MoneyGram 2009 Annual Report Download - page 41

Table of Contents
Investment revenue decreased $1.7 million due to lower yields earned on our investment portfolio. See Table 3 — Net Investment
Revenue Analysis for further information regarding average investable balances and yields on the consolidated investment portfolio.
Money transfer fee and other revenue grew $23.0 million, or 3 percent, from 2008, driven by money transfer transaction volume growth,
partially offset by lower average money transfer fees and the decline in the euro exchange rate. Money transfer transaction volume
increased 6 percent, generating incremental revenue of $53.3 million. Volume growth was lower in 2009 compared to the prior year,
reflecting the slowing economic conditions in 2009 and a growing volume base. Average money transfer fees declined from lower
principal per transaction and corridor mix, reducing revenue by $20.7 million. The decline in the euro exchange rate, net of hedging
activities, reduced revenue by $10.9 million in 2009.
Through the third quarter of 2009, pricing on money transfers remained stable. During the fourth quarter of 2009, we implemented a low-
fee promotion with our largest agent, reducing the average fee per transaction. We expect the competitive environment to remain high
and potentially intensify in various geographic locations, which could impact our pricing in the future. We continue to evaluate the price-
volume dynamic and will make further changes where deemed appropriate. In January 2008, we launched our MoneyGram Rewards
loyalty program in the United States, which provides tiered discounts on transaction fees to our repeat consumers, less paperwork and
notifications to the sender when the funds are received, among other features. In 2009, we rolled out MoneyGram Rewards in Canada,
France, Germany, Spain and certain agent locations in Italy. Our MoneyGram Rewards program has positively impacted our transaction
volumes, with membership in the program up 30 percent as of December 31, 2009 compared to 2008 and transaction volumes from
members up 34 percent. We plan to launch the program in additional European markets in 2010.
Transactions and the related fee revenue are viewed as originating from the send side of a transaction. Accordingly, discussion of
transactions by geographic location refers to the region originating a transaction. Money transfer transactions originated in the Americas
increased 6 percent. Transactions originating in the United States, excluding transactions sent to Mexico, increased 9 percent due
primarily to intra-United States remittances. Canada and Latin America saw transaction growth of 15 percent and 9 percent, respectively,
from agent network growth. Transactions sent to Mexico declined 9 percent, reflecting the impact of the United States recession on our
consumers. Mexico represented approximately 10 percent of our total transactions in 2009 as compared to 12 percent in 2008.
Transactions originated in EMEAAP increased 6 percent despite a negative 9 percentage point impact from volume declines in Spain.
EMEAAP transactions accounted for 24 percent of our volume in 2009 and 2008. The fastest growing regions in 2009 were South East
and Central Africa, the Philippines and South Asia, which all had double-digit growth. The Middle East saw transaction growth of
9 percent, driven by send transactions from, and agent signings and renewals in, the United Arab Emirates. Our France retail business
saw transaction growth of 155 percent, while the United Kingdom saw transaction growth of 6 percent primarily from sends to India and
Eastern Europe, as well as growth from our three largest agents in the United Kingdom. Greece had transaction growth of 14 percent
through its receive markets in Eastern Europe. Spain had volume declines of 24 percent from local economic conditions.
The money transfer agent base expanded 8 percent to approximately 190,000 locations in 2009, primarily due to expansion in the
international markets. At December 31, 2009, the Americas had 66,000 locations, with 39,500 locations in North America and 26,500
locations in Latin America (including 12,900 locations in Mexico). At December 31, 2009, EMEAAP had 124,000 locations, with 39,600
locations in Western Europe, 26,700 locations in the Indian subcontinent, 25,800 locations in Eastern Europe, 19,800 locations in Asia
Pacific, 8,000 locations in Africa and 4,100 locations in the Middle East.
Bill payment revenue decreased $6.6 million, or 5 percent, from 2008 from a 4 percent decrease in transaction volume. Lower bill
payment volumes reduced revenue by $4.9 million, reflecting the departure of a large biller in the third quarter of 2008 and the impact of
economic conditions on our bill payment customers. In addition, lower principal per transaction and biller vertical mix reduced revenue
by $1.7 million in 2009.
Commissions expense consists primarily of fees paid to our third-party agents for the money transfer and bill payment services, including
the amortization of capitalized agent signing bonuses. Commissions expense for 2009 decreased $3.8 million, primarily from lower
commission rates and the decline in the euro exchange rate, partially
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