MoneyGram International Inc. showed decreases in its bill-payment revenue for its third-quarter earnings report but says it is ramping up its billing business.
The Minneapolis-based funds-transfer provider is seeing an impact from an “aggressive effort” to add more billers to the MoneyGram bill-payment platform, Pat Patsley, Moneygram chairman and CEO, told analysts during an Oct. 27 conference call to discuss third-quarter earnings.
“We had a strong quarter for new billers with new contract signings across all industries, most notably mortgage, auto, prepaid cards and corrections,” she said.
Bill-payment revenue decreased 9.3%, to $28.3 million from $31.2 million during the same period ended Sept. 30 last year. The segment’s margin was affected negatively by increased marketing spend and lower operating income, the company said in a press release.
The company added more than 1,000 billers this year, a tenfold increase from last year, including Nissan, Citi credit card and the Federal Bureau of Prisons, said Patsley. It also added the national postal networks in India, Lebanon, the Netherlands, Iceland and Togo.
CashEdge Inc., Cumberland Farms and AccountNow also signed on to use its funds-transfer services.
The CashEdge deal will enable banks connected to its person-to-person funds-transfer service to send funds through the MoneyGram network. It also allows receivers of P2P payments “to create a cash payout option with MoneyGram,” Alex Holmes, MoneyGram senior vice presidents, told analysts.
Cumberland Farms is the first customer to launch the MoneyGramXpress service, which enables customers to purchase prepackaged funds transfers and redeem them online or by telephone.
AccountNow announced Oct. 26 that it will be the first U.S.-based prepaid card program to provide MoneyGram’s funds-transfer products as an online agent. The deal will enable AccountNow customers to use their prepaid cards to send money in 10 minutes to any MoneyGram location from AccountNow’s website, Holmes said.
MoneyGram also expanded its relationship with Wal-Mart Stores Inc. by adding its funds-transfer service capability to Walmart.com, said Holmes.
MoneyGram reported a 58% increase in third quarter net income, to $15.8 million from $10 million. Revenue increased 9.9%, to $321.9 million from $292.9 million.
“This is the first quarter in over two years that we have seen double-digit total revenue growth,” Jim Shields, MoneyGram executive vice president and chief financial officer, told analysts. “In addition, our money-transfer business now represents 84% of total revenue compared to 80% in the third quarter last year.”
MoneyGram’s global funds-transfer revenue increased 12.3%, to $298.9 million from $266.2 million. The company touted its growth in nearly every global region.
Funds-transfer fee and other revenue increased 15.1%, to $270.4 million from $235 million.
MoneyGram’s total agent locations increased 23.7%, to 256,000 from 207,000 last year.
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