On Monday, MoneyGram International Inc. (MGI) publicized its global alliance with Ceridian Stored Value Solutions (Ceridian SVS), a premier provider of global prepaid services, whereby the latter will offer in-lane prepaid money transfer processing services to the company.
Through this global relationship, MoneyGram and Ceridian SVS will build the first vast network money transfer product by stretching out to as many as 40 countries internationally in Asia, Russia, the UK, the US and the European Union. While the money transfer service will be provided in multiple denominations in local currency, both the parties expect to start the joint operation by the first quarter of 2011.
The global alliance will not only provide convenient ways of transferring money to MoneyGram’s customers and agents, it will also expand Ceridian SVS’ prepaid transactions through MoneyGram’s vast global network.
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, adopting a balanced-expansion approach, MoneyGram has now grown its network to more than 203,000 agent locations in 190 countries and territories.
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.
MoneyGram continues to avail fresh opportunities by exploring new locations and incorporating latest and flexible technology that facilitates transfers through mobile phones, prepaid cards or ATMs. In addition, the company is now exploring more money transfer channels that include retail, petroleum and convenience stores, 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 generation of 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.
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