Federal Reserve Bank of Atlanta-Retail Payments Risk Forum Aaron Henry September 6, 2012

MoneyGram’s Cash Remittance Process STEP 1 STEP 2 STEP 3 Sender brings funds Send location conveys transaction MoneyGram provides to send location information via PC terminal or phone transaction identification call to MoneyGram number to send location, which then gives it to sender STEP 4 STEP 5 STEP 6 Send customer Receive customer enters Receive location conveys notifies receive customer receive location to obtain funds transaction number via PC Step 7 Step 8 MoneyGram approves transaction to receive location Receive location pays receive customer SEND TRANSACTIONS STEP 1 Send location (“agent”) deposits amount paid by send customer into the send location’s own bank account. STEP 2 Send location also deposits the transaction fee paid by the sender into the send location’s bank account. STEP 3 MoneyGram has developed highly sophisticated computer programs to be able to accurately track this information. MoneyGram debits the send location’s bank account via an ACH debit for the full amount of the send transaction plus transaction fee. This transfer usually occurs the next business day after the send transaction was initiated. STEP 4 MoneyGram pays the send agent their commission once a month via an ACH credit to their bank account. The send agent’s commission comes from a portion of the fee that was paid by the sender. RECEIVE TRANSACTIONS Receive location (“agent”) issues a MoneyGram Money Transfer Check or money order payable to the receiver. In most instances, the receive agent has the receiver endorse the item and provides cash to the receiver. Some receivers negotiate the item elsewhere. The receive location deposits the endorsed item into their own bank account to reimburse themselves for the cash paid to the receiver. MoneyGram pays the receive agents their commission once a month via an ACH credit to their bank account. The receive agent’s commission comes from a portion of the fee that was paid by the sender. Receivers pay no fees to collect a MoneyGram money transfer.

CFPB Remittance Rule-Challenges and Opportunities Validation of receive side fees and taxes Guaranteeing availability of non-local currency Developing symmetrical foreign language disclosure process Impact to the consumer experience Coordination across multiple partners, countries, and time zones