MONEYGRAM PAYMENT SYSTEMS INC, S-1/A, 1996-12-11

MONEYGRAM PAYMENT SYSTEMS INC
S-1/A, 1996-12-11
FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 11, 1996

REGISTRATION NO. 333-228
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 6 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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MONEYGRAM PAYMENT SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 6099 84-1327808
(STATE OR OTHER (PRIMARY STANDARD (IRS EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

7401 WEST MANSFIELD AVE.
LAKEWOOD, COLORADO 80235
(303) 716-6800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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ANDREA M. KENYON
SECRETARY AND GENERAL COUNSEL
MONEYGRAM PAYMENT SYSTEMS, INC.
7401 MANSFIELD AVENUE
LAKEWOOD, COLORADO 80235
(303) 716-6800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:
THOMAS A. ROSSI KEVIN F. BLATCHFORD BRUCE K. DALLAS
FIRST DATA CORPORATION SIDLEY & AUSTIN DAVIS POLK & WARDWELL
2121 N. 117TH AVENUE ONE FIRST NATIONAL PLAZA 450 LEXINGTON AVENUE
OMAHA, NEBRASKA 68164 CHICAGO, ILLINOIS 60603 NEW YORK, NEW YORK 10017
(402) 498-2104 (312) 853-7000 (212) 450-4000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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EXPLANATORY NOTE

This Registration Statement contains two prospectus cover pages: one to be
used for a prospectus in connection with a United States and Canadian offering
(the "U.S. Prospectus") and one to be used for a prospectus in connection with
a concurrent international offering (the "International Prospectus"). The
International Prospectus will be identical to the U.S. Prospectus except that
it will have a different front cover page. The front cover page to be used in
the International Prospectus is located at the end of the U.S. Prospectus and
has been labeled "Alternate Page for International Prospectus."
<PAGE>

PROSPECTUS

14,463,750 Shares

MoneyGram Payment Systems, Inc.
COMMON STOCK

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OF THE 14,463,750 SHARES OF COMMON STOCK BEING OFFERED HEREBY, 11,571,000 ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND 2,892,750 ARE BEING OFFERED INITIALLY OUTSIDE THE UNITED
STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. ALL OF THE SHARES OF
COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY INTEGRATED PAYMENT
SYSTEMS INC. ("IPS" OR THE "SELLING STOCKHOLDER"), A WHOLLY OWNED
SUBSIDIARY OF FIRST DATA CORPORATION. SEE "SELLING STOCKHOLDER." THE
COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES
OF COMMON STOCK OFFERED HEREBY. PRIOR TO THE OFFERING, THERE HAS BEEN
NO PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY. SEE
"UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS CONSIDERED IN
DETERMINING THE INITIAL PUBLIC OFFERING PRICE.

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THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK
EXCHANGE ("NYSE"), SUBJECT TO OFFICIAL NOTICE OF ISSUANCE,
UNDER THE SYMBOL "MNE."

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SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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PRICE $12 A SHARE
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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
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<S> <C> <C> <C>
Per Share........................... $12.00 $.72 $11.28
Total(3)............................ $173,565,000 $10,413,900 $163,151,100
</TABLE>
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(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.
(2) Before deducting expenses payable by the Selling Stockholder estimated
at $2,100,000.

(3) The Selling Stockholder has granted to the U.S. Underwriters an option,
exercisable within 30 days of the date hereof, to purchase up to an
aggregate of 2,161,250 additional shares of Common Stock at the price
to public less underwriting discounts and commissions, for the purpose
of covering over-allotments, if any. If the U.S. Underwriters exercise
such option in full, the total price to public, underwriting discounts
and commissions and proceeds to Selling Stockholder will be
$199,500,000, $11,970,000, and $187,530,000, respectively. See
"Underwriters."
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The shares of Common Stock are offered, subject to prior sale, when, as and
if accepted by the Underwriters named herein and subject to approval of
certain legal matters by Davis Polk & Wardwell, counsel for the Underwriters.
It is expected that delivery of the shares of Common Stock will be made on or
about December 16, 1996 at the office of Morgan Stanley & Co. Incorporated,
New York, N.Y., against payment therefor in immediately available funds.
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MORGAN STANLEY & CO.
Incorporated
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SMITH BARNEY INC.

December 11, 1996
<PAGE>

[Collage of logos of MoneyGram Agents]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE ANY
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

FOR INVESTORS OUTSIDE THE UNITED STATES: NO ACTION HAS BEEN OR WILL BE TAKEN
IN ANY JURISDICTION BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY UNDERWRITER
THAT WOULD PERMIT A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR
DISTRIBUTION OF THIS PROSPECTUS IN ANY JURISDICTION WHERE ACTION FOR THAT
PURPOSE IS REQUIRED, OTHER THAN IN THE UNITED STATES. PERSONS INTO WHOSE
POSSESSION THIS PROSPECTUS COMES ARE REQUIRED BY THE COMPANY, THE SELLING
STOCKHOLDER AND THE UNDERWRITERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE
ANY RESTRICTIONS AS TO, THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION
OF THIS PROSPECTUS.

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Until January 5, 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Common Stock, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of dealers to
deliver a Prospectus when acting as underwriters and with respect to their
unsold allotments of subscriptions.

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Unless the context otherwise requires, references to the "Company" or
"MoneyGram" are to MoneyGram Payment Systems, Inc. Prior to the consummation
of the offering made hereby (the "Offering"), IPS will transfer to the Company
certain assets and liabilities of its consumer money wire transfer service
business marketed under the name "MoneyGram" (the "Business") (such transfer
of assets and liabilities and the subsequent transition of the Business to the
Company, being referred to herein as the "Transition"). The information
contained in this Prospectus, unless otherwise indicated, gives effect to the
Transition as if completed prior to the date hereof and assumes that the
Company has owned and operated the assets acquired in the Transition as a
separate legal entity during the periods presented.

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In this Prospectus, references to "dollar" and "$" are to United States
dollars, and the terms "United States" and "U.S." mean the United States of
America, its states, its territories, its possessions, and all areas subject
to its jurisdiction.

The following trademarks and service marks are mentioned in this Prospectus:
"American Express(R)" is a registered trademark of American Express Company;
"First Data Corporation(R)" and "First Data(R)" are registered service marks
of First Data Corporation; and "MoneyGramSM" and "MoneySaverSM" are service
marks of the Company.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary.................. 4
The Transition and Ongoing
Relationship with First Data....... 9
Risk Factors........................ 14
Use of Proceeds..................... 24
Dividend Policy..................... 24
Dilution............................ 24
Capitalization...................... 25
Selected Financial and Operating
Data............................... 26
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 27
Business............................ 39
Management.......................... 57
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Ownership of Capital Stock......... 61
Certain Relationships and Related
Transactions...................... 63
Description of Capital Stock....... 70
Selling Stockholder................ 72
Shares Eligible for Future Sale.... 72
Certain U.S. Federal Income Tax
Considerations for Non-U.S.
Holders of Common Stock........... 73
Underwriters....................... 76
Legal Matters...................... 79
Experts............................ 79
Additional Information............. 80
Index to Financial Statements ..... F-1
</TABLE>

3
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the financial statements,
including the related notes thereto, appearing elsewhere in this Prospectus
(the "Financial Statements"). Unless otherwise indicated, the information
contained in this Prospectus assumes that the U.S. Underwriters' over-allotment
option is not exercised. See "Underwriters." Prospective purchasers of the
Common Stock offered hereby should carefully consider the factors set forth
under "Risk Factors" as well as the other information contained in this
Prospectus.

THE COMPANY

OVERVIEW

The Company is a leading non-bank provider of consumer money wire transfer
services, with a strong, well-recognized brand-name. The Company accounted for
approximately 16% of all consumer money wire transfer transactions worldwide in
1995. The Company offers customers the ability to transfer funds quickly,
reliably, conveniently and at attractive prices through its network of agents
(each, a "MoneyGram Agent"), consisting of approximately 17,700 locations in 84
countries worldwide as of September 30, 1996. MoneyGram Agents, representing
approximately 68% of the Company's revenues for the first nine months of 1996,
are subject to long-term contracts ranging in term from three to six years.
MoneyGram targets its services to individuals without traditional banking
relationships, expatriates who send money to their country of origin,
traditional bank customers in need of emergency money transfer services,
tourists without local bank accounts and businesses that need rapid and
economical money transfer services. The Company also provides cash advance and
express bill payment services (including payments on revolving credit, time and
personal loans) through many MoneyGram Agent locations in the United States.

The number of MoneyGram Agent locations has grown from 11,600 in 1991 to
approximately 17,700 as of September 30, 1996. In 1995 and the first nine
months of 1996, the Company processed 5.4 million and 4.4 million transactions,
respectively, and transferred $1.6 billion and $1.2 billion total face amount
of funds, respectively. In 1995, total revenues were $137.1 million, total
revenues from transaction fees excluding foreign exchange revenues and
investment income ("Transaction Fee Revenues") were $93.8 million, foreign
exchange revenues were $42.8 million and operating income was $29.7 million. In
the first nine months of 1996, the Company's total revenues, Transaction Fee
Revenues, foreign exchange revenues and operating income were $107.0 million,
$83.9 million, $22.8 million and $20.6 million, respectively. Substantially all
of the Company's transactions originate in the United States. In 1995, 45% of
the Company's transactions were between U.S. locations, 44% were from U.S. to
Mexico locations and 11% involved one or more international locations other
than Mexico.

The Company generates substantially all of its foreign exchange revenue on
its U.S. to Mexico transactions based on the difference between the cost of
Mexican pesos at wholesale rates and the retail exchange rate charged to
customers in such transactions. In addition to receive commissions, the Company
pays fees to Banco Nacional de Mexico, S.A. ("Banamex"), the Company's primary
receive-only MoneyGram Agent in Mexico, in an amount equal to one-half of the
total foreign exchange revenues derived from U.S. to Mexico MoneyGram
transactions received at a Banamex location.

CUSTOMERS AND MARKETS

Consumers sending expatriate remittance funds and individuals without bank
accounts are the two largest segments of repetitive money transfer customers.
The Federal Reserve Board of Governors estimates that there are approximately
23 million households in the United States without traditional banking
relationships. Additionally, industry analysts estimate that there are an
increasing number of people who remit funds to their respective countries of
origin on a regular basis.

Consumer money wire transfer services provide customers with a convenient,
rapid and secure method of sending money. The Company believes that consumer
money wire transfer service providers and their agent

4
<PAGE>

networks offer significant advantages over alternative methods of sending
money, including those provided by banks and the postal service, such as
reliability and security, global accessibility of agents, speed, convenient
hours, individualized services and customer flexibility.

Non-bank consumer money wire transfer services are provided primarily by two
global companies, MoneyGram and Western Union Financial Services, Inc.
("Western Union"), as well as several niche competitors. The Company estimates
that in 1995 the industry processed 33 million non-bank consumer money wire
transfer transactions worldwide, an increase of 29% over 1994, and representing
a compounded annual growth rate of 22% since 1991. In 1995, the Company
processed 5.4 million of the 33 million non-bank consumer money wire transfer
transactions worldwide, representing approximately 16% of such transactions.
Western Union accounted for approximately 81% of all such transactions
worldwide in 1995. The Company believes the gross revenues generated from non-
bank consumer money wire transfers in 1995 were $800 million on $9 to $10
billion in face amount of transferred funds.

The United States currently originates more consumer money wire transfer
transactions than any other country in the world. The Company expects that the
majority of the future growth in the United States will occur in transactions
that terminate in international locations. Money transfers from the United
States to Mexico currently represent an important and growing component of the
money transfer industry due to the large number of Mexican immigrants remitting
money from the United States to Mexico.

The Company believes international consumer money transfers will continue to
grow through the end of the decade, primarily due to the combination of
increased migration and greater consumer awareness. The Company believes that
migration dynamics throughout Latin America, the Caribbean, Europe and Asia
provide attractive growth potential for consumer money transfer services.
Recently, three international companies, The Thomas Cook Group, the Post Office
Counters Ltd., a subsidiary of the UK Post Office, and Consorcio Oriental S.A.,
representing approximately 2,000 new locations in the aggregate, have indicated
their intention to serve as MoneyGram Agents.

STRATEGY

MoneyGram's objectives are to continue to grow as a leading provider of
consumer money wire transfer services by offering competitive pricing and
superior service and to develop and introduce other financial services. The
Company has developed and has been pursuing the following strategy to
capitalize on its competitive position in the growing market for consumer money
transfer services:

. Target Frequent Users of Money Transfer Services. The Company uses
selected agent expansion in high-usage markets to ensure convenient access
to its services for its target customers. The Company focuses its
advertising and promotional campaigns in these high-usage markets to
increase brand awareness and generate consumer trial and repeat usage of
the MoneyGram service.

. Offer Enhanced Value to Customers. The Company offers value-added
features to its customers, including a free three-minute long distance
phone call with most transactions and a free 10-word message to the
recipient of the funds. As part of its marketing strategy, the Company has
maintained its prices 20% to 30% below those of Western Union on
frequently sent face amounts.

. Increase Brand Recognition and Loyalty. The Company's advertising and
promotional campaigns increase brand awareness and generate trial and
repeat usage of the MoneyGram service. The Company also will continue to
offer its MoneySaver card to increase loyalty to the MoneyGram service by
providing frequent users a discount on future transactions.

. Expand its Agent Network. The Company seeks to develop relationships with
potential MoneyGram Agents that offer the optimal combination of location,
existing service mix and commitment. The Company provides its agents with
a number of support services, including product training, traffic building
and cooperative advertising programs, as well as signage and personal
computers for certain MoneyGram Agents.

5
<PAGE>

. Grow Internationally. The Company is expanding its presence in
international markets, the next significant growth area for money transfer
services, by focusing on particular corridors. The Company believes that
future growth internationally should occur as migration continues and
advertising and promotional efforts increase international awareness of
the MoneyGram service. The Company will focus on countries with rapid
growth rates or inefficient and expensive delivery systems and, when
permissible, countries that currently are subject to U.S. trade embargoes.

. Penetrate Additional Retail Network and Other Distribution Channels. The
Company seeks to maintain a balanced and diversified MoneyGram Agent
network. Potential outlets for U.S. network expansions are check cashers,
postal and packaging outlets and supermarkets. The Company expects to
expand its international MoneyGram Agent network primarily by adding
travel agencies, bureau de change operations and banks.

. Develop Other Related Payment Products and Services. The Company
currently plans to offer complementary products and services through the
MoneyGram Agent network, such as money orders and phone cards, and, in the
future, may develop other related products, such as prepaid debit cards,
secured credit cards and insurance products. The Company believes that by
introducing new products it will generate additional revenues, as well as
enhance the attractiveness of the MoneyGram service to potential agents
and its target customers.

BACKGROUND

The Business was started in 1988 by American Express Company ("American
Express") and has been managed and operated by First Data Corporation ("First
Data"), through its wholly owned subsidiary Integrated Payment Systems Inc.
("IPS"). The Company was incorporated in Delaware in January 1996 and was
formed to acquire certain assets related to the Business prior to the
consummation of the Offering. The sale of Common Stock offered hereby is being
made in order to comply with the terms of the consent decree (the "Consent
Decree") entered into between First Data and the Federal Trade Commission (the
"FTC") in connection with First Data's merger with First Financial Management
Corporation ("FFM"), the parent company of Western Union. The Company will not
have conducted any business prior to the Offering. The Company's principal
executive offices are located at 7401 West Mansfield Avenue, Lakewood, Colorado
80235 and its telephone number is (303) 716-6800.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling
Stockholder:
U.S. offering.................... 11,571,000 shares
International offering........... 2,892,750 shares
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Total.......................... 14,463,750 shares
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------------
Common Stock to be outstanding 16,625,000 shares
after the Offering(1).............
Use of proceeds.................... The Company will not receive any proceeds
from the sale by the Selling Stockholder of
the Common Stock in the Offering.
New York Stock Exchange symbol..... MNE
</TABLE>
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(1) Excludes 1,200,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan (1,175,000 shares) and 1996 Broad-Based
Stock Option Plan (25,000 shares). It is anticipated that options to
acquire approximately 1,154,825 shares and 7,750 shares of Common Stock
will be granted under the 1996 Stock Option Plan and the 1996 Broad-Based
Stock Option Plan, respectively, at an exercise price equal to 100% of the
initial public offering price of the Common Stock offered hereby effective
upon the consummation of the Offering. See "Management--Stock Plans" and
"Shares Eligible for Future Sale."

6
<PAGE>

RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN MATTERS RELATING TO
ANY INVESTMENT IN THE COMPANY. See "Risk Factors" on page 14 for a discussion
of: Highly Competitive Industry; Competition with First Data; Dependence on
Major MoneyGram Agents; Fluctuation of MoneyGram Agent Network; Factors
Relating to Independence and Sale of the Company--Reliance on First Data, --
Conflicts of Interest with First Data, --Absence of Arm's-Length Negotiations,
- --Agreements between the Company and Western Union Regarding Certain Service
Marks and --Loss of Use of American Express Name; Ability to Grow through New
Products and Services; New Management Team; Extensive Regulation; Uncertainty
as to Certain Tax Matters; Risk of Loss; Liquidity; Fluctuation in Quarterly
Operating Results; Foreign Transactions Risks; Financial Statement
Presentation; Antitakeover Matters; Absence of Prior Public Trading Market and
Determination of Offering Price; Shares Eligible for Future Sale and IPS
Intention to Sell All of its Common Stock; and Dilution.

7
<PAGE>

SUMMARY FINANCIAL AND OPERATING DATA

The following table sets forth summary financial data presented on a carve-
out basis for the Transition and are derived from historical financial data of
IPS. The financial data include allocations of operating and general and
administrative expenses to the Company from IPS. Such allocations do not
necessarily reflect the expenses that would have been or will be incurred by
the Company operating as a stand-alone entity. Management of the Company
believes that costs have been determined and allocated on a reasonable basis
and all costs attributable to conducting the Business have been included in the
Company's Financial Statements. In the opinion of management, such expenses
would not be materially affected by the Company operating as a stand-alone
entity. See Note 1 of the Notes to Financial Statements. The summary financial
data below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements appearing elsewhere in this Prospectus. The statement of operations
data set forth below with respect to the years ended December 31, 1993, 1994
and 1995 and the balance sheet data at December 31, 1994 and 1995 are derived
from, and are qualified by reference to, the audited Financial Statements
appearing elsewhere in this Prospectus. Balance sheet data as of December 31,
1993 and September 30, 1995 and the statement of operations data for the nine
months ended September 30, 1995 have been derived from audited financial
statements not included in this Prospectus. The statement of operations data
for the years ended December 31, 1991 and 1992 and balance sheet data as of
December 31, 1991 and 1992 are derived from unaudited financial statements not
included in this Prospectus. Balance sheet data as of September 30, 1996 and
statement of operations data for the nine-month period ended September 30, 1996
are derived from, and are qualified by reference to, unaudited interim
financial statements appearing elsewhere in this Prospectus. In the opinion of
management, such unaudited interim financial statements include all adjustments
(consisting only of normal recurring accruals) necessary for a fair and, except
as noted below, consistent presentation, in accordance with generally accepted
accounting principles, of such information. The financial and operating results
for the nine months ended September 30, 1996 are not necessarily indicative of
the Company's results for any future interim period or the entire year.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------- ---------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Fee and other.......... $ 17,735 $ 30,519 $48,815 $71,015 $94,242 $72,934 $84,154
Foreign exchange....... 594 1,280 3,070 20,373 42,826 33,145 22,821
-------- -------- ------- ------- ------- ------- -------
Total revenues....... 18,329 31,799 51,885 91,388 137,068 106,079 106,975
Income (loss) before
income taxes (1)...... (16,681) (10,270) (3,196) 19,411 29,656 29,592 20,573
Net income (loss)...... $(11,009) $ (6,778) $(2,077) $12,176 $18,294 $18,254 $12,715
Pro forma net income
(loss) per common
share (2)............. $ (.66) $ (.41) $ (.12) $ .73 $ 1.10 $ 1.10 $ .76
BALANCE SHEET DATA (AT
END OF PERIOD):
Assets restricted to
settlement of
MoneyGram
transactions.......... $ 11,338 $ 11,573 $12,827 $20,927 $26,010 $23,167 $26,059
Fixed assets at cost,
net of depreciation... 950 1,123 1,275 3,084 6,000 6,392 6,822
Costs of acquiring
Agent Contracts, net
of amortization....... 3,369 2,864 1,956 3,401 7,979 8,017 14,840
Total assets........... 16,561 16,009 16,502 28,583 41,618 40,814 49,483
Liabilities relating to
unsettled MoneyGram
transactions.......... 11,338 11,573 12,827 20,927 26,010 23,167 26,059
Total liabilities...... 15,455 14,996 17,358 35,411 40,449 33,686 41,379
Stockholder's equity
(deficit)............. 1,106 1,013 (856) (6,828) 1,169 7,128 8,104
OPERATING DATA:
Number of MoneyGram
Agent locations (at
end of period)........ 11.6 13.1 14.1 16.0 17.2 17.0 17.7
Percentage change...... 11% 13% 8% 13% 8%(3) N/A 4%(3)
Number of transactions. 656 1,114 2,040 3,285 5,393 3,824 4,386
Percentage change...... 104% 70% 83% 61% 64% N/A 15%
</TABLE>
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(1) During the first quarter of 1995, the Company received a $2.5 million
commission rebate from Banamex. The fourth quarter of 1995 includes $1.3
million of discretionary promotion-related payments to MoneyGram Agents. In
addition, in order to comply with the Consent Decree, the Company spent
approximately $6 million more than it otherwise would have for advertising
in the fourth quarter of 1995. The Company incurred costs and expenses
related to obtaining consents from MoneyGram Agents to permit the
assignment of their Agent Contracts to the Company of $375,000 in the
fourth quarter of 1995 and $500,000 in the nine-month period ended
September 30, 1996. Prior to 1996, the Company recorded advertising and
promotion expenses based on transaction volumes for interim reporting
purposes. Beginning in 1996, the Company recorded advertising and promotion
expenses based on actual expenses incurred during the interim period. If
the Company had continued to record advertising and promotion expenses
based on transaction volumes, advertising and promotion expenses would have
been approximately $100,000 less for the first nine months of 1996.
(2) Gives effect to the Company's issuance to IPS of 16,624,900 shares of
Common Stock prior to the consummation of the Offering.
(3) During the last three months of 1995 and the first three months of 1996,
three MoneyGram Agents representing 1,607 locations chose not to renew
their Agent Contracts. In addition, the Company's efforts to add new
MoneyGram Agents were hampered because, during this period, the Company's
sales personnel spent the majority of their time obtaining consents for the
assignment of Agent Contracts rather than focusing their efforts on
expanding the MoneyGram Agent base.

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THE TRANSITION AND ONGOING RELATIONSHIP WITH FIRST DATA

The Company was established to acquire, pursuant to the Transition, the
consumer money wire transfer service business managed and operated by First
Data, through First Data's wholly owned subsidiary IPS, under the name
"MoneyGram" and has not previously carried on an active business. Because of
the nature of consumer money wire transfer services, the Company will have
significant ongoing relationships with First Data and its affiliates under
which First Data and such affiliates will continue to own all of the contracts
with the MoneyGram Agents (the "Agent Contracts") and will provide the Company
with certain services. See "Certain Relationships and Related Transactions--
The Transition Agreements."

BACKGROUND

On June 12, 1995, First Data entered into a merger agreement with FFM, the
parent corporation of Western Union. Western Union is the principal competitor
of the Company. The Company estimates that of the 33 million non-bank consumer
money wire transfers processed worldwide in 1995, Western Union and the
Company accounted for approximately 81% and 16%, respectively, of all such
transactions.

In order to obtain the FTC's approval of its merger with FFM, First Data
entered into the Consent Decree dated January 19, 1996 with the FTC which
requires First Data to divest the sales and marketing functions associated
with the consumer money wire transfer business of the Company or Western Union
by January 23, 1997, but allows First Data to continue to perform processing
services for both businesses. In addition, on September 20, 1995 First Data
and the FTC entered into an agreement (the "Hold Separate Agreement") under
which First Data agreed to manage and maintain the Business as a separate,
ongoing business, independent of all other First Data businesses, including
Western Union. The Consent Decree and the Hold Separate Agreement require,
among other things, that prior to the Transition, First Data will: (i) spend
at least $24 million annually on advertising and promotion of the Business,
provided that no less than $10 million is spent in any two consecutive
quarters; (ii) pay 120% of the standard 1995 sales commission rates to the
MoneyGram sales force for each MoneyGram Agent renewal and MoneyGram Agent
recruitment; and (iii) operate the Business in the ordinary course so that,
when divested, the Business will be capable of providing a consumer money wire
transfer service substantially similar to that which had been provided under
First Data.

Upon the consummation of the Offering, the Consent Decree requires First
Data to, among other things: (i) make available to the Company, at no
additional cost and for a period of time of up to six months thereafter, such
personnel, assistance and training from First Data as is reasonably necessary
to transfer technology and knowledge of the Business; and (ii) refrain from
entering into any contract to provide a consumer money wire transfer service
with a selling MoneyGram Agent who has a contract with the Company to provide
the MoneyGram service until the scheduled expiration of such contract (without
giving effect to any contract extension or renewal provisions that become
effective after the consummation of the Offering). See "Risk Factors--
Competition with First Data."

THE TRANSITION

Following the signing of the Consent Decree and the Hold Separate Agreement,
First Data decided to divest itself of the sales and marketing functions
associated with the Business and to retain Western Union. Pursuant to this
decision, First Data identified those operations and functions necessary to
operate the Business as a stand-alone entity, including those assets and
personnel to be dedicated solely to the Business, began reconfiguring the
shared customer service centers so that IPS's leased facility in Lakewood,
Colorado (the "Lakewood Facility") would be exclusively used in the Business
and commenced the separation of information and services related to the
Business within the IPS data center in Englewood, Colorado.

In order to comply with applicable licensing requirements relating to the
operation of a consumer money transfer business, IPS managed and operated the
Business prior to the Transition under a management agreement with American
Express Travel Related Services, Inc. ("TRS"), a wholly owned subsidiary of
American Express (the "TRS Management Agreement"). The TRS Management
Agreement provided that TRS, as holder of

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licenses and permits that are necessary to own and operate the Business (the
"Required Licenses"), would own and execute all Agent Contracts and hold
certain funds related to unsettled MoneyGram transactions (the "Fiduciary
Funds"), and IPS would conduct the day-to-day operations of the Business and
receive the net economic benefits therefrom. As contemplated by the TRS
Management Agreement, IPS obtained the Required Licenses so as to be able to
own and operate the Business in its own name. Consequently, prior to the
consummation of the Offering, TRS, IPS and First Data will enter into an
agreement that effects the assignment of substantially all of the Agent
Contracts to IPS (the "TRS Assignment"), and IPS will begin performing all of
the functions previously performed by TRS under the TRS Management Agreement
in respect of such Agent Contracts. Those Agent Contracts that are not
assignable at the time of the TRS Assignment will be terminated by IPS as
required by the TRS Management Agreement. Following the Transition and the
Offering, IPS, as holder of the Required Licenses, will own and execute all
Agent Contracts and hold all Fiduciary Funds related thereto in accordance
with the Operations Agreement described below. The Operations Agreement
provides that IPS will assign all Agent Contracts to the Company at such time
as the Company obtains the Required Licenses to own and operate the Business
in its own name. The Company expects to obtain all Required Licenses within
one year of the date hereof; however, no assurance can be given that the
Company will obtain any or all such licenses.

The Transition Agreements

Pursuant to the Transition, the Company will enter into a Contribution
Agreement (the "Contribution Agreement"), an Operations Agreement (the
"Operations Agreement"), a Software License Agreement (the "Software License
Agreement"), a Short-Term Working Capital Facility (the "Facility"), a Service
Mark Letter Agreement (the "Service Mark Letter Agreement"), a Human Resources
Agreement (the "Human Resources Agreement"), a Telecommunications Services
Sharing Agreement (the "Telecom Agreement") and a Registration Rights
Agreement (the "Registration Rights Agreement") and, if requested by the
Company, a Service Mark License Agreement (the "License Agreement")
(collectively, the "Transition Agreements"). Under the Transition Agreements,
First Data or its affiliates will provide a source of liquidity for working
capital purposes and certain licenses and services to the Company that are
necessary to the operation of the Business. See "Certain Relationships and
Related Transactions--The Transition Agreements."

The Contribution Agreement. Prior to the consummation of the Offering, the
Company, First Data and IPS will enter into the Contribution Agreement
pursuant to which (i) IPS will contribute $12 million to the Company for
general corporate purposes (the "IPS Cash Contribution") and (ii) IPS and
certain of its affiliates will contribute certain assets to the Company (the
"MoneyGram Assets"), which include, among other things, certain copyrights and
trademarks (including the MoneyGram service mark), certain software used in
connection with the Business, the economic benefits under the Agent Contracts,
the customer service center operations of the Business, the leasehold interest
in the Lakewood Facility and certain other personal property relating to the
Business's operations, including computers and signage provided to MoneyGram
Agents (collectively, the "Contribution"). The MoneyGram Assets will be
contributed to the Company "as is, where is." In consideration of the
Contribution, the Company will issue and deliver to IPS 16,624,900 shares of
Common Stock. IPS currently holds 100 shares of the Company's Common Stock,
which represent all of the currently issued and outstanding shares.

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<PAGE>

reporting purposes, such tax basis will be reduced to take into account
management's assessment of the possible application of the "anti-churning"
rules under Section 197 of the Code. In addition, the amount of the gross
deferred tax asset which will be recorded at the time of the Contribution will
be reduced by a valuation allowance which will be based upon management's
judgment as to the likelihood of the Company generating sufficient taxable
income to realize the asset through future tax deductions. See "Risk Factors--
Uncertainty as to Certain Tax Matters" and "Certain Relationships and Related
Transactions--the Transition Agreements--The Contribution Agreement--Taxes."

The Operations Agreement. Under the Operations Agreement, which has an
initial two-year term, IPS or its affiliates will perform for the Company data
processing services, management services, disaster recovery services for the
Lakewood Facility customer service center, voice center services and certain
corporate support services. The Company and First Data have agreed to
schedules for fees and expenses which reflect First Data's good faith estimate
of the actual cost of providing such services (including reasonable
allocations of overhead expenses) calculated on a basis consistent with the
determinations made in preparing the Financial Statements appearing elsewhere
in this Prospectus. IPS has agreed to provide certain additional services
under the Operations Agreement at the request of the Company. No assurances
can be given, however, that the Company could not obtain such services at a
lower cost from a third party. See "Certain Relationships and Related
Transactions--The Transition Agreements--The Operations Agreement."

The data processing services include, among other things, data processing,
telecommunication management and data security management. The management
services include those functions that IPS must perform in order for the
Business to be in compliance with applicable licensing and other legal
requirements (including anti-fraud and anti-money laundering functions) until
such time as the Company has obtained the Required Licenses to own and operate
a consumer money wire transfer service in its own name. Disaster recovery
services will be provided by IPS for the Lakewood Facility customer service
center in the event the center is damaged by fire, earthquake, power loss,
telecommunications failure or similar events. Voice Center Services may entail
servicing up to 30% of the Company's incoming voice calls through IPS'
facility in Corpus Christi, Texas (the "Corpus Christi Facility"). Corporate
support services (such as payroll, regulatory compliance, operations support,
treasury and accounting services) will be provided until the Company can
administratively assume performance of such services itself. Under the terms
of the Operations Agreement, IPS will continue to be a party to all Agent
Contracts and to hold all Required Licenses to operate the Business, while
other activities relating to the Business, including pricing, selecting and
negotiating with MoneyGram Agents, determining commissions to be paid to
MoneyGram Agents and substantially all customer service center services, will
be conducted by the Company. IPS will hold all Fiduciary Funds related to
MoneyGram transactions and will be entitled to investment income thereon until
such time as the Company operates the Business in its own name. IPS will pay
to the Company, on a daily basis, an amount equal to Transaction Fee Revenues
generated by the Business (excluding the Company's portion of foreign exchange
revenues which will be paid by IPS to the Company on a monthly basis). The
Company will pay to First Data, on a monthly basis, all amounts owed to First
Data under the Operations Agreement.

Under the Operations Agreement, the Company will be obligated to obtain all
Required Licenses to operate the Business in its own name upon the earlier of
the expiration of the initial two-year term or within 180 days after
termination of the Operations Agreement in accordance with its terms. However,
the Operations Agreement provides that, at the request of the Company in its
sole discretion, IPS will negotiate in good faith to extend the term of the
Operations Agreement or negotiate a similar arrangement with the Company, in
either case upon such terms and conditions, including prices, to be agreed
upon by the Company and IPS. The Company may terminate the Operations
Agreement in its entirety or may terminate certain related groups of services
offered thereunder, including data processing services, or, if the Company has
obtained the Required Licenses and has converted its MoneyGram Agents, the
management services, upon prior written notice within specified periods of
varying lengths, none of which exceeds 90 days. In the event that the Company
terminates the data processing services, the Company is obliged to provide IPS
certain information required by IPS to perform its management services under
the Operations Agreement. See "Certain Relationships and Related
Transactions--The Transition Agreements--The Operations Agreement--
Termination."

