QUOTE AND NEWS
Benzinga  31 min ago  Comment 
MoneyGram (NASDAQ: MGI), a leading global money transfer and payment services company, announces an agreement with Emirates India International Exchange, a local currency exchange house, to offer money transfer services inside its locations in the...
SeekingAlpha  Apr 23  Comment 
By KL Investment Partners: MoneyGram (MGI) is a leading global money transfer and payment services company. Its primary consumers are persons who may not be fully served by other financial institutions, which it refer to as unbanked or underbanked...
TheStreet.com  Apr 23  Comment 
NEW YORK (TheStreet) -- Walmart will launch its new money-transfer service Thursday. What will this mean for long-time stalwarts Western Union and MoneyGram ?Walmart has the size to make it in this business and will offer low transaction costs,...
Benzinga  Apr 21  Comment 
Toward the end of trading Monday, the Dow traded up 0.22 percent to 16,443.00 while the NASDAQ surged 0.45 percent to 4,114.33. The S&P also rose, gaining 0.27 percent to 1,869.24. Leading and Lagging Sectors Monday morning, the healthcare...
Benzinga  Apr 21  Comment 
Benzinga  Apr 21  Comment 
In a report published Monday, Bank of America Merrill Lynch analyst Sara Gubins maintains a Buy on Moneygram International (NASDAQ: MGI) following Wal-Mart Stores announcement of a new private-label money transfer service. To better reflect the...
TheStreet.com  Apr 21  Comment 
NEW YORK (TheStreet) -- Moneygram International shares are down -12.2% to $13.00 today following last week's announcement of Walmart's "Walmat-2-Walmart Money Transfer Service".Previously, Moneygram was the fund transfer service used in Walmart...
StreetInsider.com  Apr 17  Comment 
52-Week High: Baker Hughes, Inc. (NYSE: BHI) $69.76. Baker Hughes up today after reporting Q1 EPS of $0.84 and revs of $5.73 billion, versus consensus estimates calling for EPS of $0.78 and revs of $5.72 billion. For more color, click here. ...
TheStreet.com  Apr 17  Comment 
NEW YORK (TheStreet) -- Moneygram International  stock is plummeting on Thursday after retail giant Walmart  announced exclusive money transfer service Walmart-2-Walmart. The world's largest retailer said the service, similar to Moneygram's,...
Forbes  Apr 17  Comment 
Walmart is blurring the line between banking and shopping as it adds yet another financial service to its stores across the country.
Benzinga  Apr 17  Comment 
Community Health Systems (NYSE: CYH) shares touched a new 52-week low of $34.655. Community Health shares have dropped 14.42% over the past 52 weeks, while the S&P 500 index has gained 20.80% in the same period. RadioShack (NYSE: RSH) shares...




 
TOP CONTRIBUTORS

Moneygram International (NYSE:MGI) lets customers send money through a worldwide network of over 190,000 agent locations in approximately 190 countries and territories.[1] MGI has traditionally relied on fixed fees on its services for profit, but also invests the float, or temporary cash it holds for clients who are sending money.

Money transfers, which are the lifeblood of Moneygram's business model, are heavily dependent on immigration patterns. The bulk of the volume of money transfers each year come from immigrants sending cash home to their families.

In February 2008, MGI agreed to sell a 63% stake of itself to an investment group lead by Thomas H. Lee and Goldman Sachs Group (GS) in return for $710M of investments.[2]

Company Overview

Business Financials

In 2009, MGI earned a total of $1.17 billion in total revenues. This compares to its previous year's total revenues of $1.27 billion. However, despite the decrease in total revenues, MGI was able to actually improve upon its net income situation. Between 2008 and 2009, MGI's net income increased from a net loss of $261 million in 2008 to a net loss of just $2 million in 2009.

Business Segments

MGI divides its business into two main functions:

Global Funds Transfer

MGI caters primarily to "unbanked" or "underbanked" consumers who need to transfer sums of money quickly and painlessly, but do not have access to, or choose not to use, traditional banking institutions. The company achieves this through a worldwide network of agents, totaling 190,000 locations in approximately 190 countries (prominently the United States, Spain, Italy, and the United Kingdom).[1] Among the services in this segment, consumers may transfer direct sums of money internationally, purchase money orders and pay bills electronically or by phone.

