On Thursday, MoneyGram International Inc. (MGI) publicized its alliance with leading demand payment processing company, BillingTree. The alliance will provide same-day, cash payment services through about 35,000 locations of MoneyGram in the U.S. and enhance its payment service solutions. These cash payment services will be made under BillingTree’s PaynCash brand. Through such alliances, MoneyGram has now grown its network to more than 203,000 agent locations in 190 countries and territories.
The partnership is based on MoneyGram’s immediate, on-the-spot cash payment solution that blends well with BillingTree’s payment service operations, which provides access to billing organizations, healthcare providers and financial merchants, through a variety of flexible payment options such as ACH and credit card via online, MOTO etc. Moreover, the guaranteed cash payments are reported to the bill-payor in real-time via MoneyGram’s proprietary payment tracking technology.
Hence, through this alliance MoneyGram will easily be able to supply BillingTree’s clientele by catering them with a number of quick and convenient payment alternative systems, which is of crucial need in the current global economic operations. BillingTree’s customers can now make payments through MoneyGram’s vast network of retail locations found in national grocery, pharmacy and departmental store chains that include Albertsons LLC, CVS/pharmacy and Walmart, to name a few.
Earnings Recap
MoneyGram reported second quarter loss per share of 31 cents, modestly ahead of the Zacks Consensus Estimate of a loss of 28 cents but substantially lower than the loss of 40 cents reported in the year-ago quarter. Higher money transfer transaction volumes and decreased operating expenses were offset by decreased top line on lower revenue per transaction and continued weakness in Mexico and Spain.
Money transfer business remains the driving force for MoneyGram. The company has been expanding its money transfer business across the globe through various recognized financial institutions. Further, operating on a balanced-expansion approach, MoneyGram reached a milestone by adding more than 2,000 agent locations in the Philippines alone, in 2009.
Additionally, MoneyGram has expanded its operations in the vital growth economies by adding key institutions such as Canada Post in May 2010, Bank Asya in Turkey in March 2010, Bank of China in January 2010 and Alpha Bank in Serbia in December 2009 , to name a few.
Besides, MoneyGram continues to avail fresh opportunities by exploring new locations and incorporating latest and flexible technology such as transfers through mobile phones, prepaid cards or ATMs, in order to speed up its money transfer services and enhance its remittance volumes.
However, MoneyGram has several issues to deal with in the near term, such as cost-cutting initiatives, debt-repayment strategy, utilization plans for cash and equivalents as well as generating sufficient cash flow for its operations. Unless these concerns are addressed, the company will continue to incur loss in its business.
Overall, though the current economic turmoil has weakened both the revenue growth and the operating leverage of MoneyGram, we believe that the company has the potential to overcome the impact of the volatile U.S. dollar against other currencies and additional losses in its investment portfolio, once the global economy rebounds to its historical highs.