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The Software License Agreement. The software used in connection with the
Business is comprised of three components: personal computer based application
software (the "PC MoneyGram Software") used by those MoneyGram Agents who have
personal computers and enter transactions electronically; certain application
software currently used by IPS to process all MoneyGram transactions (the
"MoneyGram Application Software"); and certain other application software used
in processing MoneyGram transactions, but which IPS also currently utilizes in
processing its money order payment products (the "Utility Software"). The PC
MoneyGram Software and the MoneyGram Application Software will be contributed
to the Company pursuant to the Contribution Agreement. Pursuant to the
Software License Agreement, IPS will grant to the Company a perpetual,
irrevocable, worldwide, nonexclusive, royalty-free license to use the Utility
Software in the Business or for any other purpose. See "Certain Relationships
and Related Transactions--The Transition Agreements--The Software License
Agreement."

The Short-Term Working Capital Facility. Prior to the consummation of the
Offering, First Data and the Company will enter into the Facility pursuant to
which the Company may borrow from time-to-time, on a revolving basis, an
amount up to $20 million. Borrowings under the Facility will be unsecured and
only may be used for working capital requirements of the Company. The interest
rate on all outstanding borrowings under the Facility will be the prime rate,
as announced by Chase Manhattan Bank, N.A., plus one percent. The Facility
will terminate 180 days from the consummation of the Offering, at which time
all outstanding borrowings thereunder would have to be repaid or refinanced by
the Company. The Facility contains no commitment or other fees to be charged
to the Company. The Facility contains covenants that limit or restrict the
ability of the Company, without the consent of First Data, which will not be
unreasonably withheld, to (i) place liens on or otherwise encumber its assets
and properties, (ii) to pay dividends, make other distributions or acquire its
capital stock, (iii) dispose of property material to the Business or
operations, (iv) merge or consolidate or acquire assets of any other person or
entity, (v) make certain Investments (as defined therein), (vi) enter into
certain transactions with affiliates and (vii) incur additional indebtedness
for money borrowed. The Facility also will include terms, conditions,
representations and warranties, indemnities, events of default and other
provisions that are customary in such agreements. See "Certain Relationships
and Related Transactions--The Transition Agreements--The Short-Term Working
Capital Facility."

The Service Mark Letter Agreement. Pursuant to the Service Mark Letter
Agreement, the Company, First Data and Western Union have agreed not to sue
each other in respect of the service marks "The Better Way to Wire Money,"
"Wire Money in Minutes" and "Money in Minutes," and certain other similar
phrases, whether in English or another language (the "Disputed Marks"), during
the two-year period following the consummation of the Offering (or thereafter
in respect of the use of any Disputed Mark during such two-year period).
However, the Company and First Data have agreed that each may prosecute or
challenge applications in respect of any of the Disputed Marks at patent and
trademark authorities in the United States or elsewhere during such two-year
period. The Service Mark Letter Agreement also provides that, at the option of
the Company at any time during such two-year period, Western Union, IPS and
the Company will execute the License Agreement and the Service Mark Letter
Agreement will thereupon terminate.

If executed, the License Agreement provides that Western Union will grant to
the Company a non-exclusive and royalty-free license to use "The Better Way to
Wire Money" and "Money in Minutes Worldwide" in English and certain other
languages (but not Spanish) in certain countries, always accompanied by the
word "MoneyGram" and to use "Wire Money in Minutes" in the United States in
English, always accompanied by the word "MoneyGram." The Company will
relinquish to Western Union any rights it may have in, and will be prohibited
from otherwise using, these marks, as well as other specified marks Western
Union uses. Western Union will covenant not to use "The Better Way to Wire
Money" in English in certain countries, including the United States. Both the
Company and Western Union will have a six-month period, beginning upon signing
the License Agreement, during which non-conforming uses of the marks covered
by the agreement will be permitted. Any non-conforming signage, including non-
conforming signage installed during the transition period, may be used through
the life of such signage. The License Agreement has other terms, conditions
and indemnities customary in such licensing agreements. See "Risk Factors--
Agreements between the Company and Western Union Regarding Certain Service
Marks" and "Certain Relationships and Related Transactions--The Transition
Agreements--The Service Mark Letter Agreement."

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The Human Resources Agreement. First Data, IPS and the Company will enter
into the Human Resources Agreement which defines the duties, obligations and
liabilities of First Data and IPS and the Company with respect to the
transition of employees from First Data and IPS to the Company. The Human
Resources Agreement addresses the termination of such employees under First
Data's pension, profit sharing and stock plans and welfare benefit plans
(medical, dental, etc.) and their benefits as newly hired employees of the
Company. Pursuant to the Human Resources Agreement, First Data, IPS and the
Company have each agreed, for a one-year period from the consummation of the
Offering, not to solicit or hire each other's employees. See "Certain
Relationships and Related Transactions--The Transition Agreements--The Human
Resources Agreement."

The Telecommunications Services Sharing Agreement. First Data and the
Company will enter into the Telecom Agreement which provides that First Data
shall cooperate and use reasonable efforts to facilitate the provision of
telecommunication services under First Data's agreements with its various
long-distance telecommunication service providers to the Company and its
affiliates, if any. The Telecom Agreement permits the Company to choose among
such long-distance providers and to benefit from First Data's tariff rates.
The Company, in exchange, will agree to use the telecommunication services
provided by First Data's telecommunication service providers exclusively for
all of the Company's and its affiliates' person-to-person telephone calls
(both incoming and outgoing). The Telecom Agreement expires on December 31,
1998, unless earlier terminated for, among other things, breach by either
party of its representations, warranties or agreements therein, bankruptcy or
insolvency of a party or, at the Company's option, upon 60 days' written
notice.

The Registration Rights Agreement. Pursuant to the Registration Rights
Agreement, the Company has agreed to register under the Securities Act of
1933, as amended (the "Securities Act") (and applicable state securities
laws), the shares of Common Stock held by the Selling Stockholder, if any,
after the completion of the Offering. IPS has agreed that in the event the
U.S. Underwriters' over-allotment option is not exercised in full, it will
deposit any shares of Common Stock then-owned by it into an irrevocable voting
trust (the "Trust") with Wachovia Bank of North Carolina, N.A., as trustee
(the "Trustee"). Pursuant to the irrevocable voting trust agreement (the
"Trust Agreement") among First Data, IPS and the Trustee, the Trustee will
vote any shares of Common Stock subject to the Trust in the same proportion as
all shares of outstanding Common Stock are voted by the other stockholders.
The Trustee will also have the duty and the authority on behalf of IPS to
dispose of such shares of Common Stock on or prior to January 23, 1997, in a
manner advised by a nationally recognized investment banker, which may include
Morgan Stanley & Co. Incorporated, or to donate such shares to a designated
charity or charities on January 23, 1997 (unless the Trust is extended). See
"Certain Relationships and Related Transactions--The Transition Agreements--
The Registration Rights Agreement."

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RISK FACTORS

This Prospectus contains certain forward-looking statements within the
meaning of the federal securities laws. Actual results and the timing of
certain events could differ materially from those projected in the forward-
looking statements due to a number of factors, including those set forth below
and elsewhere in this Prospectus. Prospective investors should consider
carefully the following factors in addition to the other information set forth
in this Prospectus in evaluating an investment in the shares of Common Stock
offered hereby.

HIGHLY COMPETITIVE INDUSTRY

The consumer money transfer and other payment products industry is highly
competitive. The principal methods of competition are price, advertising and
the number and quality of agents and agent locations. Quality of service and
service enhancements are, to a lesser extent, also competitive factors. The
Company faces competition from other consumer money wire transfer service
providers as well as from other payment products which offer consumers the
ability to transfer funds to others. Non-bank consumer money wire transfer
services are provided primarily by two global companies, MoneyGram and Western
Union. The Company estimates that Western Union accounted for approximately
81% of the 33 million non-bank consumer money wire transfers processed
worldwide in 1995 (compared to approximately 16% by the Company).

Recently, competition has increased through the entry of new competitors or
expanded services offered by existing competitors, particularly in the U.S. to
Mexico market. Orlandi Valuta, a competitor in the Los Angeles to Mexico
corridor, has expanded its U.S. presence to over 3,400 agents in California,
Illinois, Texas and Florida, now offers a 10-minute service to Mexico and is
contemplating offering a U.S. to U.S. service. The Company faces additional
competition from the U.S. Postal Service which announced plans to offer two
new money transfer products to Mexico in 1996. The U.S. Postal Service has
joined the Eurogiro Network AS, which allows the U.S. Postal Service to send
postal money order delivery information electronically to participating
partner postal administrations (such as Mexico's postal service). Funds also
may be wired to the receiving institution over this network. This "electronic
money order" service will allow customers to quickly send their money orders
to Mexico for pick up at the Mexican post office. In addition, the U.S. Postal
Service currently is testing an electronic funds transfer system in California
and Texas that will allow postal customers to wire money to Mexico to be
received at Bancomer, S.A. ("Bancomer"), Mexico's third largest bank. Niche
competitors who serve specific migratory corridors also compete with the
Company, including several Mexican banks (such as Bancomer) which have
recently begun to offer consumer money wire transfer services from the United
States to Mexico, focusing on specific geographic locations with high
densities of Mexican immigrants. Niche competitors are able to focus on
particular geographic corridors and eliminate the expenses associated with
maintaining nationwide and worldwide agent networks.

The Company also faces competition from providers of other payment products.
Banks, other financial institutions and credit card companies provide similar
services. Some financial institutions in the United States have announced
plans to expand such services or offer consumer money wire transfer services
for non-bank customers. The Company also faces competition from automated
teller machines and similar retail electronic networks that could allow
consumers to transfer funds to others. The Company also competes with
providers of money orders purchased through IPS, Western Union agents, the
U.S. Postal Service, currency exchanges, supermarkets, convenience stores and
other retail outlets. Money orders generally are less expensive than consumer
money wire transfer services and are available to customers through more
extensive distribution networks.

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able to continue to price below such competitors (particularly niche
competitors, such as Mexican banks establishing consumer wire transfer service
locations in high-use areas in the United States) or offer frequent and
substantial promotions. Future price competition could further reduce the
Company's profit margins (without any increase in transaction volume). As the
MoneyGram service increases its brand name recognition and transaction volumes
increase, the Company has in 1996, and currently intends to continue, to
reduce the number, scope, duration and level of discounting of its price
promotions compared to 1995 and 1994.

Many of the Company's competitors, including Western Union, have, and
potential competitors may have, significantly greater financial, technological
and marketing resources than the Company. No assurances can be given that such
competitors will not use such resources to compete more aggressively by
expanding their agent networks, funding substantial advertising campaigns,
adding enhanced customer services and/or reducing prices, that the Company
will be able to compete successfully against current or future competitors or
that such competition will not have a material adverse effect on the Company's
business, operating results or financial condition. See "Business--MoneyGram
Pricing and Fees," "--Sales and Marketing" and "--Competition."

COMPETITION WITH FIRST DATA

The Company currently competes, and following the offering will compete,
directly with First Data and Western Union, subject only to limited non-
solicitation protections provided by the Consent Decree. Although the Consent
Decree prohibits First Data from entering into a consumer money wire transfer
service contract with a MoneyGram Agent prior to the scheduled expiration of
its Agent Contract, First Data and Western Union may sign a consumer money
wire transfer service contract with any MoneyGram Agent whose Agent Contract
is terminated in accordance with its terms. If MoneyGram fails to comply with
the terms of any Agent Contract, the MoneyGram Agent may terminate the Agent
Contract, in which case First Data and Western Union are permitted under the
Consent Decree to sign such agent to a Western Union agent contract.

In addition, the scope of the Consent Decree is limited in certain respects.
Specifically, the non-solicitation provisions of the Consent Decree described
above do not limit First Data or Western Union from entering into contracts
with MoneyGram Agents to provide services utilizing automatic teller machines
and other point of sale devices, transactions involving debit cards, cash
advances utilizing credit cards, home banking, prepaid telephone and cash
cards, money orders and utility bill payment services. First Data and Western
Union therefore can offer such products in direct competition with the
Company, unrestricted by the Consent Decree. In addition, certain senior
managers of First Data, who previously exercised direction and control over
the Business, will remain as senior managers of First Data with responsibility
for, among other things, the operations of Western Union. Finally, other than
pursuant to the confidentiality provisions in the Hold Separate Agreement,
First Data is not restricted or precluded from applying its historical
knowledge of the Business to its management of Western Union, which may
enhance Western Union's ability to compete with the Company.

Western Union is likely to continue to use its significantly greater
financial, technological and marketing resources to compete vigorously with
the Company in the consumer money wire transfer services industry, including
by signing terminated MoneyGram Agents and other new agents, by acquisitions
and joint ventures and by launching new products that compete with the
consumer money wire transfer service offered by the Company. Such competition
may have a material adverse effect on the Company's business, operating
results or financial condition. See "Business--Competition."

DEPENDENCE ON MAJOR MONEYGRAM AGENTS

In 1995, the Company's top 10 selling MoneyGram Agents, representing
approximately 2,500 agent locations, accounted for approximately 42% of the
Company's transaction volume and 43% of the Company's Transaction Fee
Revenues. During the first nine months of 1996, the Company's top 10 selling
MoneyGram Agents, representing approximately 3,300 locations, accounted for
approximately 42% of the Company's

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transaction volume and 41% of the Company's Transaction Fee Revenues. The
Company has long-term contracts that expire no earlier than the year 2000 with
eight of its 1996 top 10 selling MoneyGram Agents, representing approximately
2,700 locations and accounting for approximately 37% of the Company's
transaction volume and 36% of the Company's Transaction Fee Revenues for the
first nine months of 1996. Two of the top 10 MoneyGram Agents in 1995 and
1996, Banamex and the Chicago Currency Exchange, were each involved in
transactions representing over 10% of the Company's total revenues. In 1995,
46% of funds transferred and 44% of all transactions processed by the Company
were sent by MoneyGram Agents located in the United States and received by
MoneyGram Agents located in Mexico. Banamex, the Company's primary MoneyGram
Agent in Mexico (receive only), represented approximately 71% of the Company's
approximately 1,000 agent locations in Mexico, accounted for 97% of the
Company's approximately 2.4 million total receive transactions in Mexico and
generated $42.4 million in foreign exchange revenues (representing 31% of
total revenues) during 1995. The Agreement with Banamex expires in April,
2002. The Chicago Currency Exchange (consisting of approximately 85 separate
Agent Contracts with owners of Chicago Currency Exchange locations which
expire in 2000 or 2001) in the aggregate initiated send transactions that
generated approximately 15% of the Company's total Transaction Fee Revenues in
1995. In addition, Ace Cash Express ("Ace"), which has 575 locations,
initiated send transactions that generated approximately 11% of the Company's
total Transaction Fee Revenues in the first nine months of 1996. The Agent
Contract with Ace expires in 2000. The loss of, or significant reduction in,
business from one or more of the Company's significant MoneyGram Agents,
including Banamex, Ace and the Chicago Currency Exchange, could have a
material adverse effect on the Company's business, operating results or
financial condition. See "Business--The MoneyGram Agent Network."

FLUCTUATION OF MONEYGRAM AGENT NETWORK

The MoneyGram Agent network recently has experienced increased fluctuation
in the number of MoneyGram Agents. This fluctuation resulted from normal
turnover, as well as extraordinary circumstances arising from the Transition.
From October 1995 to March 1996 (the "Consent Period"), the MoneyGram Agent
sales force dedicated a significant amount of time and effort to obtaining
consents from MoneyGram Agents to the assignment of their Agent Contracts
rather than focusing their efforts on maintaining and expanding the agent
base. During the Consent Period, the Company lost three significant MoneyGram
Agents: Revco, D.S., Inc. ("Revco"), Greyhound Lines, Inc., and Food 4 Less
Supermarkets, Inc. Two of these three MoneyGram Agents were among the top 10
selling MoneyGram Agents in 1995. While these three MoneyGram Agents
collectively represented 1,607 locations at December 31, 1995 (9.3% of the
total number of MoneyGram Agents at such date), the percentage of total
transactions and total revenues attributable to these agents was only 6.0% and
4.8%, respectively. Also, as a result of the Transition, the 450 American
Express Travel Services Offices (the "TSOs") will no longer serve as MoneyGram
Agents. The loss of the TSOs will decrease the number of countries covered by
the MoneyGram Agent network by 15. Although the MoneyGram Agent network has
begun to grow through the addition of new MoneyGram Agents, there can be no
assurance that the MoneyGram Agent network will continue to grow, the failure
of which could have a material adverse effect on the Company's business,
operating results or financial condition. See "Business--The MoneyGram Agent
Network."

FACTORS RELATING TO INDEPENDENCE AND SALE OF THE COMPANY

Reliance on First Data. The operating success and viability of the Company
are dependent upon the performance by First Data or its affiliates of their
obligations under the Transition Agreements. Therefore, the breach or
termination of any of the Transition Agreements could have a material and
adverse affect on the Company's business, operations or financial condition.
There can be no assurance that the Company would be able to arrange an
alternative source of such services or support or a source of working capital
provided under the Transition Agreements upon comparable terms (including
prices) or at all. Moreover, until such time as the Company has obtained the
Required Licenses and title to the Agent Contracts has been assigned to the
Company by IPS, the Company will be precluded from operating the Business
other than under the Operations Agreement

16
<PAGE>

or an extension thereof. Under the Operations Agreement, IPS has agreed, at
the request of the Company in its sole discretion, to negotiate in good faith
to extend the Operations Agreement or negotiate a similar arrangement with the
Company, in either case upon such terms and conditions, including prices, to
be agreed upon by the parties. Although the Company expects to procure all of
the Required Licenses within one year of the date hereof, there can be no
assurance that any or all Required Licenses will be obtained in a timely
manner or that, upon the failure to do so, First Data and the Company will
agree to extend the Operations Agreement. See "Certain Relationships and
Related Transactions--The Transition Agreements."

Conflicts of Interest with First Data. Conflicts of interest between First
Data and the Company could arise as a result of First Data's ownership of
Western Union, on one hand, and the obligations of First Data and its
affiliates under the Transition Agreements, on the other hand. See "Certain
Relationships and Related Transactions--The Transition Agreements." After
giving effect to the Offering, IPS will continue to own approximately 13% of
the outstanding shares of Common Stock (assuming the U.S. Underwriters do not
exercise their over-allotment option), which could result in IPS being the
Company's largest single stockholder, as well as IPS being deemed an
"affiliate" of the Company. However, IPS will not have any designated
directors on the Board of Directors of the Company or any other rights or
preferences as compared to any other stockholder of the Company, other than
any it may have by virtue of the number of shares of Common Stock it owns or
under the Registration Rights Agreement. In addition, if the U.S.
Underwriters' over-allotment option is not exercised in full and IPS continues
to own Common Stock following the Offering, IPS will deposit such Common Stock
into the Trust and will have no ability to direct or influence the manner in
which such Common Stock is voted or sold. See "The Transition and Ongoing
Relationship with First Data," "Certain Relationships and Related
Transactions--The Transition Agreements--The Registration Rights Agreement"
and "Selling Stockholder."

Absence of Arm's-Length Negotiations. While management of the Company has
participated in the preparation and negotiation of the Transition Agreements,
none of the Transition Agreements were the result of third party, arm's-length
negotiations. However, the fees and expenses to be paid by the Company for
services to be performed by First Data and its affiliates under the Operations
Agreement reflect First Data's good faith estimate of the actual cost
(including reasonably allocated overhead expenses) of providing such services,
calculated on a basis consistent with the determinations made in preparing the
Financial Statements appearing elsewhere in this Prospectus. No assurances can
be given that the Company could not obtain such services at a lower cost from
a third party. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Operations Agreement."

Agreements between the Company and Western Union Regarding Certain Service
Marks. The Company uses certain service marks in the Business, including
"MoneyGram," "The Better Way to Wire Money," "Wire Money in Minutes" and
"Money in Minutes Worldwide." Many of these marks have been refused initial
registration by the U.S. Patent and Trademark Office or are being used
concurrently by Western Union, the Company's principal competitor.

IPS has registered "MoneyGram" in certain countries and has applications
pending to register the mark in the United States and in substantially all
other countries in which the Company is conducting, or intends imminently to
conduct, business. In the United States and in certain other countries, the
trademark examiners initially have refused to register "MoneyGram" on the
grounds that it is merely descriptive of the service. In the United States,
the trademark examiner, on appeal, refused to register "MoneyGram" on the
grounds that it is generic. The Company intends to defend vigorously the
registrability of "MoneyGram." However, no assurance can be given that
"MoneyGram" will be registered in any country where applications are pending.

Western Union is using, among other marks, "The Best Way to Send Money" and
"The Fastest Way to Send Money" and has registered these marks in the United
States and in other countries. IPS, on behalf of MoneyGram, applied to
register "The Better Way to Wire Money" in the United States, and the U.S.
trademark examiner rejected the application due to Western Union's prior
registrations for said marks.

17
<PAGE>

Western Union uses "Money in Minutes" and has registered this mark in the
U.S. and has applied to register the mark in certain other countries. IPS, on
behalf of MoneyGram, applied to register "Wire Money in Minutes" in the United
States and expects that the U.S. trademark examiner will reject IPS's
application due to Western Union's prior United States registration.

The Company and Western Union have no current dispute regarding the
Company's use of "The Better Way to Wire Money," "Wire Money in Minutes" or
"Money in Minutes Worldwide," and the two entities have concurrently used
these or similar marks for some time. However, the Company's and Western
Union's respective rights to these marks and to similar marks are unsettled.
Consequently, pursuant to the Service Mark Letter Agreement, the Company,
First Data and Western Union have agreed not to sue each other in respect of
the Disputed Marks, during the two-year period following the consummation of
the Offering (or thereafter in respect of the use of any Disputed Mark during
such two-year period). However, the Company and First Data have agreed that
each may prosecute or challenge applications in respect of any of the Disputed
Marks at patent and trademark authorities in the United States or elsewhere
during such two-year period. The Service Mark Letter Agreement also provides
that, at the option of the Company at any time during such two-year period,
Western Union, IPS, and the Company will execute the License Agreement and the
Service Mark Letter Agreement will thereupon terminate. No assurances can be
given about the effect, if any, of entering into such arrangement concerning
the Disputed Marks may have on the Business or the Company's operating results
or financial condition, including in the event such arrangement constitutes an
abandonment by the Company and Western Union of any or all of the Disputed
Marks. See "Business--Proprietary Rights and Trademarks" and "Certain
Relationships and Related Transactions--The Service Mark Letter Agreement."

No assurances can be given about the effect that any dispute between the
Company and Western Union over the use of one of these marks, an adverse
resolution of such a dispute, if any, or the loss of any service mark of the
Company, would have on the Business or the Company's operating results or
financial condition.

Loss of Use of American Express Name. Prior to the Transition, IPS has
managed and operated the Business and other IPS payment products under the TRS
Management Agreement. Under the TRS Management Agreement, IPS is permitted to
use the American Express name and logo in connection with the marketing of the
MoneyGram service. The TRS Management Agreement contemplates that IPS would
phase out the use of the American Express name and logo by April 1997. IPS
already has commenced such phase out, for instance, in certain of its
advertising and promotions of the MoneyGram service. Upon the transfer of the
Agent Contracts from TRS to IPS in connection with the Transition, neither IPS
nor the Company will be permitted to use the American Express or TRS name or
logo in connection with advertising or promotion of the MoneyGram service. No
assurances can be given that the loss of the use of the American Express or
TRS name and logo will not have a material adverse effect on the Company's
business, operating results or financial condition.

ABILITY TO GROW THROUGH NEW PRODUCTS AND SERVICES

To enhance its growth prospects, the Company currently intends to expand its
business by, among other things, (i) targeting frequent users of money
transfer services, (ii) increasing brand recognition and loyalty, (iii)
providing enhanced value to customers, (iv) growing internationally, (v)
expanding its agent network, (vi) penetrating additional retail and other
distribution channels and (vii) developing other related payment products and
systems. This growth strategy will require increased expenditures. Among the
related payment products the Company currently intends to develop is a money
order product. IPS has agreed, pursuant to the Operations Agreement, to
negotiate in good faith the terms of additional data processing and other
services to be provided by IPS and its affiliates in respect of a money order
product offered by the Company, initially in the names of IPS (as the licensed
entity) and the Company and, at such time as the Company has obtained all
necessary licenses to offer such product, a money order product offered by the
Company in its own name, all at rates not greater than then-current market
rates. The development of new products may require, among other things, the
development of additional software by or on behalf of the Company.

18
<PAGE>

Aspects of the Company's operations depend upon intellectual property
subject to patents or copyrights owned by, and licensed from, third party
providers such as software and telecommunications products. The Company
believes it currently has licenses or other protection in regard to all such
intellectual property. However, should the Company offer new or additional
services, products or programs or alter the current method of operating the
Business, the Company may engage in activities not covered by its current
licenses and agreements. There can be no assurance that in the process of
expanding its product base, the Company will not require additional or
expanded licenses from third party providers. While the Company believes that
such licenses are readily available, there can be no assurance that the
Company will not incur additional expenses to obtain such licenses.

NEW MANAGEMENT TEAM

Certain members of the Company's senior management group, including Mr.
Calvano, the Chairman and Chief Executive Officer, Mr. Fowler, the Executive
Vice President and Chief Financial Officer, Mr. Friedman, the Executive Vice
President--Operations, and Ms. Kenyon, the Secretary and General Counsel,
began working with the Company in February, September, April and July of 1996,
respectively, and have only had the opportunity to work together with the
existing management team since then. In addition to other executive management
positions with other companies, Mr. Calvano previously served as president and
chief operating officer of Western Union from June 1991 through May 1993 and
Mr. Friedman previously served as chief financial officer of Western Union
from November 1994 through March 1996. Other senior sales and marketing
managers of the Company formerly held the same or similar positions while
managing the Business at IPS. Nevertheless, there can be no assurance that the
Company's management group will be successful in managing the operations of
the Company or be able to implement effectively the Company's business and
expansion strategy. In addition, none of the key senior management personnel
have an employment agreement with the Company. See "Management."

EXTENSIVE REGULATION

The Business is subject to supervision and regulation under state and
federal laws and regulations, as well as regulation by foreign governments.
The Company will be required, among other things, to obtain and maintain
licenses in 43 states, the District of Columbia and Puerto Rico. Potential
licensees such as the Company generally must meet certain financial
requirements and provide security (such as bonds). In addition, licensees are
generally subject to certain reporting requirements and, in some cases,
audits. Failure to obtain or maintain a license in a particular state could
preclude the Company from offering the MoneyGram service in that state or
subject the Company to fines and penalties under state law. The Business also
is subject to federal regulation, including the Bank Secrecy Act (the "BSA")
and the Money Laundering Control Act of 1986 (the "MLCA"), which were adopted
to combat "money laundering" via financial institutions, including money
transmitters such as the Company and MoneyGram Agents. In addition, some
foreign countries have regulations applicable to the Business. Such
regulations include both international anti-money laundering initiatives and
local regulation of money transmission. Certain countries currently, or in the
future may, limit consumer money transmission activities (as principal and/or
agent) to banks or similarly licensed financial institutions. Such
restrictions may limit who the Company can utilize as an agent, require the
Company to conduct the Business through a licensed entity or prohibit the
Company altogether from conducting the Business in such country. While the
Mexican government has enacted legislation which criminalizes money
laundering, Mexico currently does not require any special license to engage in
the consumer money wire transfer business.

The failure to comply with the laws or regulations to which the Business is
subject, adverse changes in the interpretation thereof or the adoption of more
stringent laws or regulations could have a material adverse effect on the
Company's business, operating results or financial condition. See "Business--
Regulation and Licensing."

19
<PAGE>

UNCERTAINTY AS TO CERTAIN TAX MATTERS

As a result of the Transition, the tax basis (for federal income tax
purposes) of the MoneyGram Assets will increase from their tax basis in the
hands of IPS and certain of its affiliates at the time of the Contribution to
their fair market value at that time (determined by reference to the initial
public offering price). Such tax basis is generally expected to produce a tax
benefit to the Company in future years through depreciation or amortization
deductions or through decreased gain or (subject to certain limitations)
increased loss on a disposition of any MoneyGram Asset. However, the "anti-
churning" rules under Section 197 of the Code might apply to disallow such
amortization with respect to certain intangible assets of the Company. For
financial accounting and reporting purposes, the Company will record a
deferred tax asset (with a corresponding credit to capital surplus) for the
tax effect of the excess of the tax basis of the MoneyGram Assets following
the Contribution over their net book value. Solely for financial accounting
and reporting purposes, such tax basis will be reduced to take into account
management's assessment of the possible application of the "anti-churning"
rules under Section 197 of the Code. Management's best estimate of the amount
of this uncertainty is subject to revisions and resolution of the uncertainty
may not occur until such time as an audit of the Company's tax return for the
period ended December 31, 1996, or any subsequent year in which amortization
deductions are claimed, is completed by the IRS. Any revisions to the deferred
tax asset resulting from resolution of this uncertainty will be offset by a
corresponding charge or credit directly to capital surplus at the time such
resolution occurs. In addition, the amount of the gross deferred tax asset
which will be recorded at the time of the Contribution will be reduced by a
valuation allowance which will be based upon management's judgment as to the
likelihood of the Company generating sufficient taxable income to realize the
asset through future tax deductions. Any future changes in the valuation
allowance will be based upon management's then current assessment of the
Company's ability to generate sufficient taxable income to realize the balance
of the deferred tax asset through future tax deductions and the impact of any
such changes in the valuation allowance will be recorded as a component of
income tax expense. No assurances can be given that the anti-churning rules
will not be applied to disallow amortization with respect to a significant
portion of the MoneyGram Assets, that the Company will generate sufficient
taxable income to realize the deferred tax asset through future deductions or
that changes in applicable tax law (possibly on a retroactive basis) will not
limit the Company's ability to take such deductions. See "Certain
Relationships and Related Transactions--the Transition Agreements--The
Contribution Agreement--Taxes."

RISK OF LOSS

The Company's operations are dependent on its ability to protect its
customer service center and other processing operations against damage from
fire, earthquake, power loss, telecommunications failure or similar events.
The Company's voice center and other customer service operations are located
in its Lakewood Facility, although up to 30% of the inbound voice calls may be
routed through the Corpus Christi Facility in order to insure that the Company
will have adequate redundancy in its customer service system. First Data and
its affiliates will provide disaster recovery services for the Company's voice
center during the term of the Operations Agreement at First Data's facilities
in Englewood, Colorado, and, for such time as the Company chooses to route
inbound voice calls through the Corpus Christi Facility, at the Corpus Christi
Facility. The Company may determine in the future to obtain such services from
a third party. However, no assurance can be given that the disaster recovery
services selected by the Company, either from First Data or a third party,
will be adequate, and operations may still be interrupted, even for extended
periods. Any damage or failure that causes interruptions in the Company's
operations could have a material adverse effect on the Company's business,
operating results or financial condition. The Operations Agreement does not
provide for consequential damages for the Company in the event that either the
customer service center or the data processing disaster recovery services are
inadequate and the Company incurs resulting losses. The Company's property and
business interruption insurance may not be adequate to compensate the Company
for all losses that it may incur. See "Business--Operations."

20
<PAGE>

LIQUIDITY

The Company's initial sources of liquidity will be the IPS Cash
Contribution, cash generated from operations and the Facility. In the event
that the IPS Cash Contribution and internally generated funds from operations
are not sufficient to meet the Company's liquidity requirements, the Company
will be dependent upon First Data under the Facility to provide working
capital funds until such time as the Company generates sufficient cash flow
from operations or the Company can replace the Facility with a credit facility
with a third party. The Facility will terminate 180 days from the consummation
of the Offering, at which time all outstanding borrowings thereunder would
have to be repaid or refinanced. There can be no assurance that the Facility
will be extended or refinanced. In addition, the Facility contains terms and
conditions, including certain restrictive covenants, customary in such
agreements. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Short-Term Working Capital Facility." Although the
Company believes it can refinance or replace the Facility prior to its
termination, if necessary, no assurances can be given that it will be able to
do so in a timely manner. In such event, and if the IPS Cash Contribution and
internally generated funds from operations are not sufficient for working
capital needs, the Company would be required to seek other sources of
liquidity, if available.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's Transaction Fee Revenues and foreign exchange revenues
fluctuate on a quarterly basis and, to a lesser extent, reflect some seasonal
variations in transaction volumes. Transaction Fee Revenues fluctuate based in
part upon whether the Company is offering a price discounting promotion. These
promotions are a part of the Company's growth strategy. Customers typically
increase usage during price promotions, but also usually transmit smaller
amounts of money per transaction, with a resulting lower average fee per
transaction. The lower average fee per transaction during promotions
historically has been partially offset by corresponding increases in
transaction volume. Foreign exchange revenues fluctuate based upon the
volatility in the spread earned between wholesale and retail exchange rates on
foreign exchange transactions (primarily to Mexico). These exchange rates are
affected by volatility of foreign currencies, particularly the Mexican peso,
and the face amount of transactions sent outside the United States, primarily
to Mexico. Seasonal factors such as holidays, migrant worker remittances,
which are higher in the summer and fall, and emergency transfers to travelers,
which are higher during the summer, also affect the Company's quarterly
results of operations.

