International Money Express Stock

International Money Express, Inc. (Intermex) operates as an omnichannel money remittance services company focused primarily on the United States of America ('United States' or 'U.S.') to Latin America and the Caribbean ('LAC') corridor, which includes Mexico, Central and South America and the Caribbean.

The company expands its services to allow remittances to Africa and Asia from the United States and also offers sending services from Canada to Latin America and Africa. Also, through the acquisition of LAN Holdings, Corp. ('LAN Holdings'), which was completed in the second quarter of 2023, the company provides remittance services from Spain, Italy and Germany to Africa, Asia and Latin America. The company utilizes its proprietary technology to deliver convenient, reliable and value-added services to consumers through a broad network of sending and paying agents. The company's remittance services, which include a comprehensive suite of ancillary financial processing solutions and payment services, are available in all 50 states in the U.S., Washington D.C., Puerto Rico and 13 provinces in Canada, as well as in certain locations in Spain, Italy and Germany, where consumers can send money to beneficiaries in more than 60 countries in LAC, Africa and Asia. The company's services are accessible in person through over 100,000 independent sending and paying agents and 122 company-operated stores, as well as online and via Internet-enabled mobile devices. Additionally, the company's product and service portfolio include online payment options, pre-paid debit cards and direct deposit payroll cards, which may present different cost, demand, regulatory and risk profiles relative to the company's core money remittance business.

Money remittance services to LAC countries, mainly Mexico, Guatemala, El Salvador, Honduras and the Dominican Republic, are the primary source of the company's revenue. These services involve the movement of funds on behalf of an originating consumer for receipt by a designated beneficiary at a designated receiving location. The company's remittances to LAC countries are primarily generated in the United States by consumers with roots in Latin American and Caribbean countries, many of whom do not have an existing relationship with a traditional full-service financial institution capable of providing the services the company offers. The company provides these consumers with flexibility and convenience to help them meet their financial needs. Many consumers who use the company's services may have access to traditional banking services, but prefer to use the company's services based on reliability, convenience and value. The company generates money remittance revenue from fees paid by consumers (i.e., the senders of funds), which the company shares with its sending agents in the originating country and the company's paying agents in the destination country. Remittances paid in local currencies that are not pegged to the U.S. dollar, Canadian dollar or Euro can also generate revenue if the company is successful in the company's daily management of currency exchange spreads.

The company's money remittance services enable consumers to send funds through the company's broad network of locations in the United States, Canada, Spain, Italy and Germany that are primarily operated by third-party businesses, as well as through the company-operated stores, located in those jurisdictions. Transactions are processed and payment is collected by the company's agent ('sending agent(s)') and those funds become available for pickup by the beneficiary at the designated destination, usually within minutes, at any Intermex payer location ('paying agent(s)'). The company refers to its sending agents and the company's paying agents collectively as agents. In addition, the company's services are offered digitally through Intermexonline.com, online.i-transfer.es and via Internet-enabled mobile devices. In 2023, the company processed approximately 58.7 million remittances.

Growth Strategy

The company's growth strategies are to expand its market share in the company's largest corridors; expand its services into new corridors and emerging markets; and continue to grow online and mobile remittance channels.

Segments

The company's business is organized around one reportable segment that provides money remittance services primarily between the U.S. and Canada to Mexico, Guatemala and other countries in Latin America, Africa and Asia through a network of authorized agents located in various unaffiliated retail establishments and 122 company-operated stores throughout the U.S., Canada, Spain, Italy and Germany.

Operations and Services

The majority of the company's money remittance transactions are generated through the company's agent network of retail locations and company-operated stores where the transaction is processed and payment is collected by the company's sending agent. Those funds become available for pickup by the beneficiary at the designated receiving destination, usually within minutes, at any Intermex payer location. In select countries, the designated recipient may also receive the remitted funds via a deposit directly to the recipient's bank account, mobile device account or prepaid card. The company's locations in the United States, Canada, Spain and Italy, also referred to as the company's sending agents, tend to be individual establishments, such as multi-service stores, grocery stores, convenience stores, bodegas and other retail locations. The company's payers in LAC countries are referred to as paying agents, and generally consist of large banks and financial institutions or large retail chains. Grupo Elektra, S.A.B. de C.V. ('Elektra') is the company's largest paying agent and processes a significant portion of remittances in the LAC corridor. Each of the company's sending agents and the company's paying agents are primarily operated by third-party businesses where its money remittance services are offered. Additionally, the company operates a number of retail locations in the United States, Canada, Spain, Italy and Germany, which the company refers to as company-operated stores and where the company's money remittance services are available.

