MoneyGram 2007 Annual Report Download - page 7

Table of Contents
13,600 locations in Asia Pacific; 13,700 locations in Eastern Europe; and 5,200 locations in Africa. As of the date of this filing, our
money transfer agent locations have grown to 150,000.
We also offer our money transfer services on the internet via our rapidly growing MoneyGram eMoneyTransfer service that allows
customers to send a money transfer at www.emoneygram.com using a credit card, debit card or a debit from a bank account. Finally, we
offer our money transfer services through Company-owned retail locations. In the United States, we have Company-owned retail
locations in New York and Florida. In 2007, we continued to open retail locations and kiosks in France and Germany. We plan to
continue this strategy, as expanding our global network by increasing our agent locations and opening new Company-owned locations in
select markets is a core growth strategy of the Company.
Our money transfer revenues are derived primarily from consumer transaction fees and revenues from currency exchange on international
money transfers. In a typical money transfer, a consumer goes to an agent location, 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 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 also
have multi-currency technology that allows us to execute our money transfers directly between and among several 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.
During 2007, the gap between total revenue growth and money transfer transaction growth narrowed as we lapped the first year of
implementation of the simplified pricing initiatives and the Euro strengthened against the U.S. dollar. Our simplified pricing structure
reduced 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 2007, we are the nation's leading issuer of money orders. In 2007, we issued approximately 246 million money
orders through our network of almost 59,000 retail agent locations in the United States and Puerto Rico.
Our money orders are sold under the MoneyGram brand, as well as 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. As discussed above, we experienced
significant other-than-temporary impairments in our investment portfolio in 2007 and 19 percent of the losses are allocable to the money
order product.
Bill Payment Services: Our bill payment suite of services allows consumers to make urgent payments or pay routine bills. 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
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