FOREIGN TRANSACTIONS RISKS

Approximately 75% of the Company's total revenues (including foreign
exchange revenues) in each of 1994 and 1995 and 70% of total revenues in the
first nine months of 1996 were derived from consumer money wire transfer
service transactions involving either a receiving or sending party (or both)
located outside of the United States (primarily U.S. to Mexico transactions).
The Company generates foreign exchange revenues on U.S. to international
transactions (primarily Mexico) due to the difference in the cost of foreign
currencies at wholesale exchange rates and the retail exchange rates charged
to customers in such transactions. Foreign exchange revenues in 1995 were
substantially larger than in prior years primarily due to the volatility of
the value of the Mexican peso. As the decrease in average foreign exchange
revenues earned per Mexico transaction (from approximately $20 in the first
nine months of 1995 to approximately $13 in the first nine months of 1996)
demonstrates, the Company's average foreign exchange revenues per transaction
in 1995 are not indicative of what the Company expects to achieve in the
future. While a substantial portion of the Company's transaction volume and
total revenues are the result of transactions involving one or more MoneyGram
Agent locations outside the United States, substantially all of the Company's
assets are located in the United States and approximately 98% of all send
transactions originate in the United States. Consequently, virtually all
Transaction Fee Revenues are based in U.S. dollars.

The international portion of the Business is subject to a number of inherent
risks, including difficulties establishing and maintaining agent networks,
fluctuations in the value of foreign currencies, government actions such as
currency devaluations or imposition of foreign exchange controls, potential
political and economic

21
<PAGE>

instability and the need to comply with foreign regulatory requirements. There
can be no assurance that these factors will not adversely affect the Company's
international revenues (including foreign exchange revenues), growth strategy
or its operating results or financial condition. See "Business--International
Transactions."

FINANCIAL STATEMENT PRESENTATION

The Company's Financial Statements and other financial data appearing
elsewhere in this Prospectus are presented on a carve-out basis for the
Business and are derived from the historical financial statements and
financial data of IPS. The Financial Statements include allocations of
operating and general and administrative expenses to the Company from IPS.
However, such allocations do not necessarily reflect the expenses that would
have been or will be incurred by the Company operating as a stand-alone
entity. Management of the Company believes that costs have been determined and
allocated on a reasonable basis and all costs attributable to conducting the
Business have been included in the Company's Financial Statements.
Furthermore, in the opinion of management, the Company's expenses, as
reflected in the Financial Statements, would not be materially affected by the
Company operating as a stand-alone entity and its execution of the
Contribution Agreement, the Operations Agreement and the Facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Overview--Financial Statement Presentation" and Note 1 of the
Notes to Financial Statements.

ANTITAKEOVER MATTERS

The Company's Certificate of Incorporation and By-laws contain certain
provisions that may delay, deter or prevent a takeover of the Company. The
Certificate of Incorporation provides for a classified board of directors,
with three classes of directors, each class being elected for three-year,
staggered terms, and prohibits stockholder action by written consent. In
addition, the Company's By-laws include provisions establishing advance notice
procedures with respect to stockholder proposals and director nominations,
permitting the calling of special stockholder meetings only by a majority of
the Board of Directors or the President and limiting the removal of directors
except for "cause." These factors could have the effect of making it more
difficult for a third party to acquire control of the Company, which could
adversely affect the market price of the Common Stock. See "Description of
Capital Stock."

ABSENCE OF PRIOR PUBLIC TRADING MARKET AND DETERMINATION OF OFFERING PRICE

Prior to the Offering, there has been no public market for the Common Stock.
Although the Common Stock has been approved for listing on the New York Stock
Exchange, subject to official notice of issuance, there can be no assurance
that an active public market will develop for the Common Stock or that, if
such a market develops, the market price will equal or exceed the initial
public offering price set forth on the cover page of this Prospectus. The
initial public offering price for the Common Stock will be determined by
negotiations between the Selling Stockholder and the U.S. Representatives (as
defined below) based on the factors described under "Underwriters." The prices
at which the Common Stock trades from time to time after the Offering will be
determined by the marketplace and may be influenced by many factors, including
the Company's operating and financial performance, the depth and liquidity of
the market for the Common Stock, future sales of Common Stock (or the
potential thereof), including sales by IPS (unless the U.S. Underwriters
exercise their over-allotment option in full), investor perception of the
Company and its prospects, the Company's dividend policy and general economic
conditions. Further, the stock market may experience volatility that affects
the market prices of companies in ways unrelated to the operating performance
of such companies. These market fluctuations may adversely affect the market
price of the Common Stock. See "Shares Eligible for Future Sale."

SHARES ELIGIBLE FOR FUTURE SALE AND IPS INTENTION TO SELL ALL OF ITS COMMON
STOCK

Upon consummation of the Offering, the Company will have outstanding
16,625,000 shares of Common Stock and an additional 1,200,000 shares reserved
for issuance under the Company's 1996 Stock Option Plan (1,175,000 shares) and
1996 Broad-Based Stock Option Plan (25,000 shares). See "Management--Stock
Plans."

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<PAGE>

In addition, subsequent to the Offering, the Company currently expects to
implement a stock option plan for certain key MoneyGram Agents pursuant to
which the Company would reserve shares of Common Stock (the "MoneyGram Agent
Stock Option Plan"). If implemented, the Company may grant options to certain
key MoneyGram Agents (exercisable at the price of the Common Stock on the date
any such option is granted) in connection with the extension of existing or
the negotiation of new Agent Contracts. Such options, if granted, generally
would not be exercisable until the expiration of the initial term of such
Agent Contracts. The Company expects that any such stock options (and the
shares of Common Stock issuable upon exercise of such options) would be
registered under the Securities Act. Therefore, any shares of Common Stock
issued upon exercise of such options would be freely tradeable without
restriction. No assurance can be given that the Company will adopt such a
MoneyGram Agent Stock Option Plan (which may require stockholder approval) or
that, if adopted, any options would be granted thereunder.

All of the shares of Common Stock sold by the Selling Stockholder in the
Offering will be freely tradeable without restriction. In addition, the
Selling Stockholder has entered into the Registration Rights Agreement with
the Company pursuant to which it has the right to cause the Company to
register shares owned by it after the Offering, if any, under the Securities
Act for sales in underwritten offerings or from time to time in open market
transactions. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Registration Rights Agreement." Under the terms of
the Trust Agreement, the Trustee has the duty and the authority on behalf of
IPS to dispose of any shares owned by IPS on or prior to January 23, 1997 or
to donate such shares to a designated charity or charities on January 23, 1997
(unless the Trust is extended). No predictions can be made as to the effect,
if any, that market sales of such shares, or the availability of shares for
future sales, will have on the market price of shares of Common Stock
prevailing from time to time. Sales of substantial amounts of Common Stock, or
the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock and could impair the Company's future
ability to raise capital through an offering of its equity securities.

Each of the Company, the Selling Stockholder and the Trustee pursuant to the
Trust Agreement has agreed, subject to certain exceptions, that, without the
prior written consent of Morgan Stanley & Co. Incorporated, it will not (i)
offer, pledge, issue, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, file a registration statement (in the case of the Company) or make
any demand for or exercise any right with respect to (in the case of the
Selling Stockholder and the Trustee) any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(whether such shares or any such securities are then owned by such person or
are thereafter acquired directly from the Company) or (ii) enter into any swap
or similar agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) of this paragraph is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, for a period
of 180 days after the date of this Prospectus, in the case of the Company, and
prior to December 31, 1996, in the case of the Selling Stockholder and
Trustee, other than (a) the shares of Common Stock offered hereby, (b) any
grant of stock options that vest subsequent to 180 days after the date of this
Prospectus, (c) one or more registration statements relating to the Company's
1996 Stock Option Plan, the 1996 Broad-Based Stock Option Plan or the
MoneyGram Agent Stock Option Plan or the Company's obligations under the
Registration Rights Agreement or (d) the deposit, if any, of any shares of
Common Stock with Wachovia Bank of North Carolina, N.A. as trustee pursuant to
the Trust Agreement. See "Shares Eligible for Future Sale" and "Underwriters."

DILUTION

As of September 30, 1996, the Company had a pro forma net tangible book
value per share of Common Stock of $.32 (after giving effect to the issuance
of 16,624,900 shares of Common Stock to IPS and the IPS Cash Contribution in
the Transition and excluding any amounts attributable to deferred tax assets
resulting from the Transition). Based on the initial public offering price of
$12.00 per share, purchasers of Common Stock in the Offering will experience
an immediate dilution of $11.68 per share. See "Dilution."

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<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the sale by the Selling
Stockholder of the Common Stock in the Offering.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock.
The Company expects to retain its future earnings to operate and support the
growth of its business and, therefore, does not anticipate paying any cash
dividends in the foreseeable future. In addition, the Facility generally
prohibits the Company from paying any dividend or making any other
distribution with respect to, or acquiring, shares of its capital stock other
than (i) dividends or distributions payable in shares of its Common Stock,
(ii) acquisitions of Common Stock with proceeds from a concurrent issuance of
Common Stock and (iii) cash dividends in an aggregate amount in excess of 10%
of net income of the Company on a cumulative basis after September 30, 1996.

DILUTION

The pro forma net tangible book value of the Company as of September 30,
1996, was $5.3 million or $.32 per share of Common Stock (after giving effect
to the issuance of 16,624,900 shares of Common Stock to IPS and the IPS Cash
Contribution in the Transition, as if the Transition occurred on September 30,
1996 and excluding any amounts attributable to deferred tax assets resulting
from the Transition). See "The Transition and Ongoing Relationship with First
Data," "Capitalization" and "Certain Relationships and Related Transactions--
The Transition Agreements--The Contribution Agreement--Taxes." Net tangible
book value per share is equal to the Company's total tangible assets less
total liabilities, divided by the total number of shares of Common Stock
outstanding. Because the Company will not receive any proceeds from the
Offering, the sale of shares of Common Stock offered hereby will not affect
the pro forma net tangible book value. "Dilution" per share is determined by
subtracting pro forma net tangible book value per share from the amount paid
for a share of Common Stock in the Offering. The following table illustrates
this per share dilution at the initial public offering price of $12.00 per
share:

<TABLE>
<S> <C> <C>
Initial public offering price per share.................... $12.00
Net tangible book deficit per share prior to the Offering
and the IPS Cash Contribution........................... $(.40)(1)
Increase in net tangible book value per share
attributable to the IPS Cash Contribution............... .72
-----
Pro forma net tangible book value per share after giving
effect to the Transition(2)............................... .32
------
Dilution to purchasers of Common Stock in the Offering..... $11.68
======
</TABLE>

- --------
(1) Prior to consummation of the Offering, the Company has not had, and will
not have, its own cash accounts and all positive cash flows attributable
to its business flow to IPS while any negative cash flows are funded by
IPS. As a result, the capital surplus component of the Company's
stockholder's equity as of the consummation date of the Offering will (i)
decrease from the balance reported at September 30, 1996 to the extent the
Company's cash flows are positive for the period October 1, 1996 through
the consummation date, or (ii) increase from the balance reported at
September 30, 1996 to the extent the Company's cash flows are negative for
the period October 1, 1996 through the consummation date.

(2) Based upon the initial public offering price of $12.00 per share, the pro
forma excess of the tax basis, for financial accounting and reporting
purposes, of the Company's net assets (following the Contribution,
determined after reducing such tax basis to take into account management's
assessment of the possible application of the anti-churning rules under
Section 197 of the Code) over their net book value at September 30, 1996
is approximately $152.5 million resulting in a pro forma gross deferred
tax asset of $59.5 million. Based upon preliminary management assessments,
a valuation allowance of 12% or $7.0 million would be necessary. Including
the pro forma net deferred tax asset of $52.5 million would increase the
pro forma net tangible book value to $57.8 million or $3.48 per share from
$5.3 million or $.32 per share.

24
<PAGE>

CAPITALIZATION

The following table sets forth the pro forma cash, short-term debt and
capitalization of the Company as of September 30, 1996 (as if the Transition,
including the IPS Cash Contribution, had occurred on such date). This table
should be read in conjunction with the Financial Statements appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
Cash(1)................................................... $12,000
=======
Short-term debt(2)........................................ $ --
=======
Long-term debt............................................ $ --
-------
Stockholder's equity:
Common Stock, $.01 par value, 100,000,000 shares
authorized; 16,625,000 shares issued and
outstanding(3)......................................... 166
Capital surplus(4)(5)................................... 17,679
Retained earnings....................................... 2,259
-------
Total stockholder's equity............................ 20,104
-------
Total capitalization................................ $20,104
=======
</TABLE>
- --------
(1) Represents the IPS Cash Contribution.
(2) Prior to the consummation of the Offering, First Data will extend to the
Company the Facility, pursuant to which the Company may borrow from time-
to-time, on a revolving basis, an amount up to $20 million. Borrowings
under the Facility will be unsecured. The Facility will terminate 180 days
from the consummation of the Offering, at which time all outstanding
borrowings under the Facility would have to be repaid or refinanced by the
Company. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Short-Term Working Capital Facility."
(3) Excludes 1,200,000 shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan (1,175,000 shares) and 1996 Broad-Based
Stock Option Plan (25,000 shares). See "Management--Stock Plans" and
"Shares Eligible for Future Sale."
(4) Includes $12 million, representing the IPS Cash Contribution. Prior to
consummation of the Offering, the Company has not had, and will not have,
its own cash accounts and all positive cash flows attributable to its
business flow to IPS while any negative cash flows are funded by IPS. As a
result, the capital surplus component of the Company's stockholder's
equity as of the consummation date of the Offering will (i) decrease from
the balance reported at September 30, 1996 to the extent the Company's
cash flows are positive for the period October 1, 1996 through the
consummation date, or (ii) increase from the balance reported at September
30, 1996 to the extent the Company's cash flows are negative for the
period October 1, 1996 through the consummation date.

(5) Excludes an estimated $52.5 million attributable to pro forma net deferred
tax asset which will result from the Contribution based on the initial
public offering price of $12.00 per share. See "Risk Factors--Uncertainty
as to Certain Tax Matters," "Dilution" and "Certain Relationships and
Related Transactions--The Transition Agreements--The Contribution
Agreement--Taxes."

25
<PAGE>

SELECTED FINANCIAL AND OPERATING DATA

The following table sets forth selected financial data presented on a carve-
out basis for the Transition and are derived from historical financial data of
IPS. The financial data include allocations of operating and general and
administrative expenses to the Company from IPS. Such allocations do not
necessarily reflect the expenses that would have been or will be incurred by
the Company operating as a stand-alone entity. Management of the Company
believes that costs have been determined and allocated on a reasonable basis
and all costs attributable to conducting the Business have been included in
the Company's Financial Statements. In the opinion of management, such
expenses would not be materially affected by the Company operating as a stand-
alone entity. See Note 1 of Notes to Financial Statements. The selected
financial data below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Financial Statements appearing elsewhere in this Prospectus. The statement
of operations data set forth below with respect to the years ended December
31, 1993, 1994 and 1995 and the balance sheet data at December 31, 1994 and
1995 are derived from, and are qualified by reference to, the audited
Financial Statements appearing elsewhere in this Prospectus. Balance sheet
data as of December 31, 1993 and September 30, 1995 and the statement of
operations data for the nine months ended September 30, 1995 have been derived
from audited Financial Statements not included in this Prospectus. The
statement of operations data for the years ended December 31, 1991 and 1992
and balance sheet data as of December 31, 1991 and 1992 are derived from
unaudited financial statements not included in this Prospectus. Balance sheet
data as of September 30, 1996 and statement of operations data for the nine-
month period ended September 30, 1996 are derived from, and are qualified by
reference to, unaudited interim financial statements appearing elsewhere in
this Prospectus. In the opinion of management, such unaudited interim
financial statements include all adjustments (consisting only of normal
recurring accruals) necessary for a fair and, except as noted below,
consistent presentation, in accordance with generally accepted accounting
principles, of such information. The financial and operating results for the
nine months ended September 30, 1996 are not necessarily indicative of the
Company's results for any future interim period or the entire year.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Fee and other.......... $ 17,735 $ 30,519 $48,815 $71,015 $94,242 $72,934 $84,154
Foreign exchange....... 594 1,280 3,070 20,373 42,826 33,145 22,821
-------- -------- ------- ------- ------- ------- -------
Total revenues....... 18,329 31,799 51,885 91,388 137,068 106,079 106,975
Expenses:
Agent commissions and
amortization of Agent
Contract acquisition
costs................. 11,612 17,957 22,112 28,742 34,801(1) 25,587(1) 33,865
Processing costs....... 9,791 11,022 12,361 15,334 25,542 17,500 18,698
Advertising and
promotion (2)......... 8,800 7,847 13,708 19,523 33,822(3) 24,015 22,347
Selling, service and
general and
administrative........ 4,807 5,243 6,900 8,378 13,247(4) 9,385 11,492
-------- -------- ------- ------- ------- ------- -------
Total expenses....... 35,010 42,069 55,081 71,977 107,412 76,487 86,402
Income (loss) before
income taxes.......... (16,681) (10,270) (3,196) 19,411 29,656 29,592 20,573
Net income (loss)...... $(11,009) $ (6,778) $(2,077) $12,176 $18,294 $18,254 $12,715
Pro forma net income
(loss) per common
share (5)............. $ (.66) $ (.41) $ (.12) $ .73 $ 1.10 $ 1.10 $ .76
BALANCE SHEET DATA (AT
END OF PERIOD):
Assets restricted to
settlement of
MoneyGram
transactions.......... $ 11,338 $ 11,573 $12,827 $20,927 $26,010 $23,167 $26,059
Fixed assets at cost,
net of depreciation... 950 1,123 1,275 3,084 6,000 6,392 6,822
Costs of acquiring
Agent Contracts, net
of amortization....... 3,369 2,864 1,956 3,401 7,979 8,017 14,840
Total assets........... 16,561 16,009 16,502 28,583 41,618 40,814 49,483
Liabilities relating to
unsettled MoneyGram
transactions.......... 11,338 11,573 12,827 20,927 26,010 23,167 26,059
Total liabilities...... 15,455 14,996 17,358 35,411 40,449 33,686 41,379
Stockholder's equity
(deficit)............. 1,106 1,013 (856) (6,828) 1,169 7,128 8,104
OPERATING DATA:
Number of MoneyGram
Agent locations (at
end of period)........ 11.6 13.1 14.1 16.0 17.2 17.0 17.7
Percentage change...... 11% 13% 8% 13% 8%(6) N/A 4%(6)
Number of transactions. 656 1,114 2,040 3,285 5,393 3,824 4,386
Percentage change...... 104% 70% 83% 61% 64% N/A 15%
</TABLE>
- -------
(1) Net of a $2.5 million commission rebate from Banamex received by the
Company during the first quarter of 1995.
(2) Prior to 1996 the Company recorded advertising and promotion expenses
based on transaction volumes for interim reporting purposes. Beginning in
1996, the Company recorded advertising and promotion expenses based on
actual expenses incurred during the interim period. If the Company had
continued to record advertising and promotion expenses based on
transaction volumes, advertising and promotion expenses would have been
approximately $100,000 less for the first nine months of 1996.
(3) To comply with the Consent Decree, the Company spent approximately $6
million more than it otherwise would have for advertising in the fourth
quarter of 1995. In addition, the fourth quarter of 1995 includes $1.3
million of discretionary promotion-related payments to MoneyGram Agents.
(4) Includes costs and expenses related to obtaining consents from MoneyGram
Agents to permit the assignment of their Agent Contracts to the Company of
$375,000 in the fourth quarter of 1995 and $500,000 in the nine-month
period ended September 30, 1996.
(5) Gives effect to the Company's issuance to IPS of 16,624,900 shares of
Common Stock prior to the consummation of the Offering.
(6) During the last three months of 1995 and the first three months of 1996,
three MoneyGram Agents representing 1,607 locations chose not to renew
their Agent Contracts. In addition, the Company's efforts to add new
MoneyGram Agents were hampered because, during this period, the Company's
sales personnel spent the majority of their time obtaining consents for
the assignment of Agent Contracts rather than focusing their efforts on
expanding the MoneyGram Agent base.

26
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Financial
Statements appearing elsewhere in this Prospectus. Such Financial Statements
give effect to the Transition as if completed prior to January 1, 1993, are
presented on a carve-out basis for the Business and are derived from the
historical financial information of IPS. See "--Financial Statement
Presentation" below. See "The Transition and Ongoing Relationship with First
Data" for a description of the Transition.

OVERVIEW

The Company is a leading non-bank provider of consumer money wire transfer
services, with a strong, well-recognized brand-name. The Company accounted for
approximately 16% of all consumer money wire transfer transactions worldwide
in 1995. The Company offers customers the ability to transfer funds quickly,
reliably, conveniently and at attractive prices through its approximately
17,700 MoneyGram Agent locations in 84 countries worldwide as of September 30,
1996. MoneyGram Agents, representing approximately 68% of the Company's
revenues for the first nine months of 1996, are subject to long-term contracts
ranging in term from three to six years. MoneyGram targets its services to
individuals without traditional banking relationships, expatriates who need to
send money to their country of origin, traditional bank customers in need of
emergency money transfer services, tourists without local bank accounts and
businesses that need rapid and economical money transfer services. The Company
also provides cash advance and bill payment services (including payments on
revolving credit, time and personal loans) through many MoneyGram Agent
locations in the United States.

Consumers sending expatriate remittance funds and individuals without
traditional banking relationships are the two largest segments of repetitive
money transfer customers. The Federal Reserve Board of Governors estimates
that there are approximately 23 million households in the United States
without traditional banking relationships. Additionally, industry analysts
estimate that there are an increasing number of people who remit funds to
their respective countries of origin on a regular basis.

Non-bank consumer money wire transfer services are provided primarily by two
global companies, MoneyGram and Western Union, as well as several niche
competitors. The Company estimates that in 1995 the industry processed 33
million non-bank consumer money wire transfer transactions worldwide, an
increase of 29% over 1994, and representing a compounded annual growth rate of
22% since 1991. In 1995, the Company processed 5.4 million of the 33 million
non-bank consumer money wire transfer transactions worldwide, representing
approximately 16% of such transactions. Western Union accounted for
approximately 81% of all such transactions worldwide in 1995. The Company
believes the gross revenues generated from non-bank consumer money wire
transfers in 1995 were $800 million on $9 to $10 billion in face amount of
transferred funds.

The Company believes international consumer money transfer will continue to
grow through the end of the decade, primarily due to the combination of
increased migration and greater consumer awareness. The Company believes that
migration dynamics throughout Latin America, the Caribbean, Europe and Asia
provide attractive growth potential for consumer money transfer services.

27
<PAGE>

Revenues

The Company's revenues are comprised of Transaction Fee Revenues (68% of
1995 revenues), foreign exchange revenues (31% of 1995 revenues) and
investment income (less than 1% of 1995 revenues). Transaction Fee Revenues
are a function of the number of transactions processed by the Company and the
fee per transaction paid by the customers sending the money. Transaction fees
are charged to customers according to a graduated schedule based upon the face
amount of the transaction. Prices are set to maximize transaction volume at
certain frequently transferred face value amounts. The average face amounts
for the Company's transactions during 1995 were $238, $302 and $446 for
transactions from U.S. to U.S., U.S. to Mexico and U.S. or international to
international locations, respectively, and the standard fees for such
transactions were approximately $20, $31 and $40 (depending on the location of
the recipient), respectively. The average face amounts for the Company's
transactions during the first nine months of 1996 were $234, $266 and $397 for
transactions from U.S. to U.S., U.S. to Mexico and U.S. or international to
international locations, respectively. Foreign exchange revenues are a
function of the number of transactions and the spread between the cost to the
Company of purchasing currency at wholesale exchange rates and the retail
exchange rates charged to recipients of funds outside the United States
(primarily Mexico). Investment income represents income allocated from IPS for
funds which have been transferred through the MoneyGram system, but not yet
collected by the recipient. Following the Transition, IPS will retain such
investment income until such time as the Company operates the Business in its
own name.

Transaction volume has increased as a result of (i) the Company's
development of its broad, convenient network of agent locations, (ii)
advertising and promotion strategies targeted to increase brand awareness of
MoneyGram, which have built usage among frequent money transfer users and
established positions in potential growth markets, and (iii) the overall
growth in the money transfer industry. This growth in transaction volume has
been partially offset by a decrease in the average transaction fees earned per
transaction. This decrease was caused by the Company's marketing and pricing
policy designed to increase its market share. In order to grow its market
share, the Company has actively pursued a policy of maintaining its prices 20%
to 30% below those of Western Union on each of the most frequently sent face
value amounts and has featured numerous promotions with even greater discounts
on prices. Promotional discounting of prices has reduced the Company's profit
margins. Customers typically increase usage during promotion periods, but also
transmit smaller amounts of money per transaction with a resulting lower
average fee per transaction. Historically, the Company's transaction volumes
have increased during price promotions and, although transaction volumes
decline when the price promotion ends, they consistently remain above pre-
promotion levels.

Substantially all of the growth in foreign exchange revenues through the end
of 1995 has resulted from an increase in the number of U.S. to Mexico
transactions processed by the Company and an increase in the average foreign
exchange revenue earned per transaction as a result of the increased
volatility of the value of the Mexican peso versus the U.S. dollar. Both the
Company and Banamex realize foreign exchange revenues on U.S. to Mexico
transactions with respect to the difference between the Company's wholesale
rates and the retail exchange rates charged to MoneyGram customers. In
addition to receive commissions, the Company pays Banamex fees in an amount
equal to one-half of the total foreign exchange revenues derived from U.S. to
Mexico MoneyGram transactions received at a Banamex location. Banamex
purchases Mexican pesos at a known rate for transactions that will be paid the
following day. Banamex and the Company then set the Mexican peso pricing to be
charged for those transactions based on competitive retail market rates. At a
minimum, the Company believes that its retail pricing will cover the currency
purchase cost and, in almost every case, the transaction will generate income
equal to the difference between wholesale and retail exchange rates. The total
and per transaction foreign exchange revenues realized by the Company in 1995
were substantially larger than in prior years due to the volatility of the
peso. As the decrease in average foreign exchange revenues earned per
transaction (from approximately $20 in the first nine months of 1995 to
approximately $13 in the first nine months of 1996) demonstrates, the
Company's average foreign exchange revenues per transaction in 1995 are not
indicative of what the Company expects to achieve in the future. Future levels
of foreign exchange revenues will continue to depend on the total number of
MoneyGram's international transactions and the volatility of the currencies in
the recipient countries. In addition, foreign exchange revenues will depend on
the structure of the

28
<PAGE>

Agent Contracts the Company executes in international markets and, in
particular, on the manner in which the Company shares foreign exchange
revenues with receiving MoneyGram Agents and on the arrangement under which
the Company pays commissions to the receiving MoneyGram Agents.

Total investment income is a relatively small contributor to revenues as the
average time required to collect funds from MoneyGram Agents is only slightly
less than the average time it takes for the funds to be collected by the
recipient.

Expenses

The Company's expenses include commissions paid to MoneyGram Agents and
guarantee commission payments to certain MoneyGram Agents (31% of 1995
expenses), advertising and promotion expenses (31% of 1995 expenses),
processing expenses (24% of 1995 expenses), selling, service and general and
administrative expenses (12% of 1995 expenses) and the amortization of Agent
Contract acquisition payments (2% of 1995 expenses). Commissions are set forth
in the Agent Contracts. Commissions paid to selling MoneyGram Agents typically
are based on a percentage of the transaction fee (averaging 20% of the
transaction fee) and receive commissions are based on either a flat or
percentage fee (averaging 16% of the transaction fee). Agent Contract
acquisition payments are amortized over the original term of the contract
(typically five years). Advertising and promotion expenses include signage
related expenses, print and media advertisements, "giveaways," discretionary
promotional cash rebates to MoneyGram Agents and currently a free three-minute
long distance phone call with each transaction within the United States or
between the United States and the Americas so that the sender may provide the
recipient notice of the transaction. Processing expenses primarily represent
the cost of the Company's customer service center, as well as information
processing and fraud prevention costs. Selling and service expenses represent
the costs associated with the Company's agent services, technical services and
sales, field services and marketing groups. General and administrative
expenses include the Company's legal, accounting and human resources
functions.

The Company's operating expenses can be divided into four categories: (i)
expenses that vary based upon transaction fees earned, primarily MoneyGram
Agent commissions; (ii) expenses that vary based upon the number of
transactions processed, primarily transaction processing expenses and customer
service center costs; (iii) discretionary expenses, primarily advertising; and
(iv) fixed expenses, primarily amortization of Agent Contract acquisition
costs, sales and service and general and administrative expenses. Under the
Operations Agreement, the Company will pay a fixed data processing fee for
each transaction. Future growth may require additional operational facilities
and enhanced management, information and telecommunications systems and other
operations, causing the Company to incur additional expenses. However, the
Company believes that cost reduction opportunities exist through economies of
scale, the further automation of MoneyGram Agents and the renegotiation of
certain vendor relationships.

Under the Consent Decree and the Hold Separate Agreement, First Data has
been obligated since September 1995, and until the consummation of the
Offering will be obligated, to spend a total of $24 million per year and no
less than $10 million in any two consecutive quarters on MoneyGram advertising
and promotion. To comply with the Consent Decree, the Company spent
approximately $6 million more than it otherwise would have for advertising in
the fourth quarter of 1995.

Financial Statement Presentation

The Financial Statements appearing elsewhere in this Prospectus reflect the
historical financial results of the Company giving effect to the Transition as
if completed prior to January 1, 1993. See "The Transition and Ongoing
Relationship with First Data" for a description of the Transition pursuant to
which, among other things, IPS will contribute to the Company the MoneyGram
Assets. As a result, the Financial Statements and other financial data
appearing elsewhere in this Prospectus are presented on a "carve-out" basis
for the Business and are derived from the historical financial information of
IPS. The Financial Statements include allocations of operating and general and
administrative expenses to the Company from IPS. However, such allocations do
not

29
<PAGE>

necessarily reflect the expenses that would have been or will be incurred by
the Company operating as a stand-alone entity. Management of the Company
believes that costs have been determined and allocated on a reasonable basis
and all costs attributable to conducting the Business have been included in
the Company's Financial Statements. In the opinion of management, the
Company's expenses, as reflected in the Financial Statements would not be
materially affected by the Company operating as a stand-alone entity and its
execution of the Transition Agreements. See Note 1 of the Notes to Financial
Statements.

Taxes

As a result of the Transition, the tax basis (for federal income tax
purposes) of the MoneyGram Assets will increase from their tax basis in the
hands of IPS and certain of its affiliates at the time of the Contribution to
their fair market value at that time (determined by reference to the initial
public offering price). Such tax basis is generally expected to produce a tax
benefit to the Company in future years through depreciation or amortization
deductions or through decreased gain or (subject to certain limitations)
increased loss on a disposition of any MoneyGram Asset. However, the "anti-
churning" rules under Section 197 of the Code might apply to disallow such
amortization with respect to certain intangible assets of the Company. For
financial accounting and reporting purposes, the Company will record a
deferred tax asset (with a corresponding credit to capital surplus) for the
tax effect of the excess of the tax basis of the MoneyGram Assets following
the Contribution over their net book value. Solely for financial accounting
and reporting purposes, such tax basis will be reduced to take into account
management's assessment of the possible application of the "anti-churning"
rules under Section 197 of the Code. Management's best estimate of the amount
of this uncertainty is subject to revisions and resolution of the uncertainty
may not occur until such time as an audit of the Company's tax return for the
period ended December 31, 1996, or any subsequent year in which amortization
deductions are claimed, is completed by the IRS. Any revisions to the deferred
tax asset resulting from resolution of this uncertainty will be offset by a
corresponding charge or credit directly to capital surplus at the time such
resolution occurs. In addition, the amount of the gross deferred tax asset
which will be recorded at the time of the Contribution will be reduced by a
valuation allowance which will be based upon management's judgment as to the
likelihood of the Company generating sufficient taxable income to realize the
asset through future tax deductions. Any future changes in the valuation
allowance will be based upon management's then current assessment of the
Company's ability to generate sufficient taxable income to realize the balance
of the deferred tax asset through future tax deductions and the impact of any
such changes in the valuation allowance will be recorded as a component of
income tax expense. Based upon the initial public offering price of $12.00 per
share, the pro forma excess of the tax basis of the Company's net assets
(determined for financial accounting and reporting purposes, as described
above) over their pro forma net book value at September 30, 1996 will be
approximately $152.5 million resulting in a pro forma gross deferred tax asset
of $59.5 million. Based upon preliminary management assessments, a valuation
allowance of 12% or $7.0 million would be established resulting in a pro forma
net deferred tax asset of $52.5 million. See "Certain Relationships and
Related Transactions--the Transaction Agreements--The Contribution Agreement--
Taxes."

Quarterly Results of Operations

30
<PAGE>

The following table presents unaudited interim operating results of the
Company. The Company believes that the following information includes all
adjustments (consisting only of normal, recurring adjustments) that the
Company considers necessary for a fair and consistent presentation, in
accordance with generally accepted accounting principles, of such information.
The financial and operating results for any interim period are not necessarily
indicative of results for any future interim period or the entire year.

