Clusterstock  Aug 19  Comment 
This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Every year, migrants send hundreds of billions of dollars...
Clusterstock  Aug 12  Comment 
This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here. Every year, migrants send hundreds of billions of dollars...
Clusterstock  Aug 6  Comment 
This story was delivered to Business Insider Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here. MoneyGram and Western Union, the two leading legacy remittance...
Benzinga  Aug 2  Comment 
On Friday, MoneyGram International (NASDAQ: MGI) will release its latest earnings report. Check out Benzinga's report to understand the earnings report's implications. Earnings and Revenue MoneyGram International EPS will likely be near 16...
Clusterstock  Jul 25  Comment 
This story was delivered to Business Insider Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here. Visa is   partneringwith legacy remittance firm MoneyGram to...


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.


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]


  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