MoneyGram International Inc. (MGI - Free Report) fortified its association with Pennsylvania-based commercial bank − Susquehanna Bancshares − as it extended the official check processing contract for another five years.
The money transfer, bill payment and check processing company will continue to process the official checks for Susquehanna’s banking operations across the Mid-Atlantic region, primarily West Virginia, Maryland and New Jersey. Accounting for most of the financial paper products segment, MoneyGram’s official check outsourcing services and program management are facilitated through its high-tech online platform − MoneyGram PrimeLink Official Check, which is also used in this alliance.
This advanced web-based service providing solution not only eases the customer’s banking experience but also mitigates the risk of fraud by swiftly identifying any sham transactions. Given the hike in losses in the financial services industry due to fraud and money laundering, we believe that MoneyGram’s PrimeLink Official Check has huge potential for secure and reliable money management. Hence, this contract extension is expected to significantly boost the company’s financials.
While MoneyGram faces challenges in increasing its revenues in the financial paper products segment, we believe such alliances and network expansion will support the company’s initiatives to boost the segment’s financials. Overall, led by diversified and market-compliant growth strategies, MoneyGram aims to continue achieving double-digit growth in money transfer transactions, thereby increasing free cash flow.
Despite the unfavorable global economic condition, MoneyGram showed modest growth in its operations, driven by successful penetration into unexplored markets and improved position in existing weaker markets. The company is also gaining traction in self-service and new channel revenue sources within its money transfer business.
While MoneyGram carries a Zacks Rank #3 (Hold), outperformers in the financial sector include Fleetcor Tech Inc. (FLT - Free Report) , Portfolio Recovery Associates Inc. (PRAA - Free Report) and Glacier Bancorp Inc. (GBCI - Free Report) . All these stocks carry a Zacks Rank #1 (Strong Buy).