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------------------------------------------------------
1994 1995 1996
--------------------------------- ------------------------------------ -------------------------------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30
-------- ------- -------- ------- -------- ------- -------- ------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Fee and other....... $14,738 $18,800 $19,494 $17,983 $18,899 $28,420 $25,615 $21,308 $27,567 $29,686 $26,901
Foreign exchange.... 1,950 5,399 5,457 7,567 13,928 10,480 8,737 9,681 8,044 7,731 7,046
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues..... 16,688 24,199 24,951 25,550 32,827 38,900 34,352 30,989 35,611 37,417 33,947
Expenses:
Agent commissions
and amortization of
Agent Contract
acquisition costs.. 5,988 7,454 7,956 7,344 5,770(1) 10,475 9,342 9,214 10,925 11,690 11,250
Processing.......... 3,092 4,132 4,070 4,040 5,289 6,338 5,873 8,042 6,822 5,906 5,970
Advertising and
promotion(2)....... 3,766 4,866 5,145 5,746 7,737 8,265 8,013 9,807(3) 8,814 7,949 5,584
Selling and service. 894 929 914 963 1,510 1,742 1,993 2,280(4) 2,221(4) 2,555(4) 2,869(4)
General and
administrative..... 1,044 1,115 1,182 1,337 1,294 1,391 1,455 1,582 1,391 1,225 1,231
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total expenses..... 14,784 18,496 19,267 19,430 21,600 28,211 26,676 30,925 30,173 29,325 26,904
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income before income
taxes............... 1,904 5,703 5,684 6,120 11,227 10,689 7,676 64 5,438 8,092 7,043
Income tax expense... 710 2,126 2,118 2,281 4,302 4,095 2,941 24 2,083 3,099 2,676
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net income........... $ 1,194 $ 3,577 $ 3,566 $ 3,839 $ 6,925 $ 6,594 $ 4,735 $ 40 $ 3,355 $ 4,993 $ 4,367
======= ======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Pro forma net income
per common share(5). $ .07 $ .22 $ .21 $ .23 $ .42 $ .39 $ .29 $ -- $ .20 $ .30 $ .26
Number of
transactions........ 633 819 866 967 1,232 1,316 1,276 1,569 1,505 1,481 1,400
</TABLE>
- -------
(1) Net of a $2.5 million commission rebate from Banamex received by the
Company during the first quarter of 1995.
(2) Prior to 1996, the Company recorded advertising and promotion expenses
based on transaction volumes for interim reporting purposes. Beginning in
1996, the Company recorded advertising and promotion expenses based on
actual expenses incurred during the interim period. If the Company had
continued to record advertising and promotion expenses based on
transaction volumes, advertising and promotion expenses would have been
approximately $2.0 million less for the first quarter of 1996, $.5 million
more for the second quarter of 1996 and $1.4 million more for the third
quarter of 1996.
(3) To comply with the Consent Decree, the Company spent approximately $6
million more than it otherwise would have for advertising in the fourth
quarter of 1995. In addition, the fourth quarter of 1995 includes $1.3
million of discretionary promotion-related payments to MoneyGram Agents.
(4) Includes costs and expenses related to obtaining consents from MoneyGram
Agents to permit the assignment of their Agent Contracts to the Company of
$375,000 in the fourth quarter of 1995, $300,000 in the first quarter of
1996, $150,000 in the second quarter of 1996 and $50,000 in the third
quarter of 1996.
(5) Gives effect to the Company's issuance to IPS of 16,624,900 shares of
Common Stock prior to the consummation of the Offering.

31
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage
relationships to total revenues of certain items included in the Company's
statements of operations.

<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL REVENUES
----------------------------------
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
-------------------- -----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Transaction Fees................ 93.8% 77.4% 68.5% 68.5% 78.4%
Foreign exchange................ 5.9 22.3 31.2 31.2 21.3
Investment income............... .3 .3 .3 .3 .3
----- ----- ----- ----- -----
Total revenues.............. 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Agent commissions............... 40.9 30.4 24.0 22.6 29.6
Amortization of Agent Contract
acquisition costs.............. 1.7 1.1 1.4 1.5 2.1
Processing...................... 23.8 16.8 18.6 16.5 17.5
Advertising and promotion....... 26.4 21.3 24.6 22.5 20.9
Selling and service............. 5.8 4.0 5.5 4.9 7.1
General and administrative...... 7.5 5.1 4.2 3.9 3.6
----- ----- ----- ----- -----
Total expenses.............. 106.1 % 78.7% 78.3% 72.1% 80.8%
----- ----- ----- ----- -----
Income (loss) before income taxes. (6.1)% 21.3% 21.7% 27.9% 19.2%
----- ----- ----- ----- -----
Net income (loss)................. (4.0)% 13.3% 13.4% 17.2% 11.9%
===== ===== ===== ===== =====
</TABLE>

Nine Months Ended September 30, 1996 Compared to Nine Months Ended September
30, 1995

Revenues. The Company's revenues increased 1% in the first nine months of
1996 to $107.0 million from $106.1 million for the same period in 1995. This
increase was caused primarily by an increase in Transaction Fee Revenues,
partially offset by a decrease in foreign exchange revenues.

Transaction Fee Revenues increased 16% in the first nine months of 1996 to
$83.9 million from $72.6 million for the same period in 1995. This growth was
due to a 15% increase in transactions to approximately 4.4 million
transactions in the first nine months of 1996 from approximately 3.8 million
transactions in the same period of 1995 and an increase of 1% in the average
gross fee per transaction to $19.13 compared to $18.99 for the same period in
1995. Transactions increased due to increased sales by existing MoneyGram
Agents as a result of the impact of advertising and promotion expenditures
throughout 1995 and the first nine months of 1996. The slight increase in
average gross fee per transaction was due to the Company sponsoring only nine
weeks of price promotions during the first nine months of 1996 compared to 29
weeks of price promotions during the same period in 1995, which was
substantially offset by a 9% decrease in the average face amount per
transaction to $270 for the first nine months of 1996 from $297 for the same
period in 1995.

Foreign exchange revenues, substantially all of which arise from U.S. to
Mexico transactions, decreased 31% to $22.8 million in the first nine months
of 1996 compared to $33.1 million for the same period in 1995. The average
foreign exchange revenue per Banamex transaction decreased 34% in the first
nine months of 1996 to approximately $13 from $20 for the same period of 1995.
The foreign exchange revenue during the first nine months of 1995 was unusally
high primarily due to the volatility of the Mexican peso during this period
and a higher average face amount of funds transferred of $310 compared to $258
for same period in 1996. Management believes the decrease in the average face
amount is due to the depreciation of the peso against the U.S. dollar whereby
fewer U.S. dollars purchase the same number of pesos.

32
<PAGE>

The peso to U.S. dollar exchange revenue for the Company and Banamex
averaged 10% of the average face amount during the first nine months of 1996
compared to 13% during the same period in 1995. The peso exhibited high
volatility in late 1994 and early 1995 due to the devaluation of the peso by
the Mexican government on December 20, 1994, political unrest related to the
Chiapas uprising and the assassination of the favored presidential candidate,
Luis Donaldo, and other economic uncertainties. During 1995, the Mexican
government took steps to stabilize the economy and the political unrest. As a
result, the peso was less volatile in late 1995 and early 1996 and the
Company's average foreign exchange revenue per transaction is expected to
continue to be less in 1996 compared to 1995.

Expenses. The Company's total operating expenses increased 13% to $86.4
million in the first nine months of 1996 compared to $76.5 million during the
same period in 1995. During the first three months of 1995, Banamex agreed to
reduce its earned agent commission by approximately $2.5 million (the "1995
Banamex Rebate") since it was sharing in unusually high foreign exchange
revenue with the Company, as described above, and wanted to help support the
Company's price promotion during the first three months of 1995. In addition,
during the first nine months of 1996, the Company paid approximately $500,000
of sales representative salaries, commissions and out-of-pocket expenses
related to obtaining consents from MoneyGram Agents to permit the assignment
of their Agent Contracts to the Company. Also, as described below, effective
January 1, 1996, the Company changed its method of accounting for advertising
and promotion expenses during interim periods which increased operating
expenses by $100,000 during the first nine months of 1996 as compared to the
same period in 1995. Excluding the impact of the above items, the Company's
total operating expenses would have increased 9% during the first nine months
of 1996.

As a percentage of total revenues, total operating expenses increased to 81%
during the first nine months of 1996 compared to 72% during the same period in
1995, primarily as a result of foreign exchange revenues being unusually high
during the 1995 period. As a percentage of Transaction Fee Revenues, and after
excluding the impact of the expense related items described in the immediately
preceding paragraph, total operating expenses declined from 109% in the first
nine months of 1995 to 102% in the first nine months of 1996.
MoneyGram Agent commissions and amortization of Agent Contract acquisition
payments increased 32% to $33.9 million during the first nine months of 1996
from $25.6 million during the same period in 1995. MoneyGram Agent commissions
and amortization of Agent Contract acquisition payments as a percentage of
Transaction Fee Revenues increased to 40% during the first nine months of 1996
from 35% for the same period in 1995. This increase was due primarily to the
$2.5 million 1995 Banamex Rebate. If the impact of the 1995 Banamex Rebate is
excluded from 1995, MoneyGram Agent commissions and amortization of Agent
Contract acquisition payments as a percentage of Transaction Fee Revenues
would have been 39% in 1995. Expenses associated with MoneyGram Agents failing
to reach guaranteed minimums increased to $2.3 million in the first nine
months of 1996 from approximately $600,000 during the same period of 1995,
primarily due to the addition of new MoneyGram Agents who are not yet
operating above minimum guarantee levels.

Processing expenses increased 7% to $18.7 million during the first nine
months of 1996 from $17.5 million during the same period in 1995, primarily
due to increased transaction volume of 15% offset by the efficiencies created
by additional agent automation. As a percentage of Transaction Fee Revenues,
processing expenses decreased to 22% during the first nine months of 1996 from
24% during the same period in 1995.

Advertising and promotion expenses decreased 7% to $22.3 million during the
first nine months of 1996 from $24.0 million during the same period in 1995.
As a percentage of total revenues, advertising and promotion expenses
decreased to 21% during the first nine months of 1996 compared to 23% during
the same period in 1995. During 1995 the Company recorded advertising and
promotion expenses based on transaction volumes for interim reporting
purposes. Beginning in 1996, the Company recorded advertising and promotion
expenses based on actual expenses incurred during the interim period. If the
Company continued to record advertising and promotion expenses based on
transaction volumes, advertising and promotion expenses would have been
approximately $100,000 less for the first nine months of 1996.

33
<PAGE>

Selling and service expenses increased by 46% to $7.6 million during the
first nine months of 1996 from $5.2 million for the same period in 1995. This
increase is due to an increase in the number of sales and service employees
hired to further expand and support the MoneyGram Agent network. As a
percentage of Transaction Fee Revenues, selling and service expenses were 9%
and 7% during the first nine months of 1996 and 1995, respectively. During the
first nine months of 1996, the Company incurred approximately $500,000 of
sales, salaries, commissions and out-of-pocket expenses related to obtaining
consents from MoneyGram Agents to permit the assignment of their Agent
Contracts to the Company.

General and administrative expenses decreased by 7% to $3.8 million during
the first nine months of 1996 from $4.1 million during the same period in
1995. As a percentage of Transaction Fee Revenues, general and administrative
expenses decreased to 5% during the first nine months of 1996 from 6% during
the same period in 1995.

Operating Income. Operating income decreased by 30% to $20.6 million in the
first nine months of 1996 from $29.6 million during the same period in 1995.
As a percentage of total revenues, operating income decreased to 19% during
the first nine months of 1996 from 28% during the same period in 1995.

Net Income. The Company's net income decreased 30% in the first nine months
of 1996 to $12.7 million from $18.3 million during the same period in 1995.
The decrease in net income primarily resulted from the 31% decrease in foreign
exchange revenues caused by less volatility in the value of the Mexican peso
compared to the U.S. dollar, a 13% increase in total operating expenses due to
an increase in transaction volumes, the 1995 Banamex Rebate and the $100,000
increase in advertising and promotion expenses resulting from the Company's
accounting change relating thereto. The increase in operating expenses was
more than offset by a 15% increase in Transaction Fee Revenues.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Revenues. The Company's revenues increased 50% in 1995 to $137.1 million
from $91.4 million for 1994. This growth reflected a 64% increase in the
number of transactions processed from 3.3 million to 5.4 million and a 110%
increase in the Company's foreign exchange revenues, substantially all of
which arises from U.S. to Mexico transactions, from $20.4 million to $42.8
million. This growth in foreign exchange revenues from U.S. to Mexico
transactions is a result of a 71% increase in the number of such transactions
from 1.4 million to 2.4 million, coupled with a 25% increase in the average
foreign exchange revenue earned per transaction from $14.60 to $18.21,
resulting from the increased volatility of the value of the Mexican peso
versus the U.S. dollar. The total and per transaction foreign exchange
revenues realized by the Company in 1995 were substantially larger than in
prior years, primarily due to the significant volatility of the value of the
Mexican peso. Accordingly, the Company's average foreign exchange revenues per
transaction in 1995 are not indicative of what the Company expects to achieve
in the future.

The remaining growth in 1995 revenues was due to the significant overall
transaction growth in 1995 discussed above, partially offset by a decrease of
19% in the average Transaction Fee Revenues earned per transaction from $21.55
to $17.39. The decrease in the average Transaction Fee Revenues per
transaction in 1995 compared to 1994 was primarily due to the 27 weeks of
price promotions in 1995 compared to six weeks in 1994. For example, due to a
fourth quarter price promotion, the average transaction fee for fourth quarter
1995 was only $13.52 compared to $17.39 for the full year 1995. The $13.52
average Transaction Fee Revenues during the fourth quarter of 1995 represented
a 35% decrease compared to the average Transaction Fee Revenues of $20.85
during the second and third quarters of 1995 when a price promotion was not
offered. This decrease in average Transaction Fee Revenues was offset in part
by a 21% increase in transaction volume during the fourth quarter of 1995 as
compared to the average volumes during the second and third quarters of 1995.
The growth in the number of transactions was attributable to the Company's
advertising campaigns and discount price and other promotions, as well as
greater availability of the MoneyGram service resulting from 8% growth from
16,000 to 17,200 in the number of MoneyGram Agent locations. The decrease in
average Transaction Fee Revenues per transaction was due to increased usage by
customers who took advantage of the promotional discount prices to transmit
smaller face amounts. The average transaction face amount decreased 16% from
$344 to $289.

34
<PAGE>

Expenses. The Company's total operating expenses increased 49% to $107.4
million in 1995 from $72.0 million in 1994. As a percentage of total revenues,
total operating expenses decreased 78% in 1995 from 79% in 1994. Growth in the
total amount of funds transferred and volumes of transactions processed
resulted in higher commissions to MoneyGram Agents and processing costs,
respectively, while the Company's marketing and price promotions contributed
to significantly increased advertising and promotion expenses.

MoneyGram Agent commissions and amortization of Agent Contract acquisition
payments increased 21% to $34.8 million from $28.7 million, and decreased to
25% in 1995 from 32% in 1994 as a percentage of total revenues. MoneyGram
Agent commissions and amortization of Agent Contract acquisition payments as a
percentage of Transaction Fee Revenues decreased to 37% in 1995 from 40% in
1994. This decline was largely attributable to the $2.5 million 1995 Banamex
Rebate.

Processing expense increased 67% to $25.5 million in 1995, principally as a
result of the growth in transaction volume. As a percentage of Transaction Fee
Revenues, processing expense increased to 27% in 1995 from 22% in 1994,
primarily due to the decline in average Transaction Fee Revenues per
transaction described above.

Advertising and promotion expense increased in 1995 to $33.8 million, from
$19.5 million in 1994, as a result of the advertising and promotion strategies
designed to increase market share and broaden the brand recognition of the
MoneyGram service in its target markets. In addition, during the fourth
quarter of 1995, in conjunction with the price promotion, the Company paid its
MoneyGram Agents discretionary promotion-related cash payments of
approximately $1.2 million. As a percentage of total revenues, advertising and
promotion expense increased to 25% in 1995 from 21% in 1994. Selling and
service expense increased by 103% to $7.5 million as a result of an increase
in the number of sales and service employees hired to further expand the
MoneyGram Agent network, a 9% increase in the number of MoneyGram Agents and
an increase in marketing costs associated with the Company's advertising
campaigns. In addition, during the fourth quarter of 1995, the Company
incurred approximately $375,000 of sales, salaries, commission and other out-
of-pocket expenses related to obtaining consents from MoneyGram Agents to
permit the assignment of their Agent Contracts to the Company. As a percentage
of Transaction Fee Revenues, selling and service expense increased to 8% in
1995 from 5% in 1994. General and administrative expenses increased by 22% in
1995 to $5.7 million due to an overall increase in the number of employees as
a result of growth in the Business. As a percentage of Transaction Fee
Revenues, general and administrative expenses decreased to 6% in 1995 from 7%
in 1994.

Operating Income. Operating income increased by 53% to $29.7 million in 1995
from $19.4 million in 1994. As a percentage of total revenues, operating
income increased to 22% from 21%. The fourth quarter of 1995 was adversely
impacted by the combination of the pricing promotion discussed under revenues
and the additional $6 million advertising expense discussed above.

Net Income. The Company's net income increased 50% in 1995 to $18.3 million
from $12.2 million in 1994. The 1995 increase in net income resulted from
increased foreign exchange revenues from U.S. to Mexico transactions and the
continued growth in the number of transactions processed.

35
<PAGE>

Year Ended December 31, 1994 Compared to Year Ended December 31, 1993

Revenues. The Company's revenues increased 76% in 1994 to $91.4 million from
$51.9 million in 1993. This growth reflected a 61% increase in the number of
transactions processed from 2.0 million to 3.3 million and significant growth
in the Company's foreign exchange revenues, substantially all of which arises
from U.S. to Mexico transactions, from $3.1 million to $20.4 million. This
growth in foreign exchange revenues from U.S. to Mexico transactions was a
result of a 56% increase in the number of such transactions from .9 million to
1.4 million, coupled with a 307% increase in the average foreign exchange
revenue earned per transaction from $3.59 to $14.60, resulting from the
increased volatility of the value of the Mexican peso versus the U.S. dollar.

The remaining growth in 1994 revenues was due to the significant overall
transaction growth discussed above, partially offset by a decrease of
approximately 10% in the average Transaction Fee Revenues earned per
transaction from $23.86 to $21.55. The growth in the number of transactions
was attributable to the Company's advertising campaigns and price promotions,
as well as greater availability of the MoneyGram service resulting from 13%
growth from approximately 14,100 to 16,000 in the number of MoneyGram Agent
locations. The decrease in average Transaction Fee Revenues per transaction
was due to increased usage by customers who took advantage of the promotional
discount prices to transmit smaller face amounts per transaction. The average
transaction face amount decreased 9% from $377 to $344.

Expenses. The Company's total operating expenses increased 31% to $72.0
million in 1994 from $55.1 million in 1993. As a percentage of total revenues,
operating expense decreased to 79% in 1994 from 106% in 1993. Growth in the
total amount of funds transferred and volumes of transactions processed
resulted in higher agent commissions and processing costs, respectively, while
the Company's marketing and price promotions contributed to significantly
increased advertising and promotion expenses.

MoneyGram Agent commissions and amortization of Agent Contract acquisition
costs increased 30% to $28.7 million in 1994 from $22.1 million in 1993 and
decreased as a percentage of total revenues to 31% from 43%. MoneyGram Agent
commissions and the amortization of Agent Contract acquisition payments
decreased to 40% from 45% as a percentage of Transaction Fee Revenues in 1994
as compared to 1993.

Processing expense increased 24% to $15.3 million in 1994. As a percentage
of Transaction Fee Revenues, processing expense decreased to 22% in 1994 from
25% in 1993.

Advertising and promotion expense increased by 42% in 1994 to $19.5 million,
as the Company began its campaign to promote the MoneyGram service. As a
percentage of total revenues, advertising and promotion expense decreased to
21% in 1994 from 26% in 1993. Selling and service expense increased by
approximately 23% to $3.7 million in 1994, primarily as a result of an
increase in marketing costs associated with the Company's advertising
campaigns. As a percentage of Transaction Fee Revenues, selling and service
expense decreased to 5% in 1994 from 6% in 1993. General and administrative
expenses increased by 20% in 1994 to $4.7 million. As a percentage of
Transaction Fee Revenues, general and administrative expense decreased to 7%
in 1994 from 8% in 1993.

Operating Income. Operating income increased to $19.4 million in 1994 from
an operating loss of $3.2 million in 1993.

Net Income. The Company earned net income in 1994 of $12.2 million compared
to a net loss of $2.1 million in 1993. The 1994 improvement in net income
resulted from increased foreign exchange revenues from U.S. to Mexico
transactions and the continued growth in the number of transactions processed,
offset, in part, by the increased advertising expenditures.

LIQUIDITY AND CAPITAL RESOURCES

Total assets of the Company increased by $7.9 million to $49.5 million at
September 30, 1996 from $41.6 million at December 31, 1995. The $26.1 million
of assets restricted to settlement of MoneyGram transactions at

36
<PAGE>

September 30, 1996 was comparable to the December 31, 1995 balance of $26.0
million. "Costs of acquiring Agent Contracts, net of amortization," increased
by $6.8 million from $8.0 million at December 31, 1995 to $14.8 million at
September 30, 1996, as a result of Agent Contract signings and renewals.
Currently, the Company is negotiating the renewal of certain existing
MoneyGram Agents and the signing of new MoneyGram Agents. In 1995, the Company
paid $6.5 million related to Agent Contract acquisition payments. During the
first nine months of 1996, the Company has already paid $9.1 million related
to Agent Contract acquisition payments and estimates additional Agent Contract
acquisition payments will be approximately $7 million for the remainder of
1996. The Company believes that 1997 Agent Contract acquisition payments will
be lower (estimated at $6 million) as most major MoneyGram Agents will be
under long-term (three-to-five year) agreements, but that Agent Contract
acquisition payments will increase in 1998 (estimated at $7 to $8 million) as
contracts with several key MoneyGram Agents, as well as those between Western
Union and many of its key agents, begin to expire. However, in the event that
the Company implements the MoneyGram Agent Stock Option Plan, the Company will
be able to reduce the amount of cash required for signing bonuses by offering
certain new and renewing MoneyGram Agents a combination of cash payments and
stock options under the MoneyGram Agent Stock Option Plan.

During the first nine months of 1996, cash flows from operating activities
increased by $3.5 million to $18.0 million from $14.5 million during the same
period in 1995. This was due to an increase in cash inflows from working
capital items, partially offset by a decrease in net income.

During the first nine months of 1996, cash flows used by investing
activities increased by $2.0 million to $12.2 million from $10.2 million
during the same period in 1995. The increase in cash outflows from investing
activities was due to Agent Contract acquisition payments primarily to
existing agents to extend the term of these Agent Contracts by an average of
five years. This investing activity was more than offset by the $3.5 million
increase in cash flows from operating activities which resulted in the Company
returning capital of $5.8 million to IPS during the 1996 period as compared to
$4.3 million during the same period in 1995. Because the Company does not
presently have its own cash accounts, the historical financial statements
reflect positive cash flows attributable to the Business as a return of
capital to IPS, while any negative cash flows attributable to the Business are
reflected as being funded by IPS in the form of a capital contribution.

The Company's cash flows from operating activities decreased by $1.9 million
from $23.3 million in 1994 to $21.4 million in 1995. This decrease was
principally the result of net cash outflows attributable to working capital
items of $.6 million in 1995 as compared to a net cash inflow of $9.2 million
in 1994 offset by higher net income in 1995. During 1995, the Company
increased its investing activities by $7.0 million to $12.1 million from $5.1
million in 1994, primarily due to an increase in Agent Contract acquisition
payments attributable to the signing of MoneyGram Agents and increased capital
expenditures for signage and personal computers for its MoneyGram Agents. As a
result of these increased investing activities, net capital returns to IPS
declined by $8.8 million from $18.1 million in 1994 to $9.3 million in 1995.

The Company has relied primarily on cash flows from operating activities
and, in part, on funding from First Data to support operating and investing
activities. Management expects the Company's future operating and investing
cash needs will be provided by cash flows from operating activities, the $12
million IPS Cash Contribution and the Facility. The Facility will terminate
180 days from the consummation of the Offering, at which time all outstanding
borrowings thereunder would have to be repaid or refinanced. The Facility
contains terms and conditions, including certain restrictive covenants,
customary in such agreements. See "Certain Relationships and Related
Transactions--the Transition Agreements--The Short-Term Working Capital
Facility." Management expects to negotiate a credit facility with a third
party prior to the expiration of the Facility, if necessary, with borrowing
availability, terms and conditions sufficient to meet the Company's liquidity
and capital resource requirements for the foreseeable future. However, there
can be no assurance that the Company will be successful in arranging such
financing in a timely manner.

Each consumer money wire transfer transaction involves the transfer of funds
from the sending customer to the selling MoneyGram Agent and shortly
thereafter from the selling MoneyGram Agent to IPS as the licensed entity on
behalf of the Company. These funds are used to satisfy the liability to pay
the recipient customer the

37
<PAGE>

amount transferred, usually by the end of the same or next day. The Company
does not utilize such funds to support the operations of the Company. These
funds are included on the Company's Balance Sheet under the caption "Proceeds
including proceeds due from/(to) IPS relating to unsettled MoneyGram
transactions," and support the associated liability "Liabilities relating to
unsettled MoneyGram transactions." See Note 1 of the Notes to Financial
Statements.

In certain instances, the Company has guaranteed minimum commissions to
certain MoneyGram Agents. As of September 30, 1996, the remaining maximum
commitment equalled approximately $71.2 million over the next seven years.
Historically, the Company's transaction volume growth has been sufficient to
mitigate the Company's required payments under these guarantees, with annual
payments of between $1.3 and $2.5 million during each of the three years in
the period ended December 31, 1995. The Company believes that its future
required payments under the guarantees will not have a material impact on its
financial condition or results of operations.

Management believes that the cash flows to be provided by operations, the
$12 million IPS Cash Contribution and the Facility will be sufficient to meet
its working capital and capital expenditure needs for the foreseeable future.

38
<PAGE>

BUSINESS

OVERVIEW

The Company is a leading non-bank provider of consumer money wire transfer
services, with a strong, well-recognized brand-name. The Company accounted for
approximately 16% of all consumer money wire transfer transactions worldwide
in 1995. The Company offers customers the ability to transfer funds quickly,
reliably, conveniently and at attractive prices through its approximately
17,700 MoneyGram Agent locations in 84 countries worldwide as of September 30,
1996. MoneyGram Agents, representing approximately 68% of the Company's
revenues for the first nine months of 1996, are subject to long-term contracts
ranging in term from three to six years. MoneyGram targets its services to
individuals without traditional banking relationships, expatriates who send
money to their country of origin, traditional bank customers in need of
emergency money transfer services, tourists without local bank accounts and
businesses that need rapid and economical money transfer services. The Company
also provides cash advance and express bill payment services (including
payments on revolving credit, time and personal loans) through many MoneyGram
Agent locations in the United States.

The number of MoneyGram Agent locations has grown from 11,600 in 1991 to
approximately 17,700 as of September 30, 1996. In 1995 and the first nine
months of 1996, the Company processed 5.4 million and 4.4 million
transactions, respectively, and transferred $1.6 billion and $1.2 billion
total face amount of funds, respectively. In 1995 total revenues were $137.1
million, Transaction Fee Revenues were $93.8 million, foreign exchange
revenues were $42.8 million, and operating income was $29.7 million. In the
first nine months of 1996, the Company's total revenues, Transaction Fee
Revenues, foreign exchange revenues and operating income were $107.0 million,
$83.9 million, $22.8 million and $20.6 million, respectively. Substantially
all of the Company's transactions originate in the United States. In 1995, 45%
of the Company's transactions were between U.S. locations, 44% were from U.S.
to Mexico locations and 11% involved one or more international locations other
than Mexico.

The Company generates substantially all of its foreign exchange revenue on
its U.S. to Mexico transactions based on the difference between the cost of
Mexican pesos at wholesale rates and the retail exchange rate charged to
customers in such transactions. In addition to receive commissions, the
Company pays Banamex fees in an amount equal to one-half of the total foreign
exchange revenues derived from U.S. to Mexico MoneyGram transactions received
at a Banamex location.

CUSTOMERS AND MARKETS

. Reliability and Security. Consumer money wire transfer services are
generally viewed as a more reliable and secure method of sending money
than other methods such as mailing a money order or a bank check.

. Global Accessibility of Agents. U.S.-based consumer money wire transfer
service providers have over 30,000 agent locations in the United States
and over 10,000 agent locations outside the United States. Typically,
such agents are at locations convenient to customers. In addition,
consumer money wire transfer networks provide service to many foreign
locations which banks typically do not serve.

. Speed. Money transferred through consumer money wire transfer services
often is available immediately and usually available within 24 hours
after it is sent, far faster than sending money through the mail.

39
<PAGE>

. Convenient Hours. Unlike banks and post offices, many consumer money wire
transfer agents are open 24 hours a day, seven days a week.

. Individualized Services and Customer Flexibility. Agent networks
typically include agents fluent in a variety of foreign languages. In
addition, customers may purchase only the necessary financial services
without maintaining a continual relationship or account with the agent.

Non-bank consumer money wire transfer services are provided primarily by two
global companies, MoneyGram and Western Union, as well as several niche
competitors. The Company estimates that in 1995 the industry processed 33
million non-bank consumer money wire transfer transactions worldwide, an
increase of 29% over 1994 and representing a compounded annual growth rate of
22% since 1991. In 1995, the Company processed 5.4 million of the 33 million
non-bank consumer money wire transfer transactions worldwide, representing
approximately 16% of such transactions. Western Union accounted for
approximately 81% of all such transactions worldwide in 1995. The Company
believes the gross revenues generated from non-bank consumer money wire
transfers in 1995 were $800 million on $9 to $10 billion in face amount of
transferred funds.

The Company believes international consumer money transfers will continue to
grow through the end of the decade, primarily due to the combination of
increased migration and greater consumer awareness. The Company believes that
migration dynamics throughout Latin America, the Caribbean, Europe and Asia
provide attractive growth potential for consumer money transfer services. The
Company intends to target advertising and promotional campaigns to raise
awareness of MoneyGram services to new groups of consumers.

STRATEGY

. Target Frequent Users of Money Transfer Services. Immigrants remitting
funds to their home countries, people who may have a bank account
(generally savings only) but who do not use other bank services or have
traditional banking relationships (the "Underbanked") and people sending
money to the Underbanked and unbanked represent a majority of consumer
money transfers. The Company uses selected agent expansion in high-usage
markets to ensure convenient access to its services for its target
customers. The Company focuses its advertising and promotional campaigns
in these high-usage markets to increase brand awareness and generate
consumer trial and repeat usage of the MoneyGram service.

. Offer Enhanced Value to Consumers. MoneyGram provides customers with an
attractive price/value relationship. The Company offers value-added
features to its customers, including a free three-minute long distance
phone call with each transaction within the United States or between the
United States and the Americas so that the sender may provide the
recipient notice of the transaction, and a free 10-word message to the
recipient included with the transferred funds. The Company also offers a
MoneySaver card to certain customers which provides a 10% discount to
frequent users. No other consumer money wire transfer provider currently
offers this array of services. Pricing has been an important part of the
Company's consumer marketing strategy. The Company has maintained its
consumer prices 20% to 30% below those of Western Union on each of the
most frequently sent face amounts. In addition, the Company periodically
offers consumers even greater discounts.

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. Increase Brand Recognition and Loyalty. Recognition of the MoneyGram
brand and consumer loyalty are critical to maintaining and enhancing
market share. In addition to offering value-added services to its
customers, the Company designs its advertising and promotional campaigns
to increase brand awareness and generate customer trial and repeat usage
of the service. The Company also uses its MoneySaver frequent user
discount program to build customer loyalty and enhance the MoneyGram
brand image.

. Expand its Agent Network. The MoneyGram Agent network is essential to the
Company's growth and the Company believes that the quantity and quality
of MoneyGram Agents available to the Company's customers are key elements
of the Company's continued success. The Company seeks to develop
relationships with potential MoneyGram Agents that offer the optimal
combination of location, existing service mix and commitment to providing
the MoneyGram service. In order to retain its agents, MoneyGram provides
them with a number of support services, including product training,
traffic building and cooperative advertising programs, as well as
signage. In addition, the Company's goal is to provide a computer to all
MoneyGram Agents processing more than 30 transactions per month, which
improves transaction speed, reliability and security.

. Grow Internationally. Management views international markets as the next
significant growth area for money transfer services. Focusing on
particular corridors, the Company is currently seeking to expand its
global presence. The Company has significantly increased its send
transaction volume to Asia, the Caribbean and Latin America. The advent
of send and receive capabilities by MoneyGram Agents in Latin America is
broadening the Company's customer base and fostering growth in this key
market. In addition, the Company currently is negotiating new Agent
Contracts in Europe and intends to focus increased resources on expanding
its service in Europe. Future growth should occur as migration patterns
continue and advertising and promotional efforts increase international
awareness of the MoneyGram service. The Company intends to focus on
countries with rapid growth rates or inefficient and expensive delivery
systems and, when permissible, countries that currently are subject to
U.S. trade embargoes. The Company is expanding its MoneyGram Agent
network to capitalize on these money transfer opportunities.

