QUOTE AND NEWS
The Hindu Business Line  Mar 6  Comment 
Muthoot Finance has bagged MoneyGram’s ‘Best Sub-Agent in South Asian Region’ for the third consecutive year. The award was presented to George Alexander Muthoot, Managing Direct...
Cloud Computing  Feb 27  Comment 
I read an interesting article the other day that resonated so much I felt it was worth sharing and expanding upon its premise here. The article, originally written by Andrew Dailey of MGI Research, delved into the role of growth and accelerated...
Motley Fool  Feb 13  Comment 
Is this meaningful? Or just another movement?
TheStreet.com  Feb 13  Comment 
DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players who...
Forbes  Jan 26  Comment 
The first regular Tax Court decision of the year Moneygram International, Inc. & Subsidiaries v. Commissioner has not attracted much attention. The case has some big dollars and perhaps a breath of scandal.  The issue - whether you are a bank...
Benzinga  Jan 15  Comment 
Analysts at JP Morgan upgraded MoneyGram International Inc. (NASDAQ: MGI) from Neutral to Overweight. The price target for MoneyGram International is set to $10. MoneyGram International shares have dropped 57.89% over the past 52 weeks,...
Benzinga  Jan 15  Comment 
Benzinga  Nov 21  Comment 
In a report published Friday, Compass Point analyst Michael Tarkan initiated coverage on MoneyGram International (NASDAQ: MGI) with a Neutral rating and $9.00 price target. In the report, Compass Point noted, “We are assuming coverage of...
Benzinga  Nov 17  Comment 
Australia-based customers looking to transfer funds to family and friends now have access to more easy-to-use kiosks as part of a new agreement between MoneyGram (NASDAQ: MGI), a leading global money transfer company, and Australia fuel company...




 
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
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki