hudson added the inability to get a deal with MoneyGram across the line raised concerns over the much larger PO negotiations with banks over the fourth banking framework, which is expected to be underway. “There must be lessons learnt” he stated.
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