. Penetrate Additional Retail Network and Other Distribution Channels. The
Company's success depends on its ability to grow and develop its
MoneyGram Agent network. The key characteristics of an attractive agent
location are convenience, extended hours, days of service, cash
availability, well trained and motivated staffing and a secure
environment. The Company also seeks to maintain a balanced and
diversified network. Currently, check cashers and supermarkets generate
approximately 80% of the Company's send volume despite accounting for
only 30% to 35% of the Company's MoneyGram Agent locations. Potential
outlets for U.S. network expansion are check cashers, postal and
packaging outlets and supermarkets not currently offering a consumer
money wire transfer product. The Company expects to expand its
international MoneyGram Agent network primarily by adding travel
agencies, bureau de change operators and banks.

. Develop Other Related Payment Products and Systems. The Company currently
plans to offer complementary products and services through the MoneyGram
Agent network, such as money orders and phone cards and, in the future,
may develop other related products, such as prepaid debit cards, secured
credit cards and insurance products. The Company believes that by
offering additional products it will generate additional revenues, as
well as enhance the attractiveness of the MoneyGram service to potential
agents and its target customers. See "Risk Factors--Ability to Grow
through New Products and Services."

THE MONEYGRAM AGENT NETWORK

The Company has an extensive global network of MoneyGram Agents. Of the
17,700 MoneyGram Agent locations, approximately 13,500 are located in the
United States, 1,000 in Mexico (of which approximately 700 are Banamex
locations) and 3,200 in 82 other countries around the world. The MoneyGram
Agent network includes a variety of types of businesses. Supermarkets and
check cashers represent approximately 30% to 35% of the Company's MoneyGram
Agent locations and approximately 80% of the Company's send transaction

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volume. MoneyGram Agent locations also include travel agencies, collection
agencies, bus stations and credit unions. The Company estimates that 12,000 to
13,000 of the 17,700 MoneyGram Agent locations in any given month, on average,
initiate or receive a transaction. The total number of MoneyGram Agent
locations has increased from approximately 14,100 in 1993 to 17,700 at
September 30, 1996. Since October 1995, several large MoneyGram Agents have
added a significant number of agent locations, including Ace America's Cash
Express, Albertson's Inc., Rite Aid Corporation, the Thomas Cook Group, Ltd.
and VONS COMPANY, INC., which added approximately 90, 390, 245, 350 and 95 new
MoneyGram Agents, respectively.

In addition, three international companies have recently indicated that they
will serve as MoneyGram Agents. The Thomas Cook Group, which has been offering
the MoneyGram service under a pilot agreement, has signed a five year
agreement to offer the MoneyGram service in at least 678 of its approximately
1,000 branches, covering 19 countries by the end of 1997. In 18 of these
countries, the Thomas Cook network will replace the TSOs lost upon
consummation of this Offering. In addition, the agreement with Thomas Cook
provides incentives for the Thomas Cook sales force to sign MoneyGram Agent
agreements with Thomas Cook's 4,800 financial institution customers worldwide.
Pursuant to a public bidding process, the Post Office Counters Ltd., a
subsidiary of the UK Post Office ("POCL"), recently indicated its intention to
replace its current consumer money wire transfer service provider and enter
into a contract with the Company as its sole provider of consumer money wire
transfer services. POCL operates over 19,000 branches throughout the United
Kingdom and currently provides consumer money wire transfer services in
approximately 988 branches. The Company and POCL are currently negotiating the
Agent Contract and planning the implementation. The Company expects to begin
offering the MoneyGram service through the POCL in February 1997. Finally,
Consorcio Oriental of New York, Inc. ("CONY") and Consorcio Oriental, S.A. of
the Dominican Republic ("CODR"), have signed an Agent Contract to offer the
MoneyGram service. CONY and CODR operate nearly 500 owned and affiliated
outlets throughout the northeastern United States, Florida and Puerto Rico as
well as over 100 owned and affiliated outlets in the Dominican Republic. As a
new feature for the Company, the service provided through CONY and CODR will
include home delivery of consumer money wire transfers to all destinations in
the Dominican Republic. The Company expects to begin offering the MoneyGram
service through CODR and CONY in December 1996.

In order to accomplish the Transition, the MoneyGram Agent sales force
dedicated a significant amount of time and effort to obtaining the consents of
MoneyGram Agents to the assignment of their Agent Contracts from TRS to IPS
and, at such time as the Company obtains the Required Licenses, to the Company
(the "Consents"). During the period from October 1995 to March 1996 (the
"Consent Period"), the Major Accounts division of the MoneyGram Agent sales
force dedicated more than half of their time to obtaining Consents while the
Retail Sales division of the MoneyGram Agent sales force dedicated all of
their time between October 1995 and February 1996 to obtaining the Consents.
In the process of obtaining the Consents, the Company renewed many Agent
Contracts, and obtained long-term extensions to existing Agent Contracts
resulting in most MoneyGram Agents being under contract for a longer period of
time. As of September 30, 1996, Agent Contracts representing approximately
7,000 locations and approximately 65% of the Company's Transaction Fee
Revenues for the nine months then ended do not expire until the year 2000 or
thereafter. Agent Contracts representing approximately 3,300 locations and
approximately 13% of the Company's Transaction Fee Revenues for the first nine
months of 1996 expire between October 1, 1996 and December 31, 1999. All other
Agent Contracts have expired or are currently in evergreen periods and are
subject to termination upon notice ranging from 90 to 365 days.

During the Consent Period three significant MoneyGram Agents, Revco,
Greyhound Lines, Inc. and Food 4 Less Supermarkets, Inc., chose not to renew
their Agent Contracts. While these three MoneyGram Agents collectively
represented 9.3% of the MoneyGram Agent locations at December 31, 1995, the
percentage of total transactions and total revenues attributable to these
MoneyGram Agents were only 6.0% and 4.8%, respectively.

In addition, as a result of the Transition, the 450 American Express Travel
Services Offices ("TSOs") which serve as MoneyGram Agents no longer will offer
the MoneyGram service. The TSOs accounted for approximately 9%, 6%, 2% and 1%
of the Company's transactions volume for 1993, 1994 and 1995 and the nine-
month period ended September 30, 1996, respectively. The loss of these TSOs
will reduce the number of

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countries with MoneyGram Agents by 15. The Company is actively engaged in
establishing independent Agent Contracts with the approximately 200 individual
American Express Representative Offices, which are independently owned but
operated under the American Express name and logo.

As the process of obtaining the Consents nears completion, the MoneyGram
Agent network has again begun to grow. From June 30, 1996 through September
30, 1996, the Company added 1,800 MoneyGram Agents, for a net gain for that
period of 1,300 agents. Although the Company has lost approximately 2,700,
3,600 and 3,300 MoneyGram Agents for the years ended 1994 and 1995 and the
nine-month period ended September 30, 1996, respectively, it has added
approximately 4,500, 4,900 and 3,800 new MoneyGram Agents, respectively,
during such periods. 1,400 of the 3,300 MoneyGram Agents lost between January
1, 1996 and September 30, 1996 were smaller agents who had conducted ten or
fewer total transactions during the three months preceeding their termination.
The Company believes that turnover in agents, caused primarily by the sale of
the agent location, a change in the nature of their business or the movement
by agents among consumer money wire transfer service providers, is normal for
the industry. In addition, during the Consent Period, the MoneyGram sales
personnel spent the majority of their time obtaining the Consents rather than
focusing their efforts on expanding the MoneyGram Agent base. The Company can
give no assurance that it will be able to continue to sign new agents at a
rate that exceeds the attrition rate of existing agent locations. See "Risk
Factors--Fluctuation of MoneyGram Agent Network" and "--Competition with First
Data."

A limited number of the Company's top MoneyGram Agents generate a
significant percentage of the Company's transaction volume and revenues. In
1995, the Company's top 10 selling MoneyGram Agents, representing
approximately 2,500 locations, accounted for approximately 42% of the
Company's transaction volume and 43% of the Company's Transaction Fee
Revenues. In the first nine months of 1996, the Company's top 10 selling
MoneyGram Agents, representing approximately 3,300 locations, accounted for
approximately 42% of the Company's transaction volume and 41% of the Company's
Transaction Fee Revenues. The Company has long-term contracts that expire no
earlier than the year 2000 with eight of its 1996 top 10 MoneyGram Agents,
representing approximately 2,700 locations and accounting for approximately
37% of the Company's transaction volume and 36% of the Company's Transaction
Fee Revenues for the first nine months of 1996. Two of the top 10 MoneyGram
Agents in 1995 and 1996, Banamex and the Chicago Currency Exchange, were each
involved in transactions representing over 10% of the Company's total
revenues. In 1995, 46% of funds transferred and 44% of all transactions
processed by the Company were sent by MoneyGram Agents located in the United
States and received by MoneyGram Agents located in Mexico. During 1995, U.S.
to Mexico transactions for which Banamex was the receiving agent generated
approximately $42.4 million in foreign exchange revenues, representing 31% of
total revenues. The Banamex Agreement expires in April, 2002. The Chicago
Currency Exchange (consisting of the approximately 85 separate Agent Contracts
with owners of Chicago Currency Exchange locations which expire in 2000 or
2001) in the aggregate initiated send transactions that generated
approximately 15% of the Company's total Transaction Fee Revenues in 1995. In
addition, Ace, which has 575 locations, initiated send transactions that
generated approximately 11% of the Company's total Transaction Fee Revenues in
the first nine months of 1996. The Agent Contract with Ace expires in 2000.
The loss of, or a significant reduction in, business from one or more of the
significant MoneyGram Agents, including Banamex, Ace or a significant portion
of the Chicago Currency Exchange locations, could have a material adverse
effect on the Company's business, operating results or financial condition. In
addition, each of Banamex and the Chicago Currency Exchange is the primary
provider of the MoneyGram service in its geographic location. Therefore, the
loss of either of these relationships could leave the Company without the
ability to provide adequate service to its customers in a key geographic area.
There can be no assurance that the Company could replace the volume, revenues
or geographic range represented by either Banamex or the Chicago Currency
Exchange locations.

In order to retain and sign certain significant agents and to provide those
agents an opportunity to share in the growth of the Company, subsequent to the
Offering the Company expects to implement the MoneyGram Agent Stock Option
Plan. If implemented, the Company may grant options to certain key MoneyGram
Agents (exercisable at the price of the Common Stock on the date any such
option is granted) in connection with the

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extension of existing or the negotiation of new Agent Contracts. Such options,
if granted, generally would not be exercisable until the expiration of the
initial term of such Agent Contracts. The Company expects that any such stock
options (and the shares of Common Stock issuable upon exercise of such
options) would be registered under the Securities Act. Therefore, any shares
of Common Stock issued upon exercise of an option would be freely tradeable
without restriction. No assurance can be given that the Company will adopt
such a MoneyGram Agent Stock Option Plan (which may require stockholder
approval) or that, if adopted, any options would be granted thereunder.

EXPRESS PAYMENT AND CASH ADVANCE

Express Payment, a service which provides consumers with a way to quickly
pay third party loans, bills or debt, is one of the fastest growing segments
of the money transfer industry. Since 1988 all MoneyGram Agents have offered
the Express Payment service. The Company maintains contracts with entities
such as credit card companies, lending institutions and collection agencies
("Creditors") which provide customers with credit and require a means by which
delinquent customers can make overdue payments directly to Creditors. Typical
Creditors include GMAC, Ford Motor Credit Company, Capital One and American
Express. To use Express Pay, the Creditor directs the consumer to visit a
MoneyGram location and transmit the amount due. The consumer pays the
principal amount owed and a $10.50 flat fee to the MoneyGram Agent. A
MoneyGram money transfer check automatically prints out at the Creditor's
office as immediately usable funds.

The Cash Advance product is an ancillary service offered by the Company
through about 140 MoneyGram Agents representing approximately 1,000 locations.
The service allows the customer to receive a cash advance of up to $1,000 on a
Visa or MasterCard. Fees vary based on the amount advanced.

NEW PRODUCTS

The Company expects to offer a phone card product beginning in the fourth
quarter of 1996. The market for phone cards is growing rapidly but is
increasingly fragmented. Annual industry wide phone card revenues are
estimated at $800 million in 1995, and a 15-20% growth rate is expected
through the year 2000. Customers without access to long distance phone service
can purchase a phone card in denominations of $5, $10, $20 or $50 and use the
card to make calls from any phone. International calls typically also can be
made with a phone card. The Company is well positioned to service the phone
card market and believes that the phone card is a natural complement to its
existing products. Many of the 30 to 40 million people without a phone in the
U.S. are the same individuals who comprise the unbanked and Underbanked, one
of the Company's target customer segments. The Company has entered into a
distribution agreement with MCI Telecommunications Corporation, which will
provide the telecommunications services product support and customer service
for the new phone card product.

THE MONEY TRANSFER PROCESS

The actual collection and payout of funds in MoneyGram's money transfer
process is handled by the MoneyGram Agents. Selling MoneyGram Agents collect
the money to be transferred plus the transaction fee from the customer sending
the money. At the end of each day, the Company totals the amount of each
MoneyGram Agent's transactions and the corresponding transaction fees. The
following morning the Company debits the selling MoneyGram Agents' bank
accounts for the dollar value of all of the MoneyGram Agents' transactions
processed on the previous day and the corresponding transaction fees. All
selling MoneyGram Agents are required to maintain separate bank accounts for
use in connection with processing the MoneyGram service and the process of
debiting this bank account is done through an automated clearing house ("ACH")
transfer.

Receiving MoneyGram Agents are authorized to pay out the transferred funds
to the recipient customer through confirmation of a reference number for the
transaction. In most instances, the receive MoneyGram Agents are reimbursed
for this payment by depositing a pre-signed money transfer check into their
bank account.

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Typically, the Company provides the MoneyGram Agents with blank checks and the
MoneyGram Agents write the checks out to themselves following the receipt of
an authorization number from the Company and deposit them into their bank
accounts. Similar to selling MoneyGram Agents, all receive agents must
maintain separate bank accounts for use in connection with processing the
MoneyGram service. The Company pays selling MoneyGram Agents and receiving
MoneyGram Agents their commissions at the end of each month. The Company
assumes responsibility for information processing and the additional support
services necessary to complete a given transaction. The individual MoneyGram
Agents assume responsibility for both internal fraud and/or customer fraud for
any non-cash payment (e.g., checks) for services rendered. Currently, the
Company provides a free three-minute long distance telephone call with each
transaction within the United States or between the United States and the
Americas so that the sender may provide the recipient with notice of the
transaction.

The entire process generally is completed on a same day or next day basis.
The receipt of the transmitted funds is location independent; a customer can
retrieve funds from any MoneyGram Agent within most of the Company's MoneyGram
Agent network regardless of the sender's location. This capability provides
significant flexibility to the Company's customers. The Company's
identification requirements vary according to the principal amount sent and
the circumstances of the transaction, but, generally, domestic transactions
only require the recipient to present basic forms of identification to receive
the transferred funds. No pre-existing relationship between the Company and
the send or receive customer is required in any circumstance.

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[Chart depicting the money transfer process detailed in
"Business--The Money Transfer Process"]

<PAGE>

The MoneyGram Agents are compensated through commissions with rates
determined by their Agent Contracts. Commissions for send transactions
typically are based on a percentage of each transaction fee and average
approximately 20% of the Company's gross fee per transaction. MoneyGram
Agents' commissions for receive transactions are either a flat fee or a
percentage fee, typically averaging approximately 16% of the Company's gross
fee per transaction.

MONEYGRAM PRICING AND FEES

The Company is compensated for its money transfer services through fees paid
by the sender and, in certain international transactions, revenues from
foreign exchange conversion. Transaction fees are charged to customers
according to a graduated schedule based upon the face amount of the
transaction. Prices are set to maximize transaction volume at certain
"frequent" face amounts. The average face amounts for the Company's
transactions during 1995 were $238, $302 and $446 for transactions from U.S.
to U.S., U.S. to Mexico and U.S. or international to international locations,
respectively, and the standard fees for such transactions were approximately
$20, $31 and $40 (depending on the location of the recipient), respectively.
The average face amounts for the Company's transactions during the first nine
months of 1996 were $234, $266 and $397 for transactions from U.S. to U.S.,
U.S. to Mexico and U.S. or international to international locations,
respectively.

The Company's pricing policy has been an important part of its overall
strategy. In order to grow the Business, management actively pursued a policy
of maintaining its prices 20% to 30% below those of Western Union on each of
the most frequently sent face amounts and has featured numerous promotions
with even greater discounts on prices. Promotional discounting of prices has
reduced the Company's profit margins. Customers typically increase usage
during promotion periods, but also transmit smaller amounts of money per
transaction with a resulting lower average fee per transaction. Historically,
the Company's transaction volumes have increased during price promotions and,
although transaction volumes decline when the price promotion ends, they
consistently remain above pre-promotion levels. There can be no assurance as
to what the Company's competitors will do in the future in terms of pricing,
nor can there be any assurance that the Company will be able to continue to
price below such competitors or offer frequent and substantial promotions.
Future price competition could further reduce profit margins (without any
increase in transaction volume) and adversely effect the Company's business,
operating results or financial condition. As the MoneyGram service increases
its brand name recognition and transaction volumes increase, the Company has
in 1996, and currently intends to continue, to reduce the number, scope,
duration and level of discounting of its price promotions compared to 1995 and
1994.

In addition to fees charged for each transaction, certain international
money transfers generate revenues from foreign exchange conversions. The
foreign exchange revenues received for international money transfers are
determined by the Company's contract with the receiving agent and the spread
between the wholesale and retail exchange rates for the currency involved in
the transaction. The Company's total revenues from foreign exchange have
increased from $3.1 million in 1993, to $20.4 million in 1994 and $42.8
million in 1995. For the nine-month period ended September 30, 1996 total
foreign exchange revenues were $22.8 million compared to $33.1 million for the
same period in 1995. The total and per transaction foreign exchange revenues
realized by the Company in 1995 were substantially larger than in prior years,
primarily due to the volatility of the value of the Mexican peso. As the
decrease in average foreign exchange revenue earned per transaction (from
approximately $20 in the first nine months of 1995 to approximately $13 in the
first nine months of 1996) demonstrates, the Company's average foreign
exchange revenues per transaction in 1995 are not indicative of what the
Company expects to achieve in the future.

Both the Company and Banamex realize foreign exchange revenue on U.S. to
Mexico transactions with respect to the difference between the Company's
wholesale rates and the retail exchange rates charged to MoneyGram customers.
In addition to receive commissions, the Company pays Banamex fees in an amount
equal to one-half of the total foreign exchange revenues derived from U.S. to
Mexico MoneyGram transactions received at a Banamex location. Banamex
purchases Mexican pesos at a known rate for transactions that will be paid the
following day. Banamex and the Company then set the Mexican peso pricing to be
charged for those

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transactions based on competitive retail market rates. At a minimum, the
Company believes that its retail pricing will cover the currency purchase cost
and, in almost all cases, the transaction will generate income due to the
difference between wholesale and retail exchange rates.

SALES AND MARKETING

The Company advertises primarily through spot television ads, radio, print
and other media including billboards and bus benches. The Company has
implemented advertising and promotion strategies intended to increase its
market share and broaden the brand recognition of the MoneyGram service in its
target markets. Management believes that these strategies have been effective
in increasing the Company's total transaction volume and the total amount of
funds processed through the MoneyGram system.

The major goals of the Company's advertising are to: (i) increase brand
awareness within the general market; (ii) generate customer trial and
continued usage of the service; (iii) convert customers of other consumer
money transfer providers to the Company; and (iv) create brand loyalty. The
Company's management has targeted its advertising in high usage markets (e.g.,
immigrants in the United States remitting funds to their native countries, the
Underbanked and the unbanked) by directly comparing the Company's price to the
prices charged by the Company's competitors or by focusing on speed and
security of funds transferred.

The Company seeks to focus its marketing strategies on targeted advertising
and on discounted price promotions. A typical promotional campaign entails the
lowering of the fees charged per face amount. The Company directs its
promotional materials to markets that it believes are most responsive to its
marketing strategy, such as price sensitive consumers and selected demographic
markets. The Company also provides secondary advertising in other markets
intended to increase consumer awareness of the benefits of its services. Each
of the Company's major promotions corresponded to a significant rise in
transaction volumes. Customers typically increase usage during promotion
periods, but also transmit smaller amounts of money per transaction with a
resulting lower average fee per transaction. Historically, the Company's
transaction volumes have increased during price promotions and, although
transaction volumes decline when the price promotion ends, they consistently
remain above pre-promotion levels.

The MoneyGram Agent network is supported by a nationwide field service team
which recruits and services MoneyGram Agents. The field service team is broken
into four segments: national accounts (large regional and national chains),
domestic individual accounts (small businesses), international accounts
(worldwide except U.S. and Canada) and Express Payment subscribers (primarily
commercial customers and collection agencies). The field service team provides
a variety of services to MoneyGram Agents including training, automation,
assistance with cooperative advertising and provision of signage. There are
currently 90 employees in the Sales and Service Department.

The Company introduced the MoneySaver program in April 1993 as a part of the
customer loyalty element of its marketing strategy. This program offers a 10%
discount on customer transaction fees (normal and promotional fees) and
utilizes pre-recorded "sender profiles" to save time for the MoneyGram Agent
and the customer during the send portion of a MoneyGram transaction.
MoneySaver cards are mailed to targeted customers after they have sent a
MoneyGram transaction, and currently there are approximately 2.8 million cards
in circulation. A significant number of those who have received MoneySaver
cards have used them in a subsequent transaction. In 1995 and the first nine
months of 1996, 32% and 35%, respectively, of all send transactions were
initiated with a MoneySaver card. The cards also enable the Company to
maintain a customer database that facilitates the Company's direct marketing
campaigns.

Prior to the Transition, IPS has managed and operated the Business and other
IPS payment products under the TRS Management Agreement. Under the TRS
Management Agreement, IPS is permitted to use the American Express and TRS
name and logo in connection with the MoneyGram service. The TRS Management
Agreement contemplates that IPS would phase out the use of the American
Express name and logo by April 1997. IPS has already commenced such phase out,
for instance, in certain of its advertising and promotions of the MoneyGram

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service. Upon the transfer of the Agent Contracts from TRS to IPS in
connection with the Transition, neither IPS nor the Company will be permitted
to use the American Express or TRS name or logo in connection with the
MoneyGram service, except in certain point-of-sale advertising at MoneyGram
locations for a limited period of time. No assurances can be given that the
loss of the use of the American Express or TRS name and logo will not have a
material adverse effect on the Company's business, operating results or
financial condition.

SEASONALITY AND FLUCTUATION IN QUARTERLY RESULTS

The Company processes relatively higher volumes of MoneyGram transactions in
the months of May and December as a result of customers' increased use of the
MoneyGram service to send money to family members at the Mothers' Day and
Christmas holidays. Seasonal factors such as migrant worker remittances, which
are higher in the summer and fall, and emergency transfers to travelers, which
are higher during the summer, also affect the Company's quarterly results of
operations.

OPERATIONS

Overview

The Company's operations are headquartered at its Lakewood Facility. The
Lakewood Facility houses the Company's customer service center which processes
an average of 25,000 to 30,000 calls per day. The facility is staffed 24 hours
a day, 365 days a year. The Company has operators fluent in sixteen languages
and at least 50% of the operators are bilingual. The Lakewood Facility
currently is operating with 300 operator stations but is capable of operating
approximately 440 call operator stations simultaneously. As currently
configured, and assuming the same proportion of transactions are initiated by
MoneyGram Agents via personal computers, the Lakewood Facility can process the
voice transactions associated with an overall volume of 10 million
transactions per year. At peak capacity, the Lakewood Facility could handle
the voice calls associated with a total volume of approximately 13 million
transactions per year. However, in order to insure that the Company will have
adequate redundancy in its customer service system, the Company has decided
that pursuant to the Operations Agreement, up to 30% of the inbound voice
calls may be routed through the Corpus Christi Facility.

In order to assure that the Company can provide MoneyGram Agents with
uninterrupted service in the event of an emergency, the Operations Agreement
provides that First Data and its affiliates will provide disaster recovery
services for the Company's customer service center during the term of the
Operations Agreement at First Data facilities located in Englewood, Colorado,
and, for such time as the Company chooses to route inbound voice calls through
the Corpus Christi Facility, at the Corpus Christi Facility. The Company may
obtain disaster recovery services from a third party. See "Risk Factors--Risk
of Loss" and "Certain Relationships and Related Transactions--The Transition
Agreements--The Operations Agreement."

Voice Communications

Each call into the Company's customer service center is electronically
distributed by a Rockwell Spectrum Automatic Call Distributor ("ACD"). The ACD
informs the operator of the call type and forwards the calls to

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the appropriate operator, based on the linguistic requirements of the caller.
The ACD also collects the detailed statistical information used by the Company
to help maximize the efficiency of the customer service center's operations,
including average time to answer, average call length, average number of
abandoned calls and the number of calls in queue.

MoneyGram Agent Automation

During the nine months ended September 30, 1996, approximately 72% of all
send transactions were processed through personal computers ("PCs") located at
selected MoneyGram Agent locations. PC usage reduces the Company's average
cost of a transaction. Currently, the Company's goal is to provide a personal
computer system, together with training and field support, to all MoneyGram
Agents who process more than 30 transactions per month. The PC enables the
MoneyGram Agent to enter customer and transaction data more quickly than
possible via the Company's customer service center and provides the MoneyGram
Agent with an on-line reference for inquiries, such as other MoneyGram Agent
locations and transaction procedures. The PCs currently at approximately 450
MoneyGram Agent locations process both MoneyGram wire transactions and IPS's
money order and other payment services. These PCs will be contributed to the
Company prior to the Offering. The Company has agreed, as part of the
Transition, to permit IPS to continue to offer its money order and other
payment services through these MoneyGram Agents on their PCs.

INTERNATIONAL TRANSACTIONS

Mexico

Although the Company only began processing transactions in Mexico in 1990,
it processed approximately 2.4 million transactions for receipt in Mexico
during 1995 and approximately 1.8 million transactions in the first nine
months of both 1996 and 1995. Management believes that this growth is the
result of the development of a Mexican-oriented agent network, targeted
advertising and promotional programs and its relationship with Banamex, a
leading commercial bank in Mexico.

TRS (an affiliate of American Express) and Banamex entered into the Banamex
Agreement on July 24, 1990, allowing Banamex to serve as MoneyGram's primary
receive agent in Mexico. Since the initial signing, the Banamex Agreement has
been extended three times. The Banamex Agreement is effective through April
17, 2002 and provides for an automatic renewal after April 17, 2002 for an
additional five-year term unless either party notifies the other of its intent
to cancel 90 days prior to the end of the term. The Banamex Agreement only
allows the Company to process or pay U.S. to Mexico MoneyGram money transfers
through Banamex as its receiving agent, except for the limited circumstances
in which the Company had a relationship with a MoneyGram Agent in Mexico prior
to September 1, 1994 or in specific regions of Mexico where Banamex does not
have a branch location. However, as a result of the assignment of the Banamex
Agreement by TRS to IPS in the Transition, Banamex is not prohibited from
processing, but is still prohibited from paying, money transfers in Mexico on
behalf of American Express or its affiliates and First Data or its affiliates
(including Western Union). Currently, Banamex processes or pays money
transfers in Mexico only on behalf of the Business. Western Union has agreed
with the Company that prior to the earlier of the termination of the Banamex
Agreement or April 17, 2002, Western Union shall not use Banamex to process,
directly or indirectly, United States-to-Mexico consumer money wire transfer
service transactions on behalf of Western Union.

A majority of the money transfers to Mexico are sent for next day pick-up.
For each transaction, Banamex receives a sliding percentage of the monthly
average transaction fee charged to customers. Banamex receives a higher
percentage of the fee for same day transactions. Banamex reserves the right
under certain circumstances to disapprove any Company proposed promotion or
discount and receive a minimum, agreed upon fee amount per transaction
regardless of what the Company charges the customer. The Company pays Banamex
fees in an amount equal to one-half of the total foreign exchange revenues
derived from U.S. to Mexico MoneyGram transactions received at a Banamex
location.

50
<PAGE>

In order to encourage a high volume of U.S. to Mexico transactions, First
Data has agreed with Banamex, and the Company subsequently will be bound, to
spend a specified amount each year on Spanish language advertising.
Historically, the Company has spent significantly more than the amount
required by the agreement. In 1995, the Company spent over $8 million on
Spanish language advertising, signage and promotional activities.

The Americas, Asia and Europe

Management views the international markets other than Mexico as its next
area of potential transaction growth. Focusing on particular corridors, the
Company is currently seeking to expand its global presence. Send transaction
volume to the Caribbean and Latin America has increased, and the advent of
send as well as receive capabilities by MoneyGram Agents in the region is
broadening the Company's customer base and fostering growth in this market.
While the Company previously offered receive-only service throughout the Latin
American region, MoneyGram Agents in approximately 10-15 countries in the
region will be offering both send and receive service by the end of 1996. The
Company's agent network in Latin America is increasing, with new MoneyGram
Agents in Uruguay, the Cayman Islands, Dominica and the Bahamas, increasing
the scope of the Company's agent network in the region. For example, CONY and
CODR have recently signed an Agent Contract to offer the MoneyGram service.
CONY and CODR operate nearly 500 owned and affiliated outlets throughout the
northeastern United States, Florida and Puerto Rico as well as over 100 owned
and affiliated outlets in the Dominican Republic. As a new feature for the
Company, the service provided through CONY and CODR will include home delivery
of consumer money wire transfers to all destinations in the Dominican
Republic. The Company expects to begin offering the MoneyGram service through
CODR and CONY in December 1996.

In Europe, the Company has added MoneyGram Agents in the U.K., Spain,
Germany, Switzerland, Belgium, Norway and Ireland. In addition, The Thomas
Cook Group, which has been offering the MoneyGram service under a pilot
agreement, has signed a five year agreement to offer the MoneyGram service in
at least 678 of its approximately 1,000 branches, covering 19 countries by the
end of 1997. In 18 of these countries, the Thomas Cook network will replace
the TSOs lost upon consummation of this Offering. The agreement with Thomas
Cook also provides incentives for the Thomas Cook sales force to sign
MoneyGram Agent agreements with Thomas Cook's 4,800 financial institution
customers worldwide. Pursuant to a public bidding process, the POCL recently
indicated its intention to replace its current consumer money wire transfer
service provider and enter into a contract with the Company as its sole
provider of consumer money wire transfer services. POCL operates over 19,000
branches throughout the United Kingdom and currently provides consumer money
wire transfer services in approximately 988 branches. The Company and POCL are
currently negotiating the Agent Contract and planning the implementation. The
Company expects to begin offering the MoneyGram service through the POCL in
February 1997. Spain is a particularly promising market due to the loosening
of restrictions on money transmittal by the Spanish Central Bank. Additional
efforts are underway to work with Post Office or PostBank organizations in
several European countries to expand coverage. Asian transaction volume has
also increased, and the Company has initiatives to expand the number of
MoneyGram Agents in Pakistan, Sri Lanka and Bangladesh.

The Company believes that future growth should occur as migration patterns
continue and advertising and promotional efforts increase international
awareness of the MoneyGram service. Future markets of focus include those
countries with rapid growth rates or inefficient and expensive delivery
systems and, when permissible, countries that currently are subject to U.S.
trade embargoes. Such growth could be slowed, however, due to protectionist
policies practiced by some countries, the existence of bank relationships
between countries which effectively lock out competition with their low fees
and the lack of reliable market data. Competition between the Company and
Western Union in the international arena is very fragmented and varies by
country and region. While Western Union has agents in a greater number of
countries than the Company, the Company believes that the Western Union brand
name is not as established internationally as it is in the United States. In
order to effectively penetrate the international market, the Company will need
to develop enhancements such as direct conversion between non-U.S. currencies,
home delivery and an improved telecommunications and banking settlement
infrastructure.

51
<PAGE>

COMPETITION

The consumer money transfer and other payment products industry is highly
competitive. The principal methods of competition are price and number and
quality of agents and agent locations. Quality of service and service
enhancements are, to a lesser extent, competitive factors. The Company faces
competition from other consumer money wire transfer service providers as well
as from other payment products which offer consumers the ability to transfer
funds to others. Non-bank consumer money wire transfer services are provided
primarily by two global companies, MoneyGram and Western Union. The Company
estimates that Western Union accounted for approximately 81% of the 33 million
non-bank consumer money wire transfers processed worldwide in 1995 (compared
to approximately 16% by the Company).

