MoneyGram 2004 Annual Report Download - page 6

Table of Contents
our Payment Systems segment in 2004 and 2003, respectively.
We primarily derive revenues from our financial institution customers from the investment of funds underlying the official check or financial institution
money order. We invest funds representing customer items from the time the proceeds are remitted until they are cleared. We also derive revenue from fees
paid by our customers. In 2004, Payment Systems segment revenue was $294.5 million and operating income was $27.2 million.
Official Check Outsourcing Services: We provide official check outsourcing services through our PrimeLink® service. Financial institutions provide official
checks, which include bank checks, cashier checks, teller checks and agent checks, to consumers for use in transactions when the payee requires a check
drawn on a bank or other third party. Official checks are commonly used in consumer loan closings, such as closings of home and car loans, and other critical
situations where the payee requires assurance of payment and funds availability. Financial institutions also use official checks to pay their own obligations.
Our PrimeLinkplus® product is an internet-based check issuance platform that allows financial institutions and other businesses with multiple locations to
securely print official checks at remote locations on a client-controlled basis, eliminating the need to overnight the checks from the main office or wire
transfer the funds. We provide these outsourcing services at a low cost to financial institutions and pay an agreed upon commission rate on the balance of
funds underlying the official checks pending clearing of the items. We clear the official check items pursuant to contracts with clearing banks as a service to
our official check customers.
Money Orders: The Payment Systems segment also offers money orders through financial institutions in a manner very similar to money orders offered
through our retail agents in our Global Funds Transfer segment. In 2004, approximately 20 million, or seven percent, of our total money orders were sold
through financial institutions.
Controlled Disbursement Processing: We process WIC checks through our subsidiary, FSMC, Inc. WIC checks are issued under the Special Supplemental
Nutrition Program to Women, Infants and Children administered by the U.S. Department of Agriculture through the various states. FSMC, Inc. also processes
other controlled disbursements, such as rebate checks. Our revenues from this area are primarily derived from fees.
Sales and Marketing
Global Funds Transfer Segment: We market our Global Funds Transfer segment products and services through a number of dedicated sales and marketing
teams. In the United States, our dedicated sales and marketing teams market money transfer services, money orders and bill payment services on a regional
basis to our three principal distribution channels: large national agent accounts, smaller, independent accounts and check cashing outlets. We also have
dedicated sales and marketing teams that market our urgent bill payment services directly to billers. Our international sales and marketing for money transfer
services is conducted by dedicated regional sales and marketing teams that are generally located in or near their regions: Northern Europe; Southern Europe;
Eastern Europe; Asia; the Middle East; Africa; and Mexico, Latin America and the Caribbean.
We have introduced corridor pricing capabilities that enable us to establish different consumer prices for our money transfer services by defined transaction
corridors, such as narrowly defined zip code regions or widespread direct marketing areas. We are currently adding additional capabilities, including
implementing multi-currency technology that allows us to execute our money transfers between and among an increased number of different currencies.
Where implemented, these capabilities allow our agents to settle with us in local currency and allow consumers to know the exact amount that will be
received in the local currency of the receiving nation, or in U.S. or Euro dollars in certain countries.
Payment Systems Segment: We market our PrimeLink official check services through a dedicated team of official check sales and marketing professionals. In
addition, we have dedicated teams of sales and marketing professionals for our PrimeLinkplus product and for our sales of money order services through
banks. All marketing efforts are localized and customized to specific segments of the market. Relationship marketing is the substance of our approach to the
market. We have an intertwined network of relationships with technology providers, banks that provide marketing endorsements, banking associations,
consultants and others, including alliances with Wells Fargo and the Credit Union National Association.
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