MoneyGram 2006 Annual Report Download - page 6

Table of Contents
completes a form and pays the agent the money to be transferred, together with a fee. The agent enters the transaction data into a
point-of-sale money transfer platform, which connects to our central data processing system. Our platforms include AgentConnect®,
which is integrated onto the agent's point-of-sale system, and DeltaWorks® and Delta T3®, which are separate software and stand-alone
device platforms. Through our FormFree service, customers may contact our call center and a representative will collect the information
over the telephone and enter it directly into our central data processing system. The funds are made available for payment to the
designated recipient in various currencies throughout our agent network. The fee paid by the sender is based on the amount to be
transferred and the location at which the funds are to be received. Both the "send" and "receive" agents receive a commission from the
transaction. In some instances we offer our agents a tiered commission structure, rewarding the agent with a higher commission as the
volume of its money transfer transactions increases.
We have introduced corridor pricing capabilities that enable us to establish different consumer prices and foreign exchange rates for our
money transfer services by location, for a broader segment such as defined zip code regions or for a widespread direct marketing area.
We have also implemented multi-currency technology that allows us to execute our money transfers directly 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. dollars or Euros
in certain countries.
In 2006, we completed the implementation of our simplified consumer fee pricing structure in the United States. Our simplified pricing
structure includes reducing the number of pricing tiers or bands and allows our agents to more effectively communicate our value
proposition to our customers. Our pricing philosophy generally is to maintain a price point below our higher priced competitor but above
the niche players in the market.
Money Orders: Money orders, much like checks, can be presented by the consumer to make a payment or for cash. Our Global Funds
Transfer segment has its roots in the sale of money orders, a business we have been engaged in since 1940. Based on the number of
money orders issued in 2006, we are the nation's leading issuer of money orders. In 2006, we issued approximately 257 million money
orders through our network of almost 55,000 retail agent locations in the United States and Puerto Rico.
Our money orders are sold under the MoneyGram brand and are also sold on a private label basis or co-branded with retail agents. In
most cases, we receive transaction fees from our agents for each money order sold. In many cases, we receive additional monthly
dispenser service fees from our agents for the money order dispenser equipment we provide. Furthermore, we generate income from the
investment of funds that are remitted from our agents and which we invest until the money orders are cleared through the banking system,
or escheat to the applicable states. Generally, a money order will remain outstanding for fewer than ten days.
Bill Payment Services: Our bill payment suite of services allows consumers to make urgent payments or pay routine bills. The
acquisition of ACH Commerce in 2005 has allowed us to enhance our bill payment business and work to create a multi-faceted, full-cycle
set of services.
Our bill payment services are divided into two categories: walk-in payments and electronic payments. These options enable convenience
payers, just-in-time payers and delinquent debtors to pay bills through our network to certain creditors, or "billers." Our billers include
credit card companies, mortgage companies, auto finance companies, sub-prime lenders, cellular and long distance telephone companies,
utilities and third-party bill collectors. We work closely with our agents to identify billers in their service areas to target for our services.
Generally, our bill payment services generate revenue from transaction fees charged to consumers for each bill payment transaction
completed. Such revenue is included within the Global Funds Transfer segment, with the urgent bill payment revenue included as part of
money transfer revenue and all other bill payment revenue included as part of retail revenue.
The largest portion of the walk-in payments category consists of our ExpressPayment® urgent bill payment service. Our ExpressPayment
bill payment service, which is only offered through our money transfer agent locations in the United States, continues to grow as we add
new billers to our network. As of December 31, 2006, we provide our ExpressPayment bill payment services to over 1,800 billers.
ExpressPayment bill payment service generally provides customers with same-day credit pursuant to our contract with the biller.
Customers can also use the ExpressPayment service to load stored value cards and pre-paid phone cards. Our ExpressPayment bill
payment service is available for internet transactions at www.emoneygram.com.
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