Recently, competition has increased through the entry of new competitors or
expanded services offered by existing competitors, particularly in the U.S. to
Mexico market. Orlandi Valuta, previously a competitor in the Los Angeles to
Mexico corridor, has expanded its U.S. presence to over 3,400 agents in
California, Illinois, Texas and Florida, now offers a 10-minute service to
Mexico and is contemplating offering a U.S. to U.S. service. The Company faces
additional competition from the U.S. Postal Service which announced plans to
offer two new money transfer products to Mexico in 1996. The U.S. Postal
Service has joined the Eurogiro Network AS, which allows the U.S. Postal
Service to send postal money order delivery information electronically to
participating partner postal administrations (such as Mexico's postal
service). Funds also may be wired to the receiving institution over this
network. This "electronic money order" service will allow customers to quickly
send their money orders to Mexico for pick up at the Mexican post office. In
addition, the U.S. Postal Service currently is testing an electronic funds
transfer system in California and Texas that will allow postal customers to
wire money to Mexico to be received at Bancomer. Niche competitors who serve
specific migratory corridors also compete with the Company, including several
Mexican banks (such as Bancomer) which have recently begun to offer consumer
money wire transfer services from the United States to Mexico, focusing on
specific geographic locations with high densities of Mexican immigrants. Niche
competitors are able to focus on particular geographic corridors and eliminate
the expenses associated with maintaining nationwide and worldwide agent
networks.

The Company also faces competition from providers of other payment products.
Banks, other financial institutions and credit card companies provide similar
services. Some financial institutions in the United States have announced
plans to expand such services or offer consumer money wire transfer services
for non-bank customers. The Company also faces competition from automated
teller machines and similar retail electronic networks that could allow
consumers to transfer funds to others. The Company also competes with
providers of money orders purchased through IPS, Western Union agents, the
United States Postal Service, currency exchanges, supermarkets, convenience
stores and other retail outlets. Money orders generally are less expensive
than consumer money wire transfer services and are available to customers
through more extensive distribution networks.

A significant portion of the Company's growth in revenues and transaction
volumes prior to 1996 resulted from promotional discounting of its prices,
which has reduced the Company's profit margins. Customers typically increase
usage during promotion periods, but also transmit smaller amounts of money per
transaction with a resulting lower average fee per transaction. Historically,
the Company's transaction volumes have increased during price promotions and,
although transaction volumes decline when the price promotion ends, they
consistently remain above pre-promotion levels. There can be no assurance as
to what the Company's competitors will do in the future in terms of pricing,
nor can there be any assurance that the Company will be able to continue to
price below such competitors (particularly niche competitors, such as Mexican
banks establishing consumer wire transfer service locations in high-use areas
in the United States) or offer frequent and substantial promotions. Future
price competition could further reduce the Company's profit margins (without
any increase in transaction volume). As the MoneyGram service increases its
brand name recognition and transaction volumes increase, the Company has in
1996, and currently intends to continue, to reduce the number, scope, duration
and level of discounting of its price promotions compared to 1995 and 1994.

52
<PAGE>

The Company currently competes, and following the Offering will compete,
directly with First Data and Western Union, subject only to limited non-
solicitation protections provided by the Consent Decree. Although the Consent
Decree prohibits First Data from entering into a consumer money wire transfer
service contract with a MoneyGram Agent prior to the scheduled expiration of
the Agent Contract, First Data and Western Union may sign a consumer money
wire services contract with any MoneyGram Agent whose Agent Contract is
terminated in accordance with its terms. If MoneyGram fails to comply with the
terms of any Agent Contract, including, in the case of certain significant
MoneyGram Agents, achieving certain minimum transaction volume and dollar
levels, the MoneyGram Agent may terminate the Agent Contract, in which case
First Data and Western Union are permitted under the Consent Decree to sign
such agent to a Western Union agent contract.

In addition, the scope of the Consent Decree is limited in certain respects.
Specifically, the non-solicitation provisions of the Consent Decree described
above do not limit First Data or Western Union from entering into contracts
with MoneyGram Agents to provide services utilizing automatic teller machines
and other point of sale devices, transactions involving debit cards, cash
advances utilizing credit cards, home banking, prepaid telephone and cash
cards, money orders and utility bill payment services. First Data and Western
Union therefore can offer such products in direct competition with the
Company, unrestricted by the Consent Decree. In addition, certain senior
managers of First Data who previously exercised discretion and control over
the Business will remain as senior managers of First Data with responsibility
for, among other things, the operations of Western Union. Finally, other than
pursuant to the confidentiality provisions of the Hold Separate Agreement,
First Data is not restricted or precluded from applying its historical
knowledge of the Business to its management of Western Union, which may
enhance Western Union's ability to compete with the Company.

Many of the Company's competitors have, and potential competitors may have,
significantly greater financial, technological and marketing resources than
the Company. No assurances can be given that such competitors will not use
such resources to compete more agressively by expanding their agent networks,
funding substantial advertising campaigns, adding enhanced customer services
and/or reducing prices, that the Company will be able to compete successfully
against current or future competitors or that such competition will not have a
material adverse effect on the Company's business, operating results or
financial condition.

PROPRIETARY RIGHTS AND TRADEMARKS

MoneyGram Marks

The Company uses certain service marks in the Business, including
"MoneyGram," "The Better Way to Wire Money," "Wire Money in Minutes" and
"Money in Minutes Worldwide." Many of these marks have been refused initial
registration by the U.S. Patent and Trademark Office or are concurrently being
used by Western Union, the Company's principal competitor.

53
<PAGE>

Western Union is using, among other marks, "The Best Way to Send Money" and
"The Fastest Way to Send Money" and has registered these marks in the United
States and in other countries. IPS, on behalf of Moneygram, applied to
register "The Better Way to Wire Money" in the United States, and the U.S.
trademark examiner rejected the application due to Western Union's prior
registrations for said marks.

Western Union uses "Money in Minutes" and has registered this mark in the
U.S. and has applied to register the mark in certain other countries. IPS, on
behalf of Moneygram, applied to register "Wire Money in Minutes" in the United
States and expects that the U.S. trademark examiner will reject IPS's
application due to Western Union's prior United States registration.

The Company and Western Union have no current dispute regarding the
Company's use of "The Better Way to Wire Money," "Wire Money in Minutes" or
"Money in Minutes Worldwide," and the two entities have concurrently used
these or similar marks for some time. However, the Company's and Western
Union's respective rights to these marks and to similar marks are unsettled.
Consequently, pursuant to the Service Mark Letter Agreement, the Company,
First Data and Western Union have agreed not to sue each other in respect of
the Disputed Marks, during the two-year period following the consummation of
the Offering (or thereafter in respect of the use of any Disputed Mark during
such two-year period). However, the Company and First Data have agreed that
each may prosecute or challenge applications in respect of any Disputed Marks
at patent and trademark authorities in the United States or elsewhere during
such two-year period. The Service Mark Letter Agreement also provides that, at
the option of the Company at any time during such two-year period, Western
Union, IPS and the Company will execute the License Agreement and the Service
Mark Letter Agreement will thereupon terminate.

If executed, the License Agreement provides that Western Union will grant
the Company a license to use "The Better Way to Wire Money" and "Money in
Minutes Worldwide" in English and in certain other languages except Spanish in
certain countries, always accompanied by the mark "MoneyGram" and to use "Wire
Money in Minutes" in the United States in English, always accompanied by the
word "MoneyGram." The Company will relinquish to Western Union all other
rights it may have in, and be prohibited from otherwise using other marks used
by Western Union, including, for example, "Money in Minutes," "The Best Way to
Send Money" and "The Fastest Way to Send Money." Western Union will covenant
not to use "The Better Way to Wire Money" in English in certain countries,
including the United States. Both the Company and Western Union will have a
six-month period, beginning upon signing the License Agreement, during which
non-conforming uses of the marks covered by the agreement will be permitted.
Any non-conforming signage, including non-conforming signage installed during
the transition period, may be used through the life of such signage. No
assurances can be given about the effect, if any, of entering into such
arrangement concerning the Disputed Marks may have on the Business or the
Company's operating results or financial condition, including in the event
such arrangement constitutes an abandonment by the Company and Western Union
of any or all of the Disputed Marks. See "Certain Relationships and Related
Transactions--The Service Mark Letter Agreement."

No assurances can be given about the effect of any dispute between the
Company and Western Union over the use of one of these marks, an adverse
resolution of such a dispute, if any, or the loss of any service mark of the
Company, would have on the Business or the Company's operating results or
financial condition.

Software

IPS developed the MoneyGram and Utility Software and all modifications and
enhancements to it. IPS contracted with the General Electric Company ("GE") in
1992 to develop the PC MoneyGram Software and subsequent modifications and
enhancements. GE transferred to IPS title to all PC MoneyGram Software
specifically developed for IPS, and GE granted a license to IPS to use any
pre-existing materials contained in the PC Based Software with GE's
teleprocessing services. Using the MoneyGram and Utility Software, the Company
and those MoneyGram Agents who use the PC MoneyGram Software can record all
transactions into an on-line database with ready access. This information is
summarized daily by each MoneyGram Agent for remittance

54
<PAGE>

processing and for compliance with the respective Agent Contracts, including
calculation of MoneyGram Agent commissions. The MoneyGram and Utility Software
also allow for the creation of transaction reports required for regulatory
reporting purposes. Pursuant to the Contribution Agreement, IPS will
contribute the MoneyGram Application Software and the PC MoneyGram Software to
the Company. The Software License Agreement will provide that IPS will grant
to the Company, a perpetual, irrevocable, worldwide, nonexclusive, royalty-
free license to use the Utility Software in the Business or for any other
purpose. See "Certain Relationships and Related Transactions--The Transition
Agreements--The Contribution Agreement and "--The Software License Agreement."

REGULATION AND LICENSING

State Regulations

Forty-three states, the District of Columbia and Puerto Rico currently have
sale of checks or money transmission laws which require that firms which
engage in the business of transmitting funds by wire and/or issuing checks and
other payment instruments obtain a license prior to engaging in such
businesses. The licensing process requires the applicant to submit information
concerning its operations and management as well as financial information.
Most U.S. jurisdictions also require the posting of a bond to protect the
public from insolvency or default by the issuer. Some U.S. jurisdictions also
require licensees to maintain highly-rated, liquid investments in an amount
equal to the amount of their outstanding payment obligations and many require
the issuer to maintain a minimum net worth. Typically, the licensee is
required to file annual reports with the applicable banking department.
Reporting requirements include the submission of updated financial statements,
revisions to agent lists, sales data and notification of changes in the
business. A growing number of U.S. jurisdictions also conduct annual or semi-
annual on-site examinations of licensees.

IPS currently holds all of the licenses necessary to conduct the operations
of the Business. Upon consummation of the Transition, it will be necessary for
the Company to apply for and obtain licenses from each of these forty-three
states, the District of Columbia and Puerto Rico with regard to its U.S.
operations. Normally, the licenses are granted by state regulatory authorities
after the filing of an application and some degree of investigation by the
pertinent state regulatory authorities. In many jurisdictions, licenses must
be renewed on an annual basis. While there is no guarantee that the Company
will obtain the aforementioned licenses in all jurisdictions, it is expected
that, within one year of the date hereof, the Company will be able to obtain
such licenses in all jurisdictions. Failure to obtain a license in a
particular state could preclude the Company from offering the service in that
state.

Federal Regulation

The BSA, and its accompanying regulations, and the MLCA, were adopted to
combat "money laundering" and apply to financial institutions including money
transmitters such as the Company and the MoneyGram Agents. The BSA requires
money transmitters to maintain certain records, verify the identity of
customers and periodically file certain reports. The MLCA criminalizes certain
transactions, including transfers of funds through money transmitters such as
the Company and the MoneyGram Agents, that involve funds derived from certain
specified unlawful activities and that are performed with the requisite
knowledge or intent. In addition, the Money Laundering Suppression Act of 1994
may require the Company to register with the Treasury Department as a money
transmitting business and to maintain a list of the MoneyGram Agents and
expresses the sense of Congress that each state should license and regulate
any money order transmitters' activity in that state.

The Company has developed an extensive BSA and Anti-Money Laundering
Compliance Program. Elements of this program include (i) preparation and
filing of currency transaction reports, (ii) real time review of transactions
exceeding certain amounts, (iii) daily review of transactions exceeding $1,000
and (iv) periodic review of transaction patterns by funds transfer corridor
(e.g., Los Angeles to Mexico or Amsterdam to Colombia).

55
<PAGE>

Violations of the money laundering laws or regulations can result in civil
and/or criminal liability in varying amounts that can range from $500 or less
for negligent violations of BSA requirements, to $1 million for certain
aggravated offenses, to the greater of $500,000 or twice the amount involved
in the underlying transaction for certain money laundering and other offenses.
Forfeiture penalties also are applicable to violations of various provisions
of all three statutes. The failure to comply with the laws or regulations to
which the Business is subject, adverse changes in the interpretation thereof
or the adoption of more stringent laws or regulations could have a material
adverse effect on the Company's business, results of operations or financial
condition.

Non-U.S. Regulation

Some foreign countries have licensing requirements and other regulations
applicable to the Business. Such regulations may include both international
anti-money laundering initiatives and local regulation of money transmission.
On the international front, the world community has begun to focus on the
problem of money laundering through the adoption of a number of international
initiatives. These initiatives include the adoption of the 1988 U.N.
Convention Against Illicit Traffic in Narcotic Drugs, the creation of the
Financial Action Task Force on Money Laundering established by directive of
the 1989 G-7 Economic Summit and the enactment of the Directive on Prevention
of the Use of the Financial System for the Purpose of Money Laundering by the
European Union. As a result of these initiatives, money laundering has been
criminalized in an increasing number of foreign jurisdictions. Some
jurisdictions now require customer identification, recordkeeping and
suspicious transaction reporting. In many instances, however, the offense is
limited to the laundering of proceeds of the sale of illegal drugs.

Although the business of consumer money wire transfer is not separately
licensed as in the U.S., in some jurisdictions the local agent or the
transmitter must hold a banking or foreign exchange license. In these
instances, the Company generally requires proof of the appropriate permit from
the local agent prior to its offering the MoneyGram service. Certain countries
currently, or in the future may, limit consumer money transmission activities
(as principal and/or agent) to banks or similarly licensed financial
institutions. Such restrictions may limit who the Company can utilize as an
agent, require the Company to conduct the Business through a licensed entity
or prohibit the Company altogether from conducting the Business in such
country. While the Mexican government has recently enacted legislation which
criminalizes money laundering, Mexico currently does not require any special
licensing in connection with the offering of consumer money wire transfer
services. To the extent these requirements are applicable to the MoneyGram
service, the failure to comply may be a criminal offense under local law.

Future Regulation

The adoption of more stringent laws or regulations, or adverse changes or
interpretations of existing laws or regulations, could have a material adverse
effect upon the Company.

LITIGATION

The Company is currently not engaged in any material legal proceedings.

EMPLOYEES

The Company has approximately 525 employees, including approximately 100 in
sales, marketing and customer service, approximately 350 in customer service
center operations and approximately 75 in operational, general and
administrative functions. None of the Company's employees are represented by a
labor union, and the Company believes that its employee relations are good.

56
<PAGE>

MANAGEMENT

DIRECTORS

The Board of Directors currently consists of six members and is divided into
three classes serving staggered terms as follows: Class 1, comprised of two
persons and serving for a term expiring at the 1997 Annual Meeting of
Stockholders; Class 2, comprised of two persons and serving for a term
expiring at the 1998 Annual Meeting of Stockholders; and Class 3, comprised of
two persons and serving for a term expiring at the 1999 Annual Meeting of
Stockholders. Following the expiration of the initial term, directors will
serve for three-year terms. The Company may add one or more independent
directors following consummation of the Offering, who may serve on the Audit
Committee and/or the Compensation Committee of the Board of Directors.
Information with respect to those individuals who currently serve as directors
of the Company is set forth below:

<TABLE>
<CAPTION>
INITIAL TERM
NAME EXPIRES POSITION
---- ------------ --------
<S> <C> <C>
Robbin L. Ayers....... 1999 Executive Vice President and Director
James F. Calvano...... 1999 Chairman and Chief Executive Officer
Brian J. Fitzpatrick.. 1998 Director
John M. Fowler........ 1997 Executive Vice President, Chief
Financial Officer and Director
William D. Guth....... 1997 Director
Sanford Miller........ 1998 Director
</TABLE>

Mr. Ayers, 44, has served as Executive Vice President and General Manager--
International since October 1996. He previously served in the Office of the
President of the Company since September 1995. Mr. Ayers has responsibility
for the Company's international operations. Mr. Ayers has been a Director
since January 1996. Prior to his appointment to the Office of the President,
Mr. Ayers served from January 1995 to September 1995 as Senior Vice President,
Europe and Pacific Rim Retail Services for the Business. From 1992 to 1994 Mr.
Ayers was Senior Vice President, Marketing of IPS and from 1985 to 1992, he
served in various management positions with IPS. Mr. Ayers founded the
MoneyGram service during 1988 and was its General Manager until 1991.
Previously Mr. Ayers held positions with American Express, Citicorp and
Yankelovich, Skelly and White an international marketing firm. He holds a B.A.
in Sociology and an M.B.A. in Marketing from the University of Cincinnati.

Mr. Calvano, 60, has served as Chairman and Chief Executive Officer of the
Company since October 1996. Prior to joining the Company, Mr. Calvano was
employed by the Travelers Group Inc. as Executive Vice President of Marketing
and by Travelers Insurance Companies a division of Travelers Group Inc. as
Executive Vice President & Chief Administrative Officer from November 1993
until February 1995. Mr. Calvano served as President and Chief Operating
Officer of New Valley Corp./Western Union from June 1991 through May 1993. Two
months before he assumed this position, New Valley Corp. suspended payments on
its publicly held debt. New Valley Corporation consented to an involuntary
filing of a bankruptcy petition under Title 11 of the U.S. Code effective
November 15, 1991. From January 1989 until December 1990, Mr. Calvano was
President and Chief Executive Officer of Carlson Travel Group and Executive
Vice President of Carlson Companies Inc. Prior to that date, Mr. Calvano
served in various management positions at Primerica Corporation, American
Express Travel Related Services, Avis, Inc. and the Olivetti Corporation of
America. Mr. Calvano serves on the Board of Directors of Team Rental Group,
Inc. Mr. Calvano holds an AMP from Harvard Business School and a B.A. from the
University of Chicago.

Mr. Fitzpatrick, 54, has served as a director of the Company since October
1996. Mr. Fitzpatrick has been President and Chief Executive Officer of Fits
Systems, a computer software company, since 1972. Mr. Fitzpatrick also serves
on the Board of Directors of Jade Cricket Corporation. Mr. Fitzpatrick
received his A.B. in economics from Boston College.

Mr. Fowler, 47, has served as Executive Vice President and Chief Financial
Officer since October 1996. Prior to joining the Company, Mr. Fowler worked as
a private consultant. From 1989 to 1994 Mr. Fowler was employed by the
Travelers Group Inc. as Executive Vice President and Chief Administrative
Officer, responsible for operations and administration throughout the
organization. Mr. Fowler held the position of Chairman and

57
<PAGE>

Chief Executive Officer of Gulf Insurance Group, a subsidiary of Travelers
Group Inc. from 1987 to 1994 and served as Senior Vice President, Corporate
Development, for the Travelers Group Inc. from 1986 through 1989. Prior to
that date, Mr. Fowler served in various management positions at Warner Amex
Cable, the U.S. Department of Transportation and Reading Company. Mr. Fowler
serves on the board of directors of Air Express International Corporation,
TransAtlantic Holdings, Inc. and Eastern Alliance Insurance Company. Mr.
Fowler holds a B.S. degree from Yale University and a J.D. from the University
of Pennsylvania Law School.

Dr. Guth, 63, has served as a director of the Company since October 1996.
Dr. Guth is a professor of management and strategy at the Stern School of
Business at New York University. Dr. Guth also serves as a principal of
Faculty Practice Associates, a strategic management consulting firm. Dr. Guth
received his D.B.A. degree from Harvard University, his M.B.A. degree from
Indiana University and his B.S. degree from Washington University.

Mr. Miller, 43, has served as a director of the Company since October 1996.
He has served as the Chairman of the Board of Directors and Chief Executive
Officer of Team Rental Group, Inc., which owns Budget Rent a Car franchises in
seven metropolitan regions in the United States, since December 1993. Between
1989 and 1991, Mr. Miller served as Director of Marketing, Special Accounts
for Budget Rent a Car Corporation. From 1981 to 1989, Mr. Miller was an
executive officer and principal stockholder of corporations that owned and
operated 30 Budget Rent a Car franchises. Mr. Miller holds a B.S. from the
State University of New York at Oswego.

Mr. Calvano, Chairman and the Chief Executive Officer of the Company, serves
as a director on Team Rental Group, Inc.'s Board of Directors and Mr. Miller,
a director of the Company, is Chief Executive Officer of Team Rental Group,
Inc.

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee, comprised of Messrs. Fitzpatrick and Miller, will be
responsible for reviewing with management the financial controls, accounting
and audit and reporting activities of the Company. The Committee will review
the qualifications of the Company's independent auditors, make recommendations
to the Board of Directors as to the selection of independent auditors, review
the scope, fees and results of any audit and review non-audit services and
related fees of the independent auditors.

The Compensation Committee, comprised of Messrs. Fitzpatrick and Guth, will
be responsible for the administration of all salary and incentive compensation
plans for the officers and key employees of the Company, including bonuses.
The Committee also will administer the Company's 1996 Stock Option Plan.

The Board of Directors does not have a nominating committee. The selection
of nominees for the Board of Directors will be made by the entire Board of
Directors.

EXECUTIVE OFFICERS

Information with respect to those individuals who currently serve as
executive officers of the Company is set forth below. Information with respect
to Messrs. Ayers, Calvano and Fowler is set forth above under "Management--
Directors." Executive officers of the Company are appointed annually by the
Board of Directors and serve until their successors have been duly elected and
qualified.

<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
James F. Calvano........ Chairman and Chief Executive Officer
John M. Fowler.......... Executive Vice President and Chief Financial Officer
Robbin L. Ayers......... Executive Vice President and General Manager--International
Alan H. Friedman........ Executive Vice President--Operations
Andrea M. Kenyon........ Secretary and General Counsel
</TABLE>

58
<PAGE>

Mr. Friedman, 50, has served as Executive Vice President--Operations of the
Company since October 1996. Prior to joining the Company, Mr. Friedman was
employed by Western Union as Senior Vice President and Chief Financial Officer
from November 1994 to March 1996. Mr. Friedman previously held various
financial management positions at Western Union Corporation. Mr. Friedman
served as Vice President and Comptroller of New Valley Corp/Western Union from
January 1991 until November 1994, and held that post in April 1991 when New
Valley Corporation suspended payments on its publicly held debt. New Valley
Corporation consented to an involuntary filing of a bankruptcy petition under
Title 11 of the U.S. Code effective November 15, 1991. Mr. Friedman holds a
B.B.A. from the Bernard M. Baruch College of the City University of New York.
Mr. Friedman is also a licensed CPA in New York state, a member of the
Financial Executives Institute and a member of the American Institute of
Certified Public Accountants.

Ms. Kenyon, 41, has served as General Counsel since October 1996. Prior to
joining the Company, Ms. Kenyon spent six years in the general counsel's
office of American Express, where she provided bank regulatory and legislative
support for American Express, its domestic and international banks and
financial service subsidiaries. She also provided legal support to IPS on
payment product issues and anti-money laundering regulations when First Data
was a subsidiary of American Express. Prior to joining American Express, Ms.
Kenyon was an associate at a law firm in New Jersey where she specialized in
commercial banking. She is a 1976 graduate of Lafayette College and 1983
graduate of Villanova University School of Law.

COMPENSATION OF DIRECTORS

Directors currently do not receive an annual retainer or other compensation
for serving as directors. It is anticipated that, following consummation of
the Offering, directors who do not receive compensation as officers or
employees of the Company or any of its affiliates will be compensated for
serving as directors, including an annual retainer fee and a fee for each
meeting of the Board of Directors that they attend. All such compensation will
be determined by the Board of Directors. In connection with the Offering, each
non-employee director was granted options to purchase 5,000 shares of Common
Stock under the 1996 Stock Option Plan. See "--Stock Plans."

EXECUTIVE COMPENSATION

The Company was incorporated as a subsidiary of IPS in January 1996. The
following table sets forth compensation information for each individual who
served in the capacity of an executive officer of the Business during 1995 and
who will continue to serve as an executive officer of the Company following
consummation of the Offering (the "Named Executives"). Mr. Calvano, the
Chairman and Chief Executive Officer of the Company, Mr. Fowler, an Executive
Vice President and the Chief Financial Officer of the Company, Mr. Friedman,
the Executive Vice President--Operations of the Company and Ms. Kenyon, the
General Counsel of the Company did not begin to serve in such capacities until
February, September, April and July 1996, respectively. Prior to his
appointment as Chief Executive Officer, Mr. Calvano had a consulting contract
with First Data.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
SECURITIES
BONUS OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION($) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- --------- ------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Robbin L. Ayers
Executive Vice
President............... 1995 $131,437 $60,000 $45,066(4) 5,000(3) $14,100
</TABLE>
- --------
(1) Mr. Ayers will be paid a bonus of $75,000 upon consummation of the
Offering.
(2) Represents amounts contributed by First Data to defined contribution
plans.
(3) Represents shares prior to the two-for-one stock split recently announced
by First Data and effective November 1, 1996.
(4) Represents reimbursable living expenses provided by the Company for an
expatriate assignment.

59
<PAGE>

OPTION GRANTS IN 1995

The following table sets forth information for the Named Executives
regarding grants in 1995 of options to purchase First Data common stock.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED RATES
OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(3)
------------------------------------------------- -----------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) 1995(1) ($/SH)(2) DATE 5% ($) 10% ($)
- ---- ---------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Mr. Ayers... 5,000(4)(5) (6) $51.125 3/15/05 $160,761 $407,400
</TABLE>

- --------
(1) Based on options to purchase an aggregate of 5,385,176 shares of First
Data common stock granted.
(2) The exercise price is the fair market value on the date of grant.
(3) Potential realizable value is calculated based on an assumption that the
price of First Data common stock appreciates at the annual rate shown,
compounded annually, from the date of grant of the option until the
expiration date of the option. The value is net of the exercise price but
is not adjusted for the taxes that would be due upon exercise. The 5% and
10% assumed rates of appreciation are required by the rules of the
Securities and Exchange Commission and do not represent either First
Data's or the Company's estimate of future price. Actual gains, if any,
upon the exercise of these options will depend on the actual performance
of First Data common stock.
(4) Option becomes exercisable over a four-year period with 25% of the option
becoming exercisable on each of the first through fourth anniversaries of
the date of grant.
(5) Represents shares prior to the two-for-one stock split recently announced
by First Data and effective November 1, 1996.
(6) Less than 1/10 of 1 percent.

AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES

The following table sets forth information for the Named Executives
regarding the exercise in 1995 of options to purchase First Data common stock
and their holdings of unexercised options to purchase First Data common stock
as of December 31, 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES VALUE UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON REALIZED OPTIONS AT DECEMBER 31, 1995(#) OPTIONS AT DECEMBER 31, 1995($)(2)
NAME EXERCISE(#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Mr. Ayers(3)............ 2,500 $67,188 10,107 / 11,302 $314,876 / $292,633
</TABLE>
- --------
(1) The value realized is the excess of the fair market value on the date of
exercise over the exercise price, but is not adjusted for the taxes due on
exercise.
(2) The value is calculated based on the aggregate amount of the excess of
$66.9375 over the relevant exercise price(s).
(3) Represents shares prior to the two-for-one stock split recently announced
by First Data and effective November 1, 1996.

RETIREMENT PLAN

The Company does not maintain and currently does not plan to implement a
tax-qualified defined benefit pension plan.

First Data maintains a Retirement Plan (the "Retirement Plan") which is a
tax-qualified, funded, noncontributory, defined benefit pension plan that
provides benefits for eligible employees of First Data and its participating
subsidiaries. Eligible employees include all employees of First Data and its
participating subsidiaries located in the United States and certain employees
located outside the United States as of January 2, 1993. In 1994, employees
participating in the Retirement Plan were offered the option to cease accruing
benefits under the Retirement Plan in exchange for an enhanced benefit under
First Data's Incentive Savings Plan, a defined contribution pension plan. Mr.
Ayers elected to opt out of the Retirement Plan, resulting in a frozen defined
benefit of $23,111, upon retirement at age 65 (unreduced for survivor
protection) and assuming a straight life annuity on a monthly basis.

60
<PAGE>

STOCK PLANS

In connection with the Offering, the Board of Directors of the Company has
adopted the Company's 1996 Stock Option Plan (for executives, non-employee
directors and other key employees) and the Company's 1996 Broad-Based Stock
Option Plan (for all other employees). The Company has reserved for issuance
under the 1996 Stock Option Plan 1,175,000 shares of Common Stock. The
Compensation Committee, which will administer the 1996 Stock Option Plan, has
granted, subject to consummation of the Offering, options to purchase Common
Stock as follows: 70,000 options to Mr. Ayers; 287,100 options to Mr. Calvano;
239,300 options to Mr. Fowler; 45,500 options to Mr. Friedman; 33,000 options
to Ms. Kenyon and 464,925 options to other employees of the Company. Also in
connection with the Offering, the Company has granted options to purchase
5,000 shares of Common Stock to each non-employee director. Each option will
have an exercise price equal to 100% of the initial public offering price,
will have a four-year term and will become exercisable with respect to 25% of
the shares of Common Stock subject to the option on each of the first four
anniversaries of the consummation of the Offering.

The Company has reserved for issuance under the 1996 Broad-Based Stock
Option Plan 25,000 shares of Common Stock. The Company has granted under the
1996 Broad-Based Stock Option Plan, subject to consummation of the Offering
options to purchase up to an aggregate of 7,750 shares of Common Stock to
eligible employees of the Company (other than non-employee directors and
certain officers and employees who are eligible under the 1996 Stock Option
Plan and certain employees who reside in foreign countries) as of the date of
the closing of the Offering. Each such option will have an exercise price
equal to 100% of the initial public offering price, will have a four-year term
and will become exercisable with respect to 25% of the shares of Common Stock
subject to such option on each of the first four anniversaries of the
consummation of the Offering.

OWNERSHIP OF CAPITAL STOCK

SECURITY OWNERSHIP OF THE COMPANY BY MANAGEMENT

Prior to the consummation of the Offering, no director or executive officer
beneficially owned any equity securities of the Company. The Company expects
that, subject to consummation of the Offering, certain executive officers and
other employees of the Company will be granted options to purchase Common
Stock. See "Management--Stock Plans."

SOLE STOCKHOLDER OF THE COMPANY

The following table sets forth certain information regarding the beneficial
ownership by the Selling Stockholder of the Common Stock (i) immediately prior
to the Offering and (ii) as adjusted to reflect the sale of the shares of
Common Stock offered hereby (assuming the U.S. Underwriters' over-allotment
option is not exercised). The Selling Stockholder has sole voting and
investment power with respect to all shares indicated as beneficially owned by
the Selling Stockholder. If the U.S. Underwriters' over-allotment option is
not exercised in full, IPS will deposit any shares of Common Stock then-owned
by it into the Trust. IPS will be the beneficial owner of any such shares,
however, the Trustee will have sole voting and investment power with respect
to the shares of Common Stock subject to the Trust in accordance with the
terms of the Trust Agreement.

<TABLE>
<CAPTION>
PRIOR TO OFFERING AFTER OFFERING(1)
--------------------- --------------------
PERCENT OF PERCENT OF
NAME AND ADDRESS NUMBER CLASS NUMBER CLASS
- ---------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Integrated Payment Systems Inc.
6200 South Quebec
Englewood, CO 80111................ 16,625,000 100% 2,161,250 13%
</TABLE>
- --------
(1) If the U.S. Underwriters' over-allotment option is exercised in full, the
Selling Stockholder's number of shares of Common Stock and percent of
class would be zero.

61
<PAGE>

PRINCIPAL STOCKHOLDERS OF FIRST DATA

The following table sets forth, based on 223,517,389 shares of First Data
common stock outstanding as of December 31, 1995, the percentage of ownership
of First Data common stock by the persons who beneficially own more than 5% of
First Data common stock based solely upon filings with the Securities and
Exchange Commission:

<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ------------------- ----------------------- ----------
<S> <C> <C>
American Express Company
American Express Tower
World Financial Center
New York, NY 10285......................... 27,227,310(2)(4) 12.2%
Janus Capital Corporation(3)
100 Fillmore Street, Suite 300
Denver, CO 80208........................... 14,802,043(4) 6.6%
</TABLE>
- --------
(1) Represents shares prior to the two-for-one stock split recently announced
by First Data and effective November 1, 1996.
(2) According to the Schedule 13G of American Express, 4,608,810 of these
shares were held by American Express Financial Advisers, which was a joint
filer of the Schedule 13G. Pursuant to the terms of an October 1993
offering by American Express of 6 1/4% Exchangeable Notes Due October 15,
1996 ("DECS"), American Express may, at its option, consummate the
mandatory exchange thereunder at maturity by delivering share of First
Data common stock. If American Express exercises such option and uses its
current holdings of First Data common stock without acquiring any
additional shares, its ownership interest in First Data would be
substantially reduced. However, American Express is under no obligation to
exercise such option to deliver First Data common stock pursuant to the
terms of the DECS or, if it so elects, that it will use all or any portion
of its current holdings of First Data common stock to make such delivery.
(3) The Schedule 13G dated February 13, 1996 of Janus Capital Corporation was
filed jointly with Thomas H. Bailey. As stated in Item 4 of this Schedule
13G, Mr. Bailey owns approximately 12.2% of Janus Capital. In addition to
being a stockholder of Janus Capital, Mr. Bailey serves as President and
Chairman of the Board of Janus Capital and filed the joint statement with
Janus Capital as a result of such stock ownership and positions which may
be deemed to enable him to exercise control over Janus Capital. According
to this Schedule 13G, Mr. Bailey does not own of record any shares of
First Data common stock; however, as a result of his position, Mr. Bailey
may be deemed to have the power to exercise or to direct the exercise of
such voting and/or dispositive power that Janus Capital may have with
respect to First Data common stock held by investment companies registered
under section 8 of the Investment Company Act of 1940 and individual and
institutional clients (the "Managed Portfolios"). According to this
Schedule 13G, all shares reported herein have been acquired by the Managed
Portfolios and Mr. Bailey specifically disclaims beneficial ownership over
any shares of First Data common stock that he or Janus Capital may be
deemed to beneficially own. Furthermore, according to this Schedule 13G,
Mr. Bailey does not have the right to receive any dividends from, or the
proceeds from the sale of, the securities held in the Managed Portfolios
and disclaims any ownership associated with such rights.
(4) Shared voting and dispositive power.