The company also operates subsidiary payer networks in Mexico under the Pago Express brand and in Guatemala under the Intermex brand. These networks contribute payer locations that reach some of the most remote areas in those countries, providing increased convenience to consumers in the United States, Canada, Mexico and Guatemala.

At sending agent locations, consumers may initiate a transaction directly with an agent, or through a direct-dialed telephone conversation from the agent location to the company's call centers. Many of the company's sending agents operate in locations that are open outside of traditional banking hours, including nights and weekends. The company's sending agents understand the markets that they serve and coordinate with the company's sales and marketing teams to develop business plans for those markets. The company holds promotional events for its sending agents to help familiarize them with the Intermex brand and to incentivize the agents to promote the company's services to consumers.

The company's money remittance services are also available on the Internet via Intermexonline.com and online.i-transfer.es, enabling consumers to send money twenty-four hours a day conveniently from their computer or Internet-enabled mobile device. Those funds can be sent to any of the company's paying agent locations or to a recipient's bank account, funding the transaction using debit card, credit card, or through electronic funds transfer processed through the automated clearing house ('ACH') payment system. Also, the company's enhanced digital mobile money remittance applications provide consumers with safe, easy-to-use features for remitting funds with a debit or credit card, or ACH transfer. Consumers are able to select a variety of sending methods, including cash pickup at thousands of locations, direct deposit into bank accounts, debit cards, mobile wallets, and home delivery in selected markets. Although the company's internet-based money transmission services grew significantly in 2023, they still do not constitute a material percentage of the company's overall business.

The company maintains call centers in Mexico and Guatemala, providing call center services 365 days per year and customer service in English, French and Spanish, as well as the possibility of service in many of the regional dialects that the company's customers speak. The company's call centers are able to provide customer service for inbound customer calls and have technology available for direct calls from customers at the company's agent locations in processing remittance transactions.

Cash Management Bank Relationships

The company buys and sells a number of global currencies and maintain a network of settlement accounts to facilitate the timely funding of money remittances and foreign exchange trades. The company's relationships with clearing, check processing, trading and exchange rate and cash management banks are critical to an efficient and reliable remittance network. The company benefits from its strong and long-term relationships with a number of large banks and financial institutions. The company maintains strong relationships with a number of other national and regional banking and financial institutions in the United States, Canada, Spain, Italy and Latin America. In addition, the company has benefited from its long relationship with U.S. Bank, which manages the company's main operating account, and from strong relationships with PNC Global Transfer, Wells Fargo and Bank of America, which serve as the company's primary banks for exchange rate management with respect to the foreign currencies in which the company transacts.

Information Technology

All of the company's money processing software used in the United States and Canada is proprietary and has been developed primarily by the company's internal software development team. The company's money processing software acts as a point of sale for its money remittance transactions and incorporates real-time compliance functionality, which improves the company's regulatory compliance and helps to minimize fraud. The company's money processing software is critical to the company's operations while its back-office software is critical for settling the company's transactions.

Also, the company's money remittance platforms enable consumers to send funds through the Internet via Intermexonline.com, online.i-transfer.es and on consumers' Internet-enabled mobile devices and the company's enhanced digital mobile money remittance application provides consumers with safe, easy-to-use features for remitting funds.

In addition to the company's money remittance software, digital platforms and mobile applications, the company continues to develop programs and defenses against cyber-attacks. The company is fully aligned with the National Institute of Standards and Technology cybersecurity framework, which is a voluntary framework that most companies in the financial services industry follow. The company utilizes a number of third-party vendors that monitor its systems and inform the company of any attempted attacks. The company's Chief Information Officer and Chief Information Security Officer report periodically to the company's board of directors regarding its cybersecurity policies and practices.

In addition to the company's proprietary and internally developed software systems, the company has analytical data that enable it to analyze market trends, performance of market territories, agent performance and consumer habits in real time.

The company continually invests in its technology platform that has the capacity to handle traffic well in excess of the number of transactions the company processes. A load balancing configuration between tier-1 datacenters, in addition to failover redundancy, provides uptime performance. The company's technology platforms have experienced limited downtime, with the company's 2023 downtime being less than 0.05%.