Payment Systems

MGI provides check processing, money orders, and official check outsourcing services. Through its subsidiary, Financial Services Management Corp. (FSMC), the company offers high volume check processing and disbursement, often related to rebates and government programs. MGI, as the leading national issuer of money orders, sells money orders through financial institutions to individual consumers. Lastly, the company's official check outsourcing services facilitate the issuance of official checks by financial institutions. As a medium of transaction more reliable and trustworthy than personal checks, official checks are used when the payee requires further assurance. MGI provides services that allow financial institutions to securely print official checks at multiple locations, thus lessening the need for other forms of transactions, such as wire transfers.


Key Trends/Forces

Maintaining Agent Network

Maintaining MGI's agency Network is essential to MGI, which relies on an international network of retail agents for its Global Funds Transfer segment. Furthermore, a substantial portion of its transaction volume is generated by a limited number of agents. Any decision by an agent to discontinue business with MGI, or reduce its own size, will adversely affect MGI's profits because MGI relies on these agents to provide customers with access to its services.

Regulation Compliance

Meeting regulations is difficult given MGI's involvement in a wide range of countries. The company is often subject to complicated and occasionally contradictory regulations. [3] For example, it must abide by the requirements of the Office of Foreign Assets Control, which prohibits MGI from operating in certain countries. Furthermore, domestic and international laws related to anti-money laundering and anti-terrorism often affect MGI's operations. The company often cannot directly enforce these regulations upon its agents because agents are essentially independent businesses, and MGI does not have the resources to individually ensure each agent's compliance. However, MGI must suffer the consequences of any failures to follow regulations, including loss of licenses, terminations of contracts, and official fines.

MGI is Exposed to the Performance of its Independent Agents

Because its operations are inevitably tied to those of its agents, MGI's performance relies upon the performance of its agents. At any one time, MGI has on average $1.2 billion in credit exposure to its agents in the form of money orders, money transfers, and bill payment. As such, it faces significant risk from agent default and fraud, and may suffer second-handedly from any failures of its agents to attract customers. Furthermore, operating through agents limits MGI's control over its own reputation, which will change according to that of its agents. [4]

MGI Depends on International Migration Patterns

The money transfer business relies in part on immigration patterns, when individuals move toward economic prosperity in order to send money back to their native countries. Any disruptions, such as wars, acts of terrorism, and health emergencies, may adversely the flow of immigration, and adversely affect MGI's operations.

Competition

MGI competes with most institutions providing money orders and money transfer services. Its primary niche - Global Funds Transfers - is concentrated with a small number of large competitors and many small ones.[5] Most prominently, Western Union Company (WU) has an agent base that is three times that of MGI, and controls a 17% market share.

Global Funds Transfer

  • Western Union Company (WU) : competes with MGI with many similar services under the Global Funds Transfer segment. It possesses greater transaction volume, a larger agent base, and a more established brand name.
  • U.S. Postal Service: MGI competes domestically with this institution in the sale of money orders.
  • Global Payments (GPN) : Another competitor in the money transfer sector, this company enjoys a larger transaction volume compared to MGI..

Payment Systems

  • Integrated Payment Systems (sub-branch of First Data (FDC) ): This company has announced its exit from the official check and money order business as of Feb 22nd, 2007, potentially creating new customer opportunities for MGI. [6]
  • Ria Financial which is a Subsidiary Euronet Worldwide (EEFT) : Which is growing very fast by providing the best services in money transfer. Recently they are going to introduce a 10 minutes cash collection services for South Asian region This company from USA.
  • Euronet Worldwide (EEFT) : This company overlaps significantly with Moneygram as an electronic payments provider. Interestingly, Euronet offered to buy Moneygram for $20.00 per share in mid-December of 2007, [7] and is contemplating another attempt at MGI's purchase as of February, 2008. [8]

Notes

  1. 1.0 1.1 MGI 10-K 2009 Item 1 Pg. 1
  2. "Moneygram Gets $710M...", AFX News Limited, Feb 12, 2008
  3. MGI 10-k, Item 1A, Pg 12
  4. MGI 10-k, Item 1A, Pg 13
  5. MGI 10-k, Item 1A, Pg 11
  6. "First Data to Exit..." Business Wire, Feb 22, 2007
  7. MSN Money "Market Report - In Play (MGI)", Dec 13, 2007
  8. Trading Markets "Euronet may make another bid for MoneyGram", Feb 24, 2008
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