BENEFICIAL OWNERSHIP OF FIRST DATA COMMON STOCK BY DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY

The following table sets forth, as of July 31, 1996, the number of shares of
common stock of First Data beneficially owned by each director of the Company,
each of the Named Executives and by all directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS
- ---- ----------------------- ----------
<S> <C> <C>
Robbin L. Ayers............................. 10,162(2) (4)
James F. Calvano............................ 5,000 (4)
John M. Fowler.............................. -- (4)
Alan H. Friedman............................ 30 (4)
Andrea M. Kenyon............................ -- (4)
All directors and executive officers as a
group (8 persons).......................... 15,192(3) (4)
</TABLE>
- --------
(1) The number of shares reported includes options that are exercisable within
60 days of July 31, 1996.
(2) Includes 10,107 shares issuable upon exercise of options.
(3) Includes 10,107 shares issuable upon exercise of options.
(4) Less than one percent.

62
<PAGE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIP WITH FIRST DATA

On June 12, 1995, First Data entered into a merger agreement with FFM, the
parent of Western Union. Western Union is the principal competitor of the
Company. The Company estimates that of the 33 million non-bank consumer money
wire transfers processed worldwide in 1995, Western Union and the Company
accounted for approximately 81% and 16%, respectively, of all such
transactions. In order to obtain the FTC's approval of its merger with FFM
under federal antitrust law, First Data and the FTC entered into the Consent
Decree and the Hold Separate Agreement. The Consent Decree requires First Data
to divest the sales and marketing functions of either the Business or Western
Union, but allows First Data to perform processing services for both
businesses. First Data decided to divest itself of at least the sales and
marketing functions associated with the Business and retain Western Union.
First Data identified those operations and functions necessary to operate the
Business as a stand-alone entity, including those assets and personnel to be
dedicated solely to the Business, began reconfiguring the shared customer
service centers so that the Lakewood Facility would be used exclusively in the
Business and commenced the separation of information and services related to
the Business within the IPS data center in Englewood, Colorado.

THE TRANSITION AGREEMENTS

Pursuant to the Transition, the Company will enter into the Transition
Agreements, which consist of the Contribution Agreement, the Operations
Agreement, the Software License Agreement, the Facility, the Service Mark
License Agreement, and, if requested by the Company, the License Agreement,
the Human Resources Agreement, the Telecom Agreement and the Registration
Rights Agreement. Under the Transition Agreements, First Data or its
affiliates will provide a source of liquidity for working capital purposes,
certain licenses and services that are necessary to the operation of the
Business, including data processing services and services in respect of
compliance with applicable licensing and other legal requirements regarding
the provision of a consumer money wire transfer service. See "The Business--
Regulation and Licensing." While management of the Company has participated in
the preparation and negotiation of the Transition Agreements, none of the
Transition Agreements were the result of third-party, arm's-length
negotiations and there can be no assurance that the Company would not be able
to obtain services provided thereunder from a third party at a lower cost. For
additional information concerning the relationship of, and competition and
potential conflicts between, the Company and First Data, see "Risk Factors--
Factors Relating to Independence and Sale of the Company" and "The Business--
Competition."

The following summary description of the Transition Agreements does not
purport to be complete and is qualified in its entirety by reference to the
Contribution Agreement, the Operations Agreement, the Software License
Agreement, the Facility, the Service Mark Letter Agreement (or, if applicable,
the License Agreement), the Human Resources Agreement, the Telecom Agreement
and the Registration Rights Agreement, copies of which are filed as exhibits
to the Registration Statement of which this Prospectus is a part. See
"Available Information."

The Contribution Agreement

MoneyGram Assets. Pursuant to the Contribution Agreement, (i) IPS will
contribute the $12 million IPS Cash Contribution and (ii) IPS and certain of
its affiliates will contribute to the Company all right, title and interest in
the MoneyGram Assets, including (a) the MoneyGram Marks, which consist of
certain copyrights and trademarks owned by First Data or IPS that are material
to the conduct of the Business, including the MoneyGram service mark; (b) the
PC MoneyGram and the MoneyGram Application Software; (c) the economic benefits
under the Agent Contracts; (d) the real estate lease and leasehold
improvements and certain items of personal property and personal property
leases related to the Lakewood Facility; and (e) certain items of personal
property, including PCs, printers and signage, that are provided to MoneyGram
Agents for use in connection with the MoneyGram service and certain contracts
with third persons related thereto. The MoneyGram Assets

63
<PAGE>

will be transferred to the Company prior to the consummation of the Offering
"as is, where is," and in consideration therefor, the Company will issue and
deliver to IPS 16,624,900 shares of Common Stock.

Notwithstanding the transfer of the economic benefits under certain Agent
Contracts, in order to comply with applicable licensing requirements, IPS will
not assign to the Company title to any Agent Contract. Those Agent Contracts
that are not assignable by their terms from TRS will be terminated, and the
Company will be free to seek a new contract with the applicable agent. Those
Agent Contracts that are in the name of IPS will remain with IPS and the
economic benefits will be assigned to the Company pursuant to the Contribution
Agreement and the Operations Agreement. Upon satisfaction of the conditions to
the Company's owning and operating the Business in its own name, IPS will
assign all Agent Contracts to the Company, and the Company will assume all
liabilities and obligations related thereto.

The PCs currently located at approximately 450 MoneyGram Agent locations are
used to process both MoneyGram wire transactions and IPS's money order and
other payment services. These PCs will be contributed to the Company prior to
the Offering. The Company has agreed, as part of the Transition, to maintain
such PCs and to permit IPS to continue to offer its money order and other
payment services through these MoneyGram Agents on those PCs.

Assumed Liabilities. Pursuant to the Contribution Agreement, the Company
will assume and has agreed to discharge all liabilities and obligations to be
paid or performed in respect of the MoneyGram Assets, except in respect of the
Agent Contracts, which, as described above, cannot be assigned to the Company
until the satisfaction of certain conditions. Nevertheless, the Company will
assume the economic liabilities under the Agent Contracts and agree to
indemnify First Data and certain persons affiliated with First Data for losses
or expenses suffered by First Data or any such person in respect of such Agent
Contracts as if the Company were the owner of, and had primary liability
under, the Agent Contracts (except with respect to any loss or expense
incurred as a direct result of the gross negligence or willful misconduct of
First Data or its affiliates).

Taxes. The Contribution Agreement provides that First Data will be liable
for and will pay all taxes imposed upon or applicable to the Business or the
MoneyGram Assets with respect to periods ending at or prior to the time of the
Contribution and the Company will be liable for and will pay taxes imposed on
or applicable to the Business or the MoneyGram Assets with respect to periods
after the Contribution. Any sales tax, use tax, real property transfer or
gains tax, documentary stamp tax or similar tax attributable to the transfer
of the MoneyGram Assets shall be shared equally by the Company and IPS.

As a result of the Transition, the tax basis (for federal income tax
purposes) of the MoneyGram Assets will increase from the tax basis in the
hands of IPS and its affiliates at the time of the Contribution to their fair
market value at that time (determined by reference to the initial public
offering price). Subject to the discussion below, such tax basis is generally
expected to produce a tax benefit to the Company in future years through
depreciation or amortization deductions or through decreased gain or (subject
to certain limitations) increased loss.

In general, under Section 197 of the Code the tax basis of certain
intangible assets (including goodwill and going concern value) of the Company
is amortizable over a fifteen-year period. However, if the "anti-churning"
rules under Section 197(f)(9) of the Code apply, no amortization under Section
197 of the Code will be allowed with respect to the tax basis of goodwill,
going concern value and any other intangible assets for which depreciation or
amortization would not have been allowed but for Section 197. The Company
currently believes that a significant portion of the MoneyGram Assets would
not be amortizable if the anti-churning rules applied. In that regard, the
Company currently expects to receive an appraisal of the portion of the
MoneyGram Assets not of a type subject to the anti-churning rules.
Furthermore, for the reasons set forth below, the Company does not believe
that the anti-churning rules are applicable.

In general, the Code provides a rule under which the "anti-churning" rules
will apply if IPS and the Company are treated as being related either
immediately before or immediately after the Contribution. In form, IPS will
own all of the outstanding stock of the Company immediately before and
immediately after the Contribution and therefore under the provisions of the
Code might be considered to be related to the Company

64
<PAGE>

for this purpose. However, tax counsel to First Data has advised First Data
that, in its opinion, although not clear, the Company should not be treated as
being related to IPS either immediately before or immediately after the
Contribution and therefore the anti-churning rules should not apply under that
rule as a result of the Contribution. No authority directly supports tax
counsel's opinion, and tax counsel's opinion represents only its best judgment
and is based on certain assumptions. Tax counsel's advice is based on the
reasoning that (i) the Company will conduct no meaningful business activity
before the Contribution, and IPS's holding of stock in the Company following
the Contribution will be transitory, (ii) both immediately before and
immediately after the Contribution IPS will be under a binding obligation to
sell to the Underwriters an amount of stock of the Company that will cause IPS
to no longer be related to the Company for purposes of the above rule and
(iii) the application of that anti-churning rule to the Contribution would,
under tax counsel's understanding of the purpose of the anti-churning rules,
be inconsistent with such purpose. Tax counsel's reasoning is consistent with
the reasoning of authority under provisions of the Code not related to the
anti-churning rules. In addition to the anti-churning rule discussed above,
the Code also provides rules under which, in general, the anti-churning rules
will apply in certain circumstances where the "user" of an intangible asset
included in the MoneyGram Assets is a person other than the Company. The
meaning of the term "user" is to be set forth in Treasury Regulations, which
have not yet been issued. However, in the opinion of tax counsel to First
Data, although not entirely clear, those rules should not apply to the
Transition. Such opinion represents only tax counsel's best judgment and is
based on certain assumptions.

The Company will decide from time to time (based on the advice of its own
tax advisors) whether the Company is entitled to claim such amortization
deductions. Changes in applicable tax law may eliminate (possibly on a
retroactive basis) the Company's ability to do so. In that regard, the IRS is
expected to issue Treasury regulations under Section 197 in the near future
which could set forth rules precluding such deductions. With respect to any
amortization deductions claimed by the Company, the IRS could successfully
assert a position on the audit of the Company's tax returns or in litigation
disallowing such deductions, and interest might be imposed by the IRS.

For financial accounting and reporting purposes, the Company will record a
deferred tax asset (with a corresponding credit to capital surplus) for the
tax effect of the excess of the tax basis of the MoneyGram Assets following
the Contribution over their net book value. Solely for financial accounting
and reporting purposes, such tax basis will be reduced to take into account
management's best estimate of the uncertainties outlined above with respect to
the ability of the Company to sustain amortization deductions upon challenge,
if any, by the IRS. Management's best estimate of the amount of this
uncertainty is subject to revisions, and resolution of the uncertainty may not
occur until such time as an audit of the Company's tax return for the period
ended December 31, 1996 or any subsequent year in which amortization
deductions are claimed, is completed by the IRS. Any revisions to the deferred
tax asset resulting from resolution of this uncertainty will be offset by a
corresponding charge or credit directly to capital surplus at the time such
resolution occurs. In addition, the amount of the gross deferred tax asset
which will be recorded at the time of the Contribution will be reduced by a
valuation allowance which will be based upon management's judgment as to the
likelihood of the Company generating sufficient taxable income to realize the
asset through future tax deductions. Any future changes in the valuation
allowance will be based upon management's then current assessment of the
Company's ability to generate sufficient taxable income to realize the balance
of the deferred tax asset through future tax deductions and the impact of any
such changes in the valuation allowance will be recorded as a component of
income tax expense. Based upon the initial public offering price of $12.00 per
share, the pro forma excess of the tax basis of the Company's net assets
(determined for financial accounting and reporting purposes as described
above) over their pro forma net book value at September 30, 1996 is
approximately $152.5 million resulting in a pro forma gross deferred tax asset
of $59.5 million. Based upon preliminary management assessments, a valuation
allowance of 12% or $7.0 million would be necessary resulting in a pro forma
net deferred tax asset of $52.5 million.

The Operations Agreement

Under the Operations Agreement, which has an initial two-year term, IPS or
its affiliates will perform for the Company data processing services,
management services, disaster recovery services for the Lakewood Facility's
customer service center, voice center services and certain corporate support
services. Under the Operations Agreement, the Company and First Data have
agreed to schedules of fees and expenses which reflect

65
<PAGE>

First Data's good faith estimate of the actual cost of providing such services
(including reasonable allocations of overhead expenses) calculated on a basis
consistent with the determinations made in preparing the Financial Statements
appearing elsewhere in this Prospectus. No assurances can be made, however,
that the Company could not obtain such services at lower cost from a third
party.

Data Processing Services. Data processing services include, among other
things, on-line and batch processing of MoneyGram transactions, database
management, data security and telecommunications and account management.

Management Services. The management services are functions that IPS must
perform in order for the Business to be in compliance with applicable
licensing and other legal requirements (including anti-fraud and anti-money
laundering functions) until such time as the Company is fully licensed in all
applicable jurisdictions to own and operate a consumer money wire transfer
service in its own name (the "Management Services"). IPS will issue to
MoneyGram Agents its own financial paper and send and receive forms. IPS also
will be responsible for collecting all monies related to MoneyGram
transactions. Fiduciary Funds related to MoneyGram transactions, except those
related to transactions that are subject to the TRS Management Agreement, will
be held by IPS and invested, in accordance with applicable law, in a portfolio
of investments at least equal to the principal amount of MoneyGram
transactions that, from time to time, have been initiated but not yet paid to
the recipient. IPS will be entitled to investment income on the Fiduciary
Funds until such time as the Company operates the Business in its own name.
Under the Operations Agreement, IPS will continue to be a party to the Agent
Contracts and to hold all necessary licenses to operate the Business. All
other activities relating to the Business, including pricing, selecting and
negotiating with MoneyGram Agents, determining commissions to be paid to
MoneyGram Agents and substantially all customer service center services, will
be conducted by the Company.

Disaster Recovery Services. IPS and its affiliates will provide disaster
recovery services for the Lakewood Facility customer service center during the
term of the Operations Agreement at First Data's facilities in Englewood,
Colorado in the event the customer service center is damaged by fire,
earthquake, power loss, telecommunications failure or similar events, and, for
such time as the Company chooses to route inbound voice calls through the
Corpus Christi Facility, at the Corpus Christi Facility.

Voice Center Services. Voice Center Services may be provided, pursuant to
the Company's request, for up to 30% of the Company's inbound voice calls
through the Corpus Christi Facility.

Corporate Support Services. Corporate support services such as payroll,
operations support, treasury and accounting services will be provided by IPS
and its affiliates until the Company can administratively assume performance
of such services itself.

Economic Rights under the Agent Contracts. Under the Operations Agreement,
IPS will pay to the Company on a daily basis the aggregate amount of fees paid
by customers in respect of all MoneyGram transactions. Foreign exchange
revenues in respect of all such transactions will be paid by IPS to the
Company on a monthly basis, as such revenues are collected from Banamex
monthly. The Company will pay the MoneyGram Agents the commissions and other
amounts payable on account of MoneyGram transactions in accordance with the
terms of the applicable Agent Contracts and, on a monthly basis, will pay IPS
the amount due or payable to First Data under the Operations Agreement.

Confidentiality. Both the Company and First Data will agree to keep
confidential certain information concerning the other party's business,
technical data or computer software, documentation and systems to which a
party has access under the Operations Agreement. In addition, any confidential
information that the Operations Agreement requires the Company to provide to
First Data will be provided only to a designated representative of First Data.
Such designated representative will be obligated to keep such information
confidential and to provide it only to those persons within First Data who
have a need to know such information in order for First Data to perform its
obligations under the Operations Agreement. The designated representative also
will take reasonable steps to keep any confidential information of the Company
separated from First Data personnel involved in the management of the Western
Union business.

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Term. The Operations Agreement will have a two-year term, unless earlier
terminated as described below. The Company is obligated to obtain all
necessary licenses to commence owning and operating the Business in its own
name on or prior to the expiration of the two-year term or within 180 days
after termination of the Operations Agreement in accordance with its terms.
Thereafter, IPS will have no further obligation to provide the Management
Services or to allow the Company or any MoneyGram Agent to continue to sell an
IPS denominated consumer money wire transfer product. However, the Operations
Agreement provides that, at the request of the Company in its sole discretion,
IPS will negotiate in good faith to extend the term of the Operations
Agreement or negotiate a similar arrangement with the Company, in either case
upon such terms and conditions, including prices, to be agreed upon by the
Company and IPS.

Termination. The Company may terminate the Operations Agreement in its
entirety or may terminate certain related groups of services offered under the
Operations Agreement, including the data processing services or, if the
Company has obtained the Required Licenses and has converted its selling
MoneyGram Agents, the management services, upon prior written notice within
specified periods of varying lengths, none of which exceeds 90 days. The
Company may terminate the voice center services on 30 days notice. In the
event the Company terminates the data processing services the Company is
obligated to provide IPS with certain information required by IPS to perform
the Management Services. In addition, the Company or IPS will have the right
to terminate the Operations Agreement in the event of, among other things, (i)
the failure of the other party or any of its affiliates to perform any
material obligation thereunder (after notice, an opportunity to cure and
satisfaction of certain dispute resolution procedures), (ii) certain
bankruptcy related events of the other party, (iii) the enjoinment of the
other party from performing any of its material obligations thereunder and
(iv) the insolvency of the other party.

Continuing Obligations After Termination. If the Operations Agreement is
terminated, IPS and the Company will expeditiously and in good faith agree
upon and document a plan providing for an orderly transition to a successor of
the obligations of IPS under the Operations Agreement over a period of not
less than 180 days from the date of such termination. During such transition
period, IPS will provide reasonable transition assistance to the Company. The
Company will compensate IPS, on a time and materials basis, for such
assistance, at IPS's then-prevailing rates (plus reimbursement of expenses) in
addition to all other payment obligations of the Company pursuant to and in
accordance with the Operations Agreement.

Indemnification. IPS and the Company will agree to indemnify and hold
harmless each other in respect of certain matters arising in connection with
the Operations Agreement. The indemnification obligations of IPS and the
Company under the Operations Agreement will be limited in the certain
respects, including in respect of the maximum amounts of indemnification.

Money Order Product. During the term of the Operations Agreement, IPS has
agreed, upon the request of the Company, to negotiate in good faith the terms
of additional data processing and other services to be provided by IPS and its
affiliates in respect of a money order product offered by the Company,
initially, in the names of IPS (as the licensed entity) and the Company and,
at such time as the Company has obtained all necessary licenses to offer such
product, a money order product offered by the Company in its own name. Any
agreement between the Company and IPS in respect of such product will be on
terms agreed to by the parties, provided that IPS has agreed that its fees and
reimbursable expenses will not be greater than then-current market rates.

The Software License Agreement

Pursuant to the Software License Agreement, IPS will grant to the Company, a
perpetual, irrevocable, worldwide, nonexclusive, royalty-free license to use
the Utility Software in the Business or for any other purpose. IPS will
indemnify, defend and hold the Company harmless against certain claims arising
out of or related to any claim that the Company's use or possession of the
Utility Software, or the license to such software granted thereunder,
infringes or violates the intellectual property of any third person. If a
final injunction is obtained against the Company's use of the Utility Software
by reason of such infringement or if in IPS's opinion such software is likely
to become the subject of a claim for such infringement, IPS may procure for
the Company the

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right to continue using such software in the manner permitted under the
Software License Agreement or replace or modify such software so that it
becomes noninfringing.

The Short-Term Working Capital Facility

Prior to the consummation of the Offering, First Data and the Company will
enter into the Facility with the Company pursuant to which the Company may
borrow from time to time, on a revolving basis, up to $20 million. Borrowings
under the Facility will be unsecured and may be used by the Company only to
fund working capital requirements. The Facility will terminate 180 days from
the consummation of the Offering, at which time all outstanding borrowings
thereunder would have to be repaid or refinanced by the Company. See "Risk
Factors--Liquidity."

Borrowings under the Facility bear interest at the prime rate, as announced
by Chase Manhattan Bank, N.A. (the "Prime Rate"), plus one percent. Any
overdue amounts under the Facility will bear an interest rate equal to the
Prime Rate plus three percent. The Company, upon proper notice to First Data,
may make prepayments on the outstanding balance under the Facility at any
time. No commitment or other fees are charged to the Company under the
Facility.

The Facility contains certain negative covenants that limit or restrict the
Company, without the consent of First Data (not to be unreasonably withheld),
from (i) creating or permitting any lien or other encumbrance on its assets or
properties, other than purchase money security interests or pre-existing liens
on after-acquired property; (ii) paying any dividend on or making any
distribution with respect to, or acquiring, shares of its capital stock other
than (x) dividends or distributions payable in shares of its Common Stock, (y)
acquisitions of Common Stock with proceeds from a concurrent issuance of
Common Stock or (z) cash dividends to the extent that the aggregate amount of
all such cash dividends in excess of 10% of net income of the Company on a
cumulative consolidated basis after September 30, 1996; (iii) selling, leasing
or otherwise disposing of any property (other than in the ordinary course of
business) that is material to the Company's business or operations; (iv)
merging or consolidating; (v) acquiring all or substantially all of the assets
of any other person, except for acquisitions that in the aggregate do not
exceed $5 million; (vi) Investments (as defined in the Facility) in excess of
$5 million in the aggregate; (vii) any transactions with an affiliate other
than on an arm's length basis and (viii) prepaying or repaying the principal
of any indebtedness for money borrowed unless such payment is a regularly
scheduled payment, in which case the Company concurrently shall reduce the
commitment under the Facility in an amount equal to such payment (and repay
any outstanding indebtedness under the Facility in excess of such reduced
commitment). The Facility also will include terms, conditions, representations
and warranties, indemnities and events of default and other provisions which
are customary in such agreements. In addition, in the event the Company or any
of its subsidiaries receives cash proceeds from the issuance of any
indebtedness for money borrowed, the Company must repay outstanding borrowings
under the Facility in an amount equal to such cash proceeds and the
outstanding commitment under the Facility shall be reduced concomitantly.

The Service Mark Letter Agreement

Pursuant to the Service Mark Letter Agreement, the Company, First Data and
Western Union have agreed not to sue each other in respect of the Disputed
Marks during the two-year period following the consummation of the Offering
(or thereafter in respect of the use of any Disputed Mark during such two-year
period). However, the Company and First Data have agreed that each may
prosecute or challenge applications in respect of any of the Disputed Marks at
patent and trademark authorities in the United States or elsewhere during such
two-year period. The Service Mark Letter Agreement also provides that, at the
option of the Company at any time during such two-year period, Western Union,
IPS and the Company will execute the License Agreement and the Service Mark
Letter Agreement will thereupon terminate.

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may have in, and will be prohibited from otherwise using, the Licensed Marks.
In addition, the Company will relinquish any rights it may have in, and be
prohibited from using, other marks used by Western Union, including, for
example, "Money in Minutes," "The Best Way to Send Money" and "The Fastest Way
to Send Money." Western Union will covenant not to use "The Better Way to Wire
Money" in English in certain countries, including the United States. Both the
Company and Western Union will have a six-month period, upon signing the
License Agreement, during which non-conforming uses of the marks covered by
the agreement will be permitted. Any non-conforming signage, including non-
conforming signage installed during the transition period, may be used through
the life of such signage. The Company is required to use the Licensed Marks in
compliance with laws and in accordance with quality control and other
guidelines agreed to by the parties. In the event the Company breaches any
material obligation of the Company under the Service Mark License Agreement
(which breach is not cured within 60 days of notice by Western Union of such
breach), Western Union may terminate the license with respect to all licensed
Marks in each Territory (as defined therein) in which such breach occurred and
was not cured. The Company has six months after any such termination to
discontinue use of the Licensed Marks. The Service Mark License Agreement also
contains limited representations and warranties by Western Union, mutual
indemnities and certain other terms customary in such licensing agreements.

The Human Resources Agreement

First Data, IPS and the Company will enter into the Human Resources
Agreement which defines the duties, obligations and liabilities of First Data,
IPS and the Company with respect to the transition of employees from First
Data and IPS to the Company. The Human Resources Agreement addresses the
termination of such employees under First Data's pension, profit sharing and
stock plans and welfare benefit plans (medical, dental, etc.) and their
benefits as newly hired employees of the Company. Pursuant to the Human
Resources Agreement, First Data, IPS and the Company have each agreed, for a
one-year period from the consummation of the Offering, not to solicit or hire
each other's employees.

The Telecommunications Services Sharing Agreement

First Data and the Company will enter into the Telecom Agreement which
provides that First Data shall cooperate and use reasonable efforts to
facilitate the provision of telecommunication services under First Data's
agreements with its various long-distance telecommunication service providers
to the Company and its affiliates, if any. The Telecom Agreement permits the
Company to choose among such long-distance providers and to benefit from First
Data's tariff rates. The Company, in exchange, will agree to use the
telecommunication services provided by First Data's telecommunication
providers exclusively for all of the Company's and its affiliates' person-to-
person telephone calls (both incoming and outgoing). The Telecom Agreement
expires on December 31, 1998, unless earlier terminated for, among other
things, breach by either party of its representations, warranties or
agreements therein, bankruptcy or insolvency of a party or, at the Company's
option, upon 60 days written notice.

Registration Rights Agreement

In connection with the Offering, the Company and IPS will enter into a
Registration Rights Agreement, which, among other things, provides that upon
the request of IPS, the Company will register under the Securities Act any of
the shares of Common Stock (and any other securities issued in respect thereof
or in exchange therefor) held by IPS (or the Trustee) and certain transferees
for sale in accordance with IPS's intended method of disposition thereof, and
will take such other actions necessary to permit the sale thereof in other
jurisdictions. IPS has the right to request three such registrations (one of
which may be a "shelf" registration pursuant to Rule 415 under the Securities
Act), subject to certain limitations specified in the Registration Rights
Agreement. IPS also has the right, which it may exercise at any time and from
time to time in the future, to include the shares of Common Stock (and any
other securities issued in respect thereof or in exchange therefor) held by
IPS (or the Trustee) and certain transferees in certain other registrations of
common equity securities of the Company initiated by the Company on its own
behalf or on behalf of its other stockholders. Subject to certain limitations
specified in the Registration Rights Agreement, such registration rights are
assignable by IPS and its assigns.

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OTHER RELATIONSHIPS

For a description of certain transactions between IPS and American Express
that related to the Business prior to the Offering, see Note 3 of the Notes to
Financial Statements.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share. The following summary description
of the capital stock, Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), and By-laws of the Company does not purport
to be complete and is qualified in its entirety by reference to the Company's
Certificate of Incorporation and By-laws, copies of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part (see
"Available Information"), and to the Delaware General Corporation Law
("DGCL").

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor. See "Dividend Policy." Upon the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to receive ratably the net assets of the Company available after the
payment of all debts and other liabilities. Holders of Common Stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of Common Stock offered by the Selling Stockholder in the Offering will
be fully paid and nonassessable.

DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and By-
laws, summarized in the following paragraphs, may be considered to have an
anti-takeover effect and may delay, deter or prevent a tender offer, proxy
contest or other takeover attempt that a stockholder might consider to be in
such stockholder's best interest, including such an attempt as might result in
payment of a premium over the market price for shares held by stockholders.

Delaware Anti-takeover Law. Section 203 of the DGCL ("Section 203")
prohibits a public Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which such person became an interested
stockholder unless: (i) prior to such date, the Board of Directors approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder; or (ii) upon becoming an
interested stockholder, the stockholder then owned at least 85% of the voting
stock, as defined in Section 203; or (iii) subsequent to such date, the
business combination is approved by both the Board of Directors and by holders
of at least 66 2/3% of the corporation's outstanding voting stock, excluding
shares owned by the interested stockholder. For these purposes, the term
"business combination" includes mergers, asset sales and other similar
transactions with an "interested stockholder." An "interested stockholder" is
a person who, together with affiliates and associates, owns (or, within the
prior three years, did own) 15% or more of the corporation's voting stock.
Pursuant to the Certificate of Incorporation, the Company has expressly
elected not to be governed by Section 203.

Classified Board of Directors. The Company's Certificate of Incorporation
provides for the Board of Directors to be divided into three classes of
directors serving staggered three-year terms. As a result, approximately one-
third of the Board of Directors will be elected each year. Classification of
the Board of Directors expands the time required to change the composition of
a majority of directors and may tend to discourage a proxy contest or other
takeover bid for the Company. Moreover, under the DGCL in the case of a
corporation having a classified board of directors, the stockholders may
remove a director only for cause. These provisions, when coupled with
provisions of the Company's Certificate of Incorporation authorizing only the

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Board of Directors to fill vacant directorships, will preclude stockholders of
the Company from removing incumbent directors without cause and simultaneously
gaining control of the Board of Directors by filling the vacancies with their
own nominees.

Special Meetings of Stockholders. The Company's By-laws provide that special
meetings of stockholders may be called by the Chairman of the Board, if any,
or the President and shall be called by the President or the Secretary at the
request in writing of a majority of the Board of Directors of the Company.

Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Company's By-laws provide that stockholders seeking to bring
business before a meeting of stockholders, or to nominate candidates for
election as directors at a meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive office of the Company, not
less than 60 days nor more than 90 days prior to the scheduled meeting (or, if
a special meeting, not later than the close of business on the tenth day
following the earlier of (i) the day on which such notice of the date of the
meeting was mailed, or (ii) the day on which public disclosure of the date of
the special meeting was made). The By-laws also specify certain requirements
pertaining to the form and substance of a stockholder's notice. These
provisions may preclude some stockholders from making nominations for
directors at an annual or special meeting or from bringing other matters
before the stockholders at a meeting.

No Action by Written Consent of the Stockholders. The Company's Certificate
of Incorporation does not allow the stockholders of the Company to take action
by written consent except during periods when all of the Company's outstanding
stock is owned by a single stockholder.

LIMITATIONS OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Certificate of Incorporation contains a provision that is
designed to limit the directors' liability to the extent permitted by the DGCL
and any amendments thereto. Specifically, directors will not be held liable to
the Company or its stockholders for an act or omission in such capacity as a
director, except for liability as a result of: (i) a breach of the duty of
loyalty to the Company or its stockholders, (ii) actions or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) payment of an improper dividend or improper repurchase of the
Company's stock under Section 174 of the DGCL, or (iv) actions or omissions
pursuant to which the director will receive an improper personal benefit. The
principal effect of the limitation of liability provision is that a
stockholder is unable to prosecute an action for monetary damages against a
director of the Company unless the stockholder can demonstrate one of the
specified bases for liability. This provision, however, does not eliminate or
limit director liability arising in connection with causes of action brought
under the federal securities laws. The Company's Certificate of Incorporation
does not eliminate its directors' duty of care. The inclusion of this
provision in the Company's Certificate of Incorporation may, however,
discourage or deter stockholders or management from bringing a lawsuit against
directors for a breach of their fiduciary duties, even though such an action,
if successful, might otherwise have benefited the Company and its
stockholders. This provision should not affect the availability of equitable
remedies such as injunction or rescission based upon a director's breach of
the duty of care.

Indemnification. The Company's By-laws also provide that the Company will
indemnify its directors and officers to the fullest extent permitted by
Delaware law. The Company generally is required to indemnify its directors and
officers for all judgments, fines, settlements, legal fees and other expenses
incurred in connection with pending or threatened legal proceedings because of
the director's or officer's position with the Company or another entity that
the director or officer serves at the Company's request, subject to certain
conditions, and to advance funds to its directors and officers to enable them
to defend against such proceedings. To receive indemnification, the director
or officer must have been successful in the legal proceedings or acted in good
faith and in what was reasonably believed to be a lawful manner and in the
Company's best interest.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is The First National
Bank of Boston.

