MoneyGram 2015 Annual Report Download - page 8

Table of Contents
Our competitors include a small number of large money transfer and bill payment providers, financial institutions, banks and a large number of small niche money
transfer service providers that serve select regions. Our largest competitor in the money transfer industry is The Western Union Company ("Western Union"),
which also competes with our bill payment services and money order businesses. On April 17, 2014, Walmart announced the launch of the Walmart white label
money transfer service, a program operated by a competitor of MoneyGram that allows consumers to transfer money between its U.S. store locations. See our
"Management's Discussion and Analysis — Overview" section in Item 7 of this Annual Report on Form 10-K for additional disclosure. We will encounter
increasing competition as new technologies emerge that allow consumers to send and receive money through a variety of channels, but we continue to be an
innovator in the industry by diversifying our core money transfer business through new channels, such as online, mobile solutions, kiosk and other Digital/Self-
Service offerings.
Seasonality—A larger share of our annual money transfer revenues traditionally occurs in the third and fourth quarters as a result of major global holidays falling
during or around this period.
Financial Paper Products Segment
Our Financial Paper Products segment provides money orders to consumers through our retail agents and financial institutions located throughout the U.S. and
Puerto Rico and provides official check outsourcing services for financial institutions across the U.S.
In 2015 , our Financial Paper Products segment generated revenues of $73.3 million from fee and other revenue and investment revenue. We earn revenue from the
investment of funds underlying outstanding official checks and money orders. We refer to our cash and cash equivalents, settlement cash and cash equivalents,
interest-bearing investments and available-for-sale investments collectively as our “investment portfolio.” Our investment portfolio primarily consists of low risk,
highly liquid, short-term U.S. government securities and bank deposits that produce a low rate of return.
MoneyOrders—Consumers use our money orders to make payments in lieu of cash or personal checks. We generate revenue from money orders by charging per
item and other fees, as well as from the investment of funds underlying outstanding money orders, which generally remain outstanding for fewer than eight days.
We sell money orders under the MoneyGram brand and on a private label or co-branded basis with certain large retail and financial institution agents in the U.S.
As of December 31, 2015 , we issued money orders through our network of approximately 47,000 agents and financial institution locations in the U.S. and Puerto
Rico.
OfficialCheckOutsourcingServices—Official checks are used by consumers where a payee requires a check drawn on a bank. Financial institutions also use
official checks to pay their own obligations. Similar to money orders, we generate revenue from our official check outsourcing services for U.S. banks and credit
unions by charging per item and other fees, as well as from the investment of funds underlying outstanding official checks, which generally remain outstanding for
fewer than four days. As of December 31, 2015 , we provided official check outsourcing services through approximately 900 financial institutions at approximately
6,300 branch bank locations.
Marketing — We employ a wide range of marketing methods. A key component of our marketing efforts is our global branding. We use a marketing mix to
support our brand, which includes traditional, digital and social media, point of sale materials, signage at our agent locations and targeted marketing campaigns.
Official checks are financial institution branded, and therefore, all marketing to this segment is business to business.
Sales—Our sales teams are organized by product and delivery channel. We have dedicated teams that focus on developing our agent and financial institution
networks to enhance the reach of our official check and money order products. Our agent requirements vary depending upon the type of outlet or location, and our
sales teams continue to improve and strengthen our agent relationships with a goal of providing the optimal agent and consumer experience.
Competition—Our money order competitors include a small number of large money order, regional and niche money order providers. Our largest competitors in
the money order industry are Western Union and the U.S. Postal Service. We generally compete for money order agents on the basis of value, service, quality,
technical and operational differences, price, commission and marketing efforts. We compete for money order consumers on the basis of trust, convenience,
availability of outlets, price, technology and brand recognition.
Official check competitors include financial institution solution providers, such as core data processors and corporate credit unions. We generally compete against
a financial institution’s desire to perform these processes in-house with support from these types of organizations. We compete for official check customers on the
basis of value, service, quality, technical and operational differences, price and commission.
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