UK non-bank foreign exchange operator Travelex has sold its money transfer subsidiary to US-based Coinstar for $27 million in cash.
Travelex Money Transfer (TMT) was founded in 2003 and now operates in 138 countries and has an agent network in more than 17,000 locations.
The firm uses Internet-based payment, exchange and settlement technology to provide consumers with its person-to-person money transfer service. The system manages the instant transfer of funds, calculates and settles agents' commissions and also supports an integrated customer loyalty programme.
In addition to company-owned locations, TMT has agreements with banks, post offices and other retail locations to supply its service.
TMT's revenues for the twelve months ended December 31 2005, were approximately $5.8 million, with a negative Ebitda of $10.4 million.
Following the closing of the transaction, TMT will continue to operate independently as a wholly-owned subsidiary of Coinstar. The unit will ccontinue to be headed by Mohit Davar, chief executive officer of TMT, who will report to Steve Verleye, senior vice president and general manager of e-pay at Coinstar.
Commenting on the acquisition, Davar says: "Coinstar's existing e-payment offerings and expansive retail channel in North America was very attractive to us."
According to Coinstar the global money transfer market is valued at between $250 and $300 billion in transferred value. It is also estimated that 175 million people live outside of their countries of origin, which is one of the factors driving money transfer industry growth rates at about 10% annually.
In a separate move, US retailer Wal-Mart is lowering the cost for customers using the MoneyGram network for sending money to Latin America. Wal-Mart says its customers can now send up to $1000 from the US to 14,000 locations throughout Latin America, including Mexico, for one fixed fee of $9.46.
Previously, Wal-Mart customers spent an average of $15.12 to send up to $1000 to Latin America. The new pricing structure represents a 35% saving for the average money transfer, says Wal-mart.
Wal-Mart says the lower-price service is being introdiced to meet the growing demand for money transfer services to Latin America. A study conducted by Synovate showed that Mexico received more than $11.3 billion in money transfers from the US in 2005. In addition, Central America received $2.1 billion; South America $1.3 billion and the Dominican Republic $413 million.
The retailer is competing competing with banks like Bank of America and Wells Fargo in the lucrative Latin American money transfer business in the US.