The company's Transaction Processing Engine ('TPE') allows the company to process money remittances reliably and quickly by leveraging a proprietary rules engine to apply granular-level product feature customization. The TPE also leverages real-time risk management algorithms to improve the company's regulatory compliance and helps to minimize fraud.

The company's internally developed and proprietary payer Application Programming Interface platform securely and efficiently integrates its TPE directly with the platforms of the company's paying agents, so that the company can deliver money remittances quickly to its paying agents while optimizing the efficiency/speed of adding new payers to the company's network and integrating payers' software and systems with its software and systems.

Intellectual Property

The Intermex brand is critical to the company's business. The company uses various trademarks and service marks in the company's business, including, but not limited, to Intermex, International Money Express, IntermexDirect, CheckDirect, La Nacional and Pago Express, some of which are registered in the United States and other countries.

Sales and Marketing

The majority of the company's money remittance transactions are generated through the company's agent network of retail locations and company-operated stores where the transaction is processed and payment is collected by the company's sending agent or store. Sending agent locations include multi-service stores, grocery stores, convenience stores, bodegas and other retail locations. The vast majority of the company's sending agents are provided access to the company's proprietary money remittance software systems, while others have access to the company's combination telephone and fax/tablet set up, which the company calls telewire, enabling direct access to the company's call centers for money remittance services. In all of the company's independent sending agent locations the agent provides the physical infrastructure and staff required to complete the remittances, while the company provides the central operating functions, such as transaction processing, settlement, marketing support, compliance training and support, and customer relationship management. The company also maintains 122 company-operated stores in the United States, Canada, Spain, Italy and Germany. The company retains customer data, which enables the company to increase repeat customer usage, track and effectively recapture one-time users of the company's service and improve sending agent productivity.

The company markets its services to consumers in a number of ways, directly and indirectly through the company's sending agents and paying agents, promotional activities, traditional media and digital advertising, and the company's loyalty program, which the company calls 'Interpuntos'. This loyalty program offers consumers faster service at the company's sending agent locations and the ability to earn points with each transaction that are redeemable for rewards, such as reduced transaction fees or more favorable foreign exchange rates.

Government Regulation

As a non-bank financial institution in the United States, the company is regulated by the Department of Treasury, the Internal Revenue Service, the U.S. Department of the Treasury's Financial Crimes Enforcement Network ('FinCEN'), the Consumer Financial Protection Bureau ('CFPB'), the Department of Banking and Finance of the State of Florida and the equivalent regulatory authorities in all of the states, the District of Columbia and the Commonwealth of Puerto Rico, in which the company holds an operating money transmission license. The company is duly registered as a Money Services Business ('MSB') with FinCEN, the financial intelligence unit of the U.S. Department of the Treasury. The company is also subject to a wide range of regulations in the United States and other countries in which the company operates, including: minimum capital or capital adequacy requirements; anti-money laundering laws and regulations; financial services regulations; currency control regulations; anti-bribery laws; money transfer and payment instrument licensing laws; escheatment laws; privacy, data protection and information security laws, such as the Gramm-Leach-Bliley Act ('GLBA'); and consumer disclosure and consumer protection laws, such as the California Consumer Privacy Act ('CCPA').

The company's money remittance services are subject to anti-money laundering laws and regulations of the United States, including the Bank Secrecy Act ('BSA'), as amended by the USA PATRIOT Act of 2001, as well as state laws and regulations and the anti-money laundering laws and regulations in many of the countries in which the company operates.

In the United States, the company is subject to various federal privacy laws, including the Gramm-Leach-Bliley Act, which requires that financial institutions provide consumers with privacy notices and have in place policies and procedures regarding the safeguarding of personal information.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the 'Dodd-Frank Act') imposes additional regulatory requirements and creates additional regulatory oversight over the company. As a 'larger participant' in the market for international money transfers, the company is subject to direct examination and supervision by the CFPB.

The company's communications, advertising and sales practices and that of its agent network are subject to regulation by, among other things, state and federal consumer protection laws including the Telephone Consumer Protection Act ('TCPA').

The company is subject to regulations imposed by the Foreign Corrupt Practices Act (the 'FCPA') in the United States and similar anti-bribery laws in other jurisdictions.

Competition

The company competes with larger companies, such as The Western Union Company ('Western Union'), MoneyGram International, Inc. ('MoneyGram'), Remitly Global, Inc. ('Remitly'), and Euronet Worldwide Inc. ('Euronet').