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SELLING STOCKHOLDER

Immediately prior to the sale of the shares of Common Stock in the Offering,
IPS will own all of the 16,625,000 issued and outstanding shares of Common
Stock. After giving effect to the sale of shares of Common Stock to be sold in
the Offering, the Selling Stockholder will own 2,161,250 shares of Common
Stock, representing 13% of the outstanding shares of Common Stock. The
foregoing percentage of ownership of the Selling Stockholder does not give
effect to the 2,161,250 shares of Common Stock which may be sold by the
Selling Stockholder if the U.S. Underwriters over-allotment option is
exercised in full and does not give effect to the dilution arising from the
possible exercise of stock options.

SHARES ELIGIBLE FOR FUTURE SALE

Giving effect to the Transition, the Company will have outstanding
16,625,000 shares of Common Stock. Of these shares, the 14,463,750 shares sold
in the Offering (or 16,625,000 shares if the U.S. Underwriters' over-allotment
option granted by the Selling Stockholder is exercised in full) will be freely
tradeable without restrictions or further registration under the Securities
Act, except for any shares purchased by an "affiliate" of the Company which
will be subject to the resale limitations of Rule 144 under the Securities Act
("Rule 144"). Any shares held by the Selling Stockholder after completion of
the Offering (up to 2,161,250 shares of Common Stock assuming the over-
allotment option granted by IPS is not exercised in full) will be "restricted
securities" within the meaning of Rule 144. These "restricted securities" may
not be sold in absence of registration under the Securities Act other than in
accordance with Rule 144 or another exemption from registration. IPS has
certain rights to have the Common Stock owned by it (or held by the Trustee)
subsequent to the Offering, if any, registered by the Company under the
Securities Act. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Registration Rights Agreement."

In general, under Rule 144 as currently in effect, a person (including an
"affiliate" (as that term is defined under the Securities Act)) who
beneficially owns shares that are "restricted securities" as to which at least
two years have elapsed since the later of the date of acquisition of such
securities from the issuer or from an affiliate of the issuer, and any
affiliate who owns shares that are not "restricted securities," is entitled to
sell, within any three-month period, a number of shares that does not exceed
the greater of one percent of the then outstanding shares of Common Stock or
the average weekly trading volume in the Company's Common Stock in composite
trading on all exchanges and the New York Stock Exchange during the four
calendar weeks preceding such sale. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company and who has
beneficially owned restricted securities as to which at least three years have
elapsed since the later of the date of the acquisition of such securities from
the issuer or from an affiliate of the issuer is entitled to sell such shares
under Rule 144 without regard to the volume limitations described above. The
foregoing summary of Rule 144 is not intended to be a complete description
thereof.

Prior to the Offering, there has been no public market for the Common Stock,
and no prediction can be made as to the effect, if any, that market sales of
shares of Common Stock, or the availability of such shares for sale, will have
on the market price of the Common Stock prevailing from time to time.
Nevertheless, sales of substantial amounts of Common Stock in the public
market, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock. Under the terms of the Trust
Agreement, the Trustee has the duty and the authority on behalf of IPS to
dispose of any shares owned by IPS on or prior to January 23, 1997 or to
donate such shares to a designated charity or charities on January 23, 1997
(unless the Trust is extended). In connection with the Offering, subject to
certain exceptions, the Company, the Selling Stockholder and the Trustee
pursuant to the Trust Agreement have agreed not to sell or otherwise dispose
of, directly or indirectly, any shares of Common Stock (or any security
convertible into or exchangeable or exercisable for Common Stock) for a period
of 180 days after the date hereof (in the case of the Company) and prior to
December 31, 1996 (in the case of the Selling Stockholder and the Trustee)
without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the Underwriters other than (i) the shares of Common Stock offered
hereby, (ii) any grant of stock options that vest subsequent to 180 days after
the date of

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this Prospectus or (iii) one or more registration statements relating to the
Company's 1996 Stock Option Plan, the 1996 Broad-Based Stock Option Plan or
the MoneyGram Agent Stock Option Plan or the Company's obligations under the
Registration Rights Agreement or (iv) the deposit, if any, of any shares of
Common Stock with Wachovia Bank of North Carolina, N.A. as trustee pursuant to
the Irrevocable Voting Trust Agreement. See "Underwriters."

In connection with the Offering, the Company has granted to non-employee
directors and certain officers and key employees options to acquire up to an
aggregate 1,154,825 shares of Common Stock under the 1996 Stock Option Plan
and has granted to certain other employees options to acquire up to an
aggregate of 7,750 shares of Common Stock under the 1996 Broad-Based Stock
Option Plan, in each case at a price equal to 100% of the initial public
offering price set forth on the cover page of this Prospectus. An additional
20,175 and 17,250 shares of Common Stock would be available for future grants
under the Company's 1996 Stock Option Plan and 1996 Broad-Based Stock Option
Plan. See "Management--Stock Plans." The Company intends to file one or more
registration statements on Form S-8 under the Securities Act to register all
shares of Common Stock issuable pursuant to the Company's 1996 Stock Option
Plan and 1996 Broad-Based Stock Option Plan, and such registration statements
are expected to become effective upon filing. Shares of Common Stock covered
by these registration statements will thereupon be eligible for sale in the
public markets.

In order to retain and sign certain significant MoneyGram Agents and to
provide those MoneyGram Agents an opportunity to share in the growth of the
Company, subsequent to the Offering, the Company currently expects to
implement the MoneyGram Agent Stock Option Plan. If implemented, the Company
may grant options to certain key MoneyGram Agents (exercisable at the price of
the Common Stock on the date any such option is granted) in connection with
the extension of existing or the negotiation of new Agent Contracts. Such
options, if granted, generally would not be exercisable until the expiration
of the initial term of such Agent Contracts. The Company expects that any such
stock options (and the shares of Common Stock issuable upon exercise of such
options) would be registered under the Securities Act. Therefore, any shares
of Common Stock issued upon exercise of an option would be freely tradeable
without restriction. No assurance can be given that the Company will adopt
such a MoneyGram Agent Stock Option Plan (which may require stockholder
approval) or that, if adopted, any options would be granted thereunder.

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of shares
of Common Stock by a beneficial owner of Common Stock that, for United States
federal income or estate tax purposes, as the case may be, is a nonresident
alien individual, a foreign corporation or a foreign partnership or a foreign
trust or estate (a "non-U.S. holder"). The following discussion is based on
current provisions of the Code, existing and proposed regulations promulgated
thereunder and judicial and administrative interpretations thereof (any of
which may be changed either retroactively or prospectively) and is for general
information only. The following discussion does not address tax consequences
that may be relevant in light of any specific facts or circumstances that
might apply to a particular non-U.S. holder and does not address tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction or the application or effect of any tax treaty.

Proposed United States Treasury Regulations were issued on April 15, 1996
(the "Proposed Regulations") which, if adopted, could affect the United States
taxation of dividends on Common Stock paid to a non-U.S. holder. The Proposed
Regulations are generally proposed to be effective with respect to dividends
paid after December 31, 1997, subject to certain transition rules. It cannot
be predicted at this time whether the Proposed Regulations will become
effective as proposed or what modifications, if any, may be made to them. The
discussion below is not intended to include a complete discussion of the
provisions of the Proposed Regulations, and prospective investors are urged to
consult their tax advisors with respect to the effect the Proposed Regulations
may have if adopted.

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PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES, AS WELL AS THE
STATE, LOCAL AND OTHER TAX CONSEQUENCES, OF ACQUIRING, HOLDING AND DISPOSING
OF SHARES OF COMMON STOCK.

Dividends

Dividends paid to a non-U.S. holder will be subject to United States
withholding tax at a 30 percent rate, or such lower rate as may be specified
by an applicable tax treaty, unless the dividends are effectively connected
with the conduct of a trade or business of the non-U.S. holder in the United
States and the non-U.S. holder provides the payor with proper documentation.
Dividends which are effectively connected with such a United States trade or
business generally are subject to United States federal income tax on a net
income basis at regular graduated rates applicable to U.S. persons. A non-U.S.
holder may claim exemption from withholding under the effectively connected
income exception by filing IRS Form 4224 with the Company or its paying agent
at the times required by federal income tax law. The Proposed Regulations
would replace Form 4224 with Form W-8. Under certain circumstances, a non-U.S.
holder which is a corporation also may be subject to an additional "branch
profits tax" at a rate of 30%, or such lower rate as may be specified by an
applicable income tax treaty, of the non-U.S. holder's effectively connected
earnings and profits, subject to certain adjustments. Effectively connected
dividends might be subject to different treatment under an applicable tax
treaty depending on whether such dividends are attributable to a permanent
establishment of the non-U.S. holder in the United States.

Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of
such country for purposes of the withholding discussed above (unless the payor
has knowledge to the contrary) and, under current interpretation of United
States Treasury regulations, for purposes of determining the applicability of
a tax treaty rate. A non-U.S. holder of Common Stock eligible for a reduced
rate of United States withholding tax pursuant to a tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for
refund with the United States Internal Revenue Service ("IRS").

The Proposed Regulations would provide for certain presumptions (which
differ from those described above) upon which the Company generally may rely
to determine whether, in the absence of certain documentation, a holder should
be treated as a non-U.S. holder for purposes of the 30% withholding tax
described above. The presumptions would not apply for purposes of granting a
reduced rate of withholding under a treaty. Under the Proposed Regulations, to
obtain a reduced rate of withholding under a treaty a non-U.S. holder
generally would be required to provide an Internal Revenue Service Form W-8
certifying such non-U.S. holder's entitlement to benefits under a treaty
together with, in certain circumstances, additional information. The Proposed
Regulations also would provide rules to determine whether, for purposes of
determining the applicability of a tax treaty and for purposes of the 30%
withholding tax described above, dividends paid to a non-U.S. holder that is
an entity should be treated as paid to the entity or those holding an interest
in that entity.

Sale of Common Stock

Generally, a non-U.S. holder will not be subject to United States federal
income tax on any gain recognized upon the sale or exchange or other
disposition of shares of Common Stock unless (i) the gain is effectively
connected with a trade or business carried on by the non-U.S. holder within
the United States, (ii) the non-U.S. holder is a nonresident alien individual
who holds Common Stock as a capital asset, is present in the United States for
183 or more days in the taxable year of the sale or disposition and either (a)
such individual's "tax home" for United States federal income tax purposes is
in the United States or (b) the sale is attributable to an office or other
fixed place of business maintained by such individual in the United States, or
(iii) subject to certain exceptions, the Company is or has been a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code at any time during the five year period ending on the
date of disposition, or, if shorter, the period during which the non-U.S.
holder held the Common Stock. The Company believes that it is not, nor has it
ever been, a "United States real property holding corporation" and does not
anticipate becoming such a corporation.

74
<PAGE>

The 183-day rule summarized above only applies in limited circumstances
because generally an individual present in the United States for 183 days in
the taxable year of the sale, exchange, or other disposition will be treated
as a resident for United States federal income tax purposes and therefore will
be subject to United States federal income tax at graduated rates applicable
to individuals who are United States persons for such purposes.

Non-U.S. holders should consult applicable treaties, which may result in
United States federal income tax treatment on the sale or exchange or other
disposition of the Common Stock different than as described above.

Backup Withholding and Information Reporting

The Company must report annually to the Internal Revenue Service and to each
non-U.S. holder the amount of dividends paid to, and the tax withheld with
respect to, each non-U.S. holder. These reporting requirements apply
regardless of whether withholding was reduced by an applicable tax treaty.
Copies of these information returns also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the non-U.S. holder resides.

Unless the Company has actual knowledge that a holder is a non-U.S. holder,
dividends paid to such non-U.S. holder at an address within the United States
may be subject to backup withholding at a rate of 31% if the holder is not an
"exempt recipient" as defined in the existing Treasury regulations (which
includes corporations) and fails to provide a correct taxpayer identification
number and other information to the Company. United States backup withholding
generally will not apply to (i) the payment of dividends paid on Common Stock
to a non-U.S. holder at an address outside the United States (unless the
Company has knowledge that the holder is a United States person for United
States federal income tax purposes) or (ii) the payment of proceeds of a sale
or other disposition of Common Stock effected by or through the foreign office
of a broker. In the case of the payment of proceeds from such a sale or other
disposition of Common Stock effected by or through a foreign office of a
broker that is a United States person (for United States federal income tax
purposes) or a "U.S. related person," however, information reporting (but not
backup withholding) is required with respect to the payment unless the broker
has documentary evidence in its files that the owner is a non-U.S. holder (and
has no actual knowledge to the contrary) and certain other requirements are
met or the holder otherwise establishes an exemption. For this purpose, a
"U.S. related person" is (i) a "controlled foreign corporation" for United
States federal income tax purposes, or (ii) a foreign person 50% or more of
whose gross income is from a United States trade or business for a specified
three-year period. The payment of the proceeds of a sale or other disposition
of Common Stock effected by or through the United States office of a broker is
subject to information reporting and backup withholding at a rate of 31
percent unless the non-U.S. holder certifies, among other things, as to its
non-United States status under penalties of perjury or otherwise establishes
an exemption.

If adopted, the Proposed Regulations would alter the foregoing rules in
certain respects. Among other things, the Proposed Regulations would provide
certain presumptions and other rules under which non-U.S. holders may be
subject to backup withholding in the absence of required certifications and
would revise the definition of an "exempt recipient" in the case of a
corporation.

Backup withholding is not an additional tax. Rather, any amounts withheld
under the backup withholding rules from a payment to a non-U.S. holder will be
allowed as a refund or a credit against such non-U.S. holder's United States
federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.

Estate Tax

Shares of Common Stock owned or treated as owned, or which were the subject
of certain lifetime transfers, by an individual who is not a citizen or
resident (as specifically defined for United States federal estate tax
purposes) of the United States at the time of death will be includible in the
individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise. Such individual's estate
may be subject to United States federal estate tax on the property includible
in the estate for United States federal estate tax purposes.

75
<PAGE>

UNDERWRITERS

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below, for whom Morgan Stanley & Co. Incorporated, Lehman Brothers Inc.,
Montgomery Securities and Smith Barney Inc. are acting as U.S.
Representatives, and the International Underwriters named below, for whom
Morgan Stanley & Co. International Limited, Lehman Brothers International
(Europe), Montgomery Securities and Smith Barney Inc. are acting as the
International Representatives, have severally agreed, to purchase from the
Selling Stockholder, and the Selling Stockholder has agreed to sell to them,
severally, the respective number of shares of Common Stock set forth opposite
the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ----------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................ 2,080,250
Lehman Brothers Inc.......................................... 2,080,250
Montgomery Securities........................................ 2,080,250
Smith Barney Inc............................................. 2,080,250
M.R. Beal & Company.......................................... 125,000
William Blair & Company, L.L.C............................... 125,000
Alex. Brown & Sons Incorporated.............................. 250,000
Cowen & Company.............................................. 125,000
CS First Boston Corporation.................................. 250,000
Crowell, Weedon & Co......................................... 125,000
Deutsche Morgan Grenfell Inc................................. 250,000
Donaldson, Lufkin & Jenrette Securities Corporation.......... 250,000
Furman Selz LLC.............................................. 125,000
Goldman, Sachs & Co.......................................... 250,000
Guzman & Company............................................. 125,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated........................................... 250,000
J.P. Morgan Securities Inc................................... 250,000
Oppenheimer & Co., Inc....................................... 250,000
Ormes Capital Markets, Inc................................... 125,000
The Robinson-Humphrey Company, Inc........................... 125,000
Salomon Brothers Inc......................................... 250,000
----------
Subtotal..................................................... 11,571,000
----------
International Underwriters:
Morgan Stanley & Co. International Limited................... 580,689
Lehman Brothers International (Europe)....................... 580,687
Montgomery Securities........................................ 580,687
Smith Barney Inc............................................. 580,687
ABN AMRO Rothschild.......................................... 95,000
Argentaria Bolsa, S.V.B., S.A................................ 95,000
Credit Commercial de France.................................. 95,000
Daiwa Europe Limited......................................... 95,000
Morgan Grenfell and Co. Limited.............................. 95,000
Nomura International plc..................................... 95,000
----------
Subtotal..................................................... 2,892,750
----------
Total........................................................ 14,463,750
==========
</TABLE>

76
<PAGE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively
referred to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all of the shares of Common Stock offered hereby (other than
those covered by the U.S. Underwriters' over-allotment option described below)
if any such shares are taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that with certain exceptions: (a)
it is not purchasing any U.S. Shares (as defined below) for the account of
anyone other than a United States or Canadian Person (as defined below), and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any U.S. Shares or distribute any prospectus relating to the U.S.
Shares outside the United States or Canada or to anyone other than a United
States or Canadian Person. Pursuant to the Agreement between U.S. and
International Underwriters, each International Underwriter has represented and
agreed that, with certain exceptions, (i) it is not purchasing any
International Shares (as defined below) for the account of any United States
or Canadian Person and (ii) it has not offered or sold, and will not offer or
sell, directly or indirectly, any International Shares or distribute any
prospectus relating to the International Shares in the United States or in any
province or territory of Canada or to any United States or Canadian Person.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement between U.S. and
International Underwriters. As used herein, "United States or Canadian Person"
means any national or resident of the United States or of any province or
territory of Canada, or any corporation, pension, profit sharing or other
trust or other entity organized under the laws of the United States or Canada
or of any political subdivision thereof (other than a branch located outside
the United States and Canada of any United States or Canadian Person) and
includes any United States or Canadian branch of a person who is otherwise not
a United States or Canadian Person. All shares of Common Stock to be purchased
by the U.S. Underwriters and the International Underwriters are referred to
herein as the U.S. Shares and the International Shares, respectively.

Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares of Common Stock sold shall be the Price to Public set forth on the
cover page hereof, in United States dollars, less an amount not greater than
the per share amount of the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has
agreed not to offer or sell, any shares of Common Stock, directly or
indirectly, in any province or territory of Canada in contravention of the
securities laws thereof and has represented that any offer of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file
a prospectus in the province or territory of Canada in which such offer is
made. Each U.S. Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance
that, by purchasing such Common Stock, such dealer represents and agrees that
it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such Common Stock in any province or territory of Canada or
to, or for the benefit of, any resident of Canada in contravention of the
securities laws thereof and that any offer of Common Stock in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus
in the province or territory of Canada in which such offer is made, and that
such dealer will deliver to any other dealer to whom it sells any of such
Common Stock a notice to the foregoing effect.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that: (i) it has not
offered or sold and during the period of six months after the date hereof will
not offer or sell any shares of Common Stock to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or

77
<PAGE>

agent) for the purposes of their business or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995
(the "Regulations"); (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 and the Regulations with respect
to anything done by it in relation to the shares of Common Stock offered
hereby in, from or otherwise involving the United Kingdom; and (iii) it has
only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issue of the
shares of Common Stock if that person is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996, or to any person to whom the document may otherwise lawfully be
issued or passed on.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the Price to Public set forth on the cover
page hereof, and part to certain dealers at a price which represents a
concession not in excess of $.43 per share under the public offering price.
The Underwriters may allow and such dealers may reallow a concession not in
excess of $.10 per share to other Underwriters or certain dealers. After the
initial offering of the shares of Common Stock, the offering price, and other
selling terms may from time to time, be varied by the Representatives.

Pursuant to the Underwriting Agreement, the Selling Stockholder has granted
to the U.S. Underwriters an option exercisable for 30 days from the date of
this Prospectus, to purchase up to an additional 2,161,250 shares of Common
Stock at the public offering price set forth on the cover page hereof, less
underwriting discounts and commissions. The U.S. Underwriters may exercise
such option to purchase solely for the purpose of covering over-allotments, if
any, made in connection with the offering of the shares of Common Stock
offered hereby. To the extent such option is exercised, each U.S. Underwriter
will be committed, subject to certain conditions, to purchase approximately
the same percentage of such additional shares as the number set forth next to
such U.S. Underwriter's name in the preceding table bears to the total number
of shares of Common Stock offered by the U.S. Underwriters hereby.

Each of the Company, the Selling Stockholder and the Trustee pursuant to the
Trust Agreement has agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated, it will not, subject to certain exceptions, (i)
offer, issue, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, file a registration statement (in the case of the Company) or make
any demand for or exercise any right with respect to registration of (in the
case of the Selling Stockholder and the Trustee) any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common
Stock (whether such shares or any such securities are then owned by such
person or are thereafter acquired directly from the Company) or (ii) enter
into any swap or similar agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) of this paragraph is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise,
for a period of 180 days after the date of this Prospectus, in the case of the
Company, and prior to December 31, 1996, in the case of the Selling
Stockholder and the Trustee, other than (i) the shares of Common Stock offered
hereby, (ii) any grant of stock options that vest subsequent to 180 days after
the date of this Prospectus or (iii) one or more registration statements
relating to the Company's 1996 Stock Option Plan, the 1996 Broad-Based Stock
Option Plan or the MoneyGram Agent Stock Option Plan or the Company's
obligations under the Registration Rights Agreement or (iv) the deposit, if
any, of any shares of Common Stock with Wachovia Bank of North Carolina, N.A.
as trustee pursuant to the Trust Agreement.

At the request of the Company, the Underwriters have reserved up to 723,187
shares of Common Stock offered hereby for sale to certain directors, officers
and employees of the Company. Sales of shares of Common Stock to such persons
will be at the initial public offering price. The number of shares available
for sale to the general public will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares not so purchased will be
offered to the general public in the Offering on the same terms as the other
shares offered hereby. All purchasers of the shares of Common Stock reserved
pursuant to this paragraph who are also directors

78
<PAGE>

or senior officers of the Company will be required to enter into agreements
identical to those described in the immediately preceding paragraph
restricting the transferability of such shares for a period of 180 days after
the date of this Prospectus. Messrs. Calvano and Fowler have each indicated an
interest in purchasing up to 100,000 shares of Common Stock under this reserve
program.

The Underwriters have informed the Selling Stockholder that they do not
intend sales to discretionary accounts to exceed five percent of the total
number of shares of Common Stock offered hereby.

The Company, the Selling Stockholder and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

Morgan Stanley & Co. Incorporated, Lehman Brothers Inc., Montgomery
Securities and Smith Barney Inc. provide from time to time certain financial
advisory services to First Data and its affiliates for which they have
received customary fees and commissions.

PRICING OF THE OFFERING

Prior to the Offering there has been no public market for the Common Stock.
The initial public offering price for the Common Stock was determined by
negotiations between the Selling Stockholder and the U.S. Representatives.
Among the factors considered in determining the initial public offering price,
in addition to prevailing market conditions, were the sales, earnings and
other financial and operating information of the Company in recent periods,
the future prospects of the Company and its industry in general, and certain
ratios, market prices of securities and certain financial and operating
information of companies engaged in activities similar to that of the Company.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Selling Stockholder by Sidley & Austin, Chicago, Illinois.
Certain legal matters in connection with the Offering will be passed upon for
the Underwriters by Davis Polk & Wardwell, New York, New York.

EXPERTS

The Financial Statements of the Company at December 31, 1994 and 1995, and
for each of the three years in the period ended December 31, 1995, appearing
in this Prospectus and the Registration Statement of which this Prospectus is
a part have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein and in such
Registration Statement, and are included in reliance upon such report given
upon the authority of such firm as experts in auditing and accounting. With
respect to the unaudited interim financial information as of and for the nine-
month period ended September 30, 1996 appearing in this Prospectus and the
Registration Statement of which this Prospectus is a part, Ernst & Young LLP
have reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report, appearing elsewhere herein and in such Registration
Statement, states that they did not audit and they do not express an opinion
on that interim financial information. Accordingly, the degree of reliance on
their report on such information should be restricted considering the limited
nature of the review procedures applied. The independent auditors are not
subject to the liability provisions of Section 11 of the Securities Act for
their report on the unaudited interim financial information because that
report is not a "report" or a "part" of the Registration Statement prepared or
certified by the auditors within the meaning of Sections 7 and 11 of the
Securities Act.

79
<PAGE>

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement," which term shall include all amendments, exhibits and schedules
thereto), pursuant to the Securities Act and the rules and regulations
promulgated thereunder, with respect to the Offering. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain parts of which
are omitted from the Prospectus in accordance with the rules and regulations
of the Commission, and to which reference is hereby made.

After consummation of the Offering, the Company will be subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended, and, in accordance therewith will be required to file, proxy
statements, reports and other information with the Commission. The
Registration Statement, as well as any such report, proxy statement and other
information filed by the Company with the Commission, may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at 7 World Trade Center, 13th
Floor, New York, New York 10048 and the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Upon listing of the Common Stock on the
New York Stock Exchange, Inc. (the "NYSE"), reports, proxy statements and
other information concerning the Company may be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.

Statements made in this Prospectus concerning the provisions of any
contract, agreement or other document referred to herein are not necessarily
complete. With respect to each such statement concerning a contract, agreement
or other document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission, reference is made to such exhibit or
other filing for a more complete description of the matter involved, and each
such statement is qualified in its entirety by such reference. Copies of the
exhibits are available upon request made to Andrea M. Kenyon, Secretary,
MoneyGram Payment Systems, Inc., 7401 Mansfield Avenue, Lakewood, Colorado
80235, telephone number (303) 716-6800.

The Company intends to furnish to its stockholders annual reports containing
financial statements audited by an independent accounting firm and quarterly
reports containing unaudited financial information for the first three
quarters of each fiscal year.

80
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
AUDITED FINANCIAL STATEMENTS PAGE
- ---------------------------- ----
<S> <C>
Report of Independent Auditors............................................ F-2
Balance Sheets as of December 31, 1994 and 1995........................... F-3
Statements of Operations for the Years Ended December 31, 1993, 1994 and
1995..................................................................... F-4
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and
1995..................................................................... F-5
Statement of Changes in Stockholder's (Deficit)/Equity for the Years Ended
December 31, 1993, 1994 and 1995......................................... F-6
Notes to Financial Statements............................................. F-7
<CAPTION>
UNAUDITED INTERIM FINANCIAL STATEMENTS
- --------------------------------------
<S> <C>
Independent Accountants' Review Report.................................... F-15
Balance Sheet as of June 30, 1996......................................... F-16
Statements of Income for the Six Months Ended June 30, 1995 and 1996...... F-17
Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1996.. F-18
Statement of Changes in Stockholder's Equity for the Six Months Ended June
30, 1996................................................................. F-19
Notes to Financial Statements............................................. F-20
</TABLE>

F-1
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors of
MoneyGram Payment Systems, Inc.

We have audited the accompanying balance sheets of MoneyGram Payment
Systems, Inc. as of December 31, 1994 and 1995, and the related statements of
operations and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MoneyGram Payment Systems,
Inc. at December 31, 1994 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995,
in conformity with generally accepted accounting principles.

Ernst & Young LLP

Denver, Colorado

February 2, 1996

except as to Notes 1 and 9, as to which the date is

December 10, 1996

F-2
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------
ASSETS 1994 1995
- ----------------------------------------------------------- -------- --------
<S> <C> <C>
Cash and cash equivalents.................................. $ -- $ --
Assets restricted to settlement of MoneyGram transactions.. 20,927 26,010
Fee revenue receivable..................................... 910 1,165
Prepaid and other current assets........................... 90 271
-------- --------
Total current assets................................... 21,927 27,446
Fixed assets at cost, net of depreciation: 1994--$2,231;
1995--$3,953.............................................. 3,084 6,000
Deferred income taxes...................................... 171 193
Costs of acquiring Agent Contracts, net of amortization:
1994--$3,535;
1995--$1,952.............................................. 3,401 7,979
-------- --------
Total assets........................................... $28,583 $ 41,618
======== ========
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
- -----------------------------------------------------------
<S> <C> <C>
Liabilities relating to unsettled MoneyGram transactions... $20,927 $ 26,010
Accounts payable........................................... 2,178 1,393
Commissions payable........................................ 6,418 6,696
Accrued advertising........................................ 4,457 2,786
Employee-related liabilities............................... 507 1,280
Accrued and other liabilities.............................. 924 2,284
-------- --------
Total current liabilities.............................. 35,411 40,449
Stockholder's equity/(deficit):
Common stock, $.01 par value, authorized 100,000,000
shares; issued and outstanding 16,625,000 shares........ 166 166
Capital surplus.......................................... 21,756 11,459
Accumulated deficit...................................... (28,750) (10,456)
-------- --------
Total stockholder's equity/(deficit)................... (6,828) 1,169
-------- --------
Total liabilities and stockholder's equity/(deficit)... $28,583 $ 41,618
======== ========
</TABLE>

See accompanying notes.

F-3
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1993 1994 1995
------- ------- --------
<S> <C> <C> <C>
Revenues
Fee and other...................................... $48,815 $71,015 $ 94,242
Foreign exchange................................... 3,070 20,373 42,826
------- ------- --------
Total revenue ................................... 51,885 91,388 137,068
------- ------- --------
Expenses:
Agent commissions and amortization of Agent
Contract acquisition costs........................ 22,112 28,742 34,801
Processing......................................... 12,361 15,334 25,542
Advertising and promotion.......................... 13,708 19,523 33,822
Selling and service................................ 2,996 3,700 7,525
General and administrative......................... 3,904 4,678 5,722
------- ------- --------
Total expenses................................... 55,081 71,977 107,412
------- ------- --------
Income (loss) before income taxes.................... (3,196) 19,411 29,656
Income tax (benefit) expense......................... (1,119) 7,235 11,362
------- ------- --------
Net income (loss).................................... $(2,077) $12,176 $ 18,294
======= ======= ========
Pro forma net income (loss) per common share......... $ (.12) $ .73 $ 1.10
======= ======= ========
</TABLE>

See accompanying notes.

F-4
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1993 1994 1995
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)................................ $(2,077) $ 12,176 $ 18,294
Adjustments to reconcile net income to net cash
provided by operating activities:
Direct depreciation and amortization expense*.. 1,518 1,889 3,762
Other noncash charges.......................... (160) 25 (22)
Changes in operating assets and liabilities:
Assets restricted to settlement of MoneyGram
transactions................................ 1,254 (8,100) (5,083)
Accounts receivable.......................... (103) (773) (255)
Prepaid and other assets..................... 268 21 (181)
Liabilities relating to unsettled MoneyGram
transactions................................ (1,254) 8,100 5,083
Accounts payable and other liabilities....... 1,108 9,953 (189)
------- -------- --------
Net cash provided by operating activities........ 554 23,291 21,409
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of signage and equipment................ (762) (2,739) (4,638)
Costs of acquiring Agent Contracts............... -- (2,404) (6,474)
------- -------- --------
Net cash used by investing activities............ (762) (5,143) (11,112)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transfer from/(to) IPS....................... 208 (18,148) (10,297)
------- -------- --------
Net cash provided/(used) by financing activities. 208 (18,148) (10,297)
------- -------- --------
Net change in cash and cash equivalents.......... $ -- $ -- $ --
======= ======== ========
</TABLE>
- --------
* Relates only to MoneyGram assets as reflected on the accompanying balance
sheet.

See accompanying notes.

F-5
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S
EQUITY/(DEFICIT)
(IN THOUSANDS)

<TABLE>
<CAPTION>
TOTAL
COMMON CAPITAL ACCUMULATED STOCKHOLDER'S
STOCK SURPLUS DEFICIT EQUITY/(DEFICIT)
------ -------- ----------- ---------------
<S> <C> <C> <C> <C>
Balance January 1, 1993........... $166 $ 39,696 $(38,849) $ 1,013
Net loss........................ -- -- (2,077) (2,077)
Capital contribution from IPS... -- 208 -- 208
---- -------- -------- --------
Balance December 31, 1993......... 166 39,904 (40,926) (856)
Net income...................... -- -- 12,176 12,176
Return of capital to IPS........ -- (18,148) -- (18,148)
---- -------- -------- --------
Balance December 31, 1994......... 166 21,756 (28,750) (6,828)
Net income...................... -- -- 18,294 18,294
Return of capital to IPS........ -- (10,297) -- (10,297)
---- -------- -------- --------
Balance December 31, 1995......... $166 $ 11,459 $(10,456) $ 1,169
==== ======== ======== ========
</TABLE>

See accompanying notes.

F-6
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND BASIS OF PRESENTATION

MoneyGram Payment Systems, Inc. (the "Company") is a wholly owned subsidiary
of Integrated Payment Systems Inc. ("IPS"), which is a wholly owned subsidiary
of First Data Corporation ("First Data"). First Data was a wholly owned
subsidiary of American Express Company ("American Express") prior to an
initial public offering of its common stock (the "1992 IPO") in April 1992.

Nature of Business

IPS' principal business involves providing payment instruments transaction
processing to institutional clients and retail consumers. These services
principally have involved the marketing and processing of the following types
of payment instruments: American Express(R) Official Checks, American
Express(R) Money Orders and the MoneyGram service ("MoneyGram" or the
"Business"). Pursuant to a management agreement (the "TRS Management
Agreement") among First Data, IPS and American Express Travel Related Services
Company, Inc., a wholly owned subsidiary of American Express ("TRS"), IPS has
managed the TRS payment instruments business, although TRS has been and
currently is the state-licensed issuer and provider of such payment
instruments. Throughout the periods presented in the accompanying financial
statements, the MoneyGram service has been conducted through an extensive
network of TRS selling agents. In accordance with the TRS Management
Agreement, the contracts with these selling agents were negotiated and managed
by IPS but executed in the name of TRS. Furthermore, IPS and First Data agreed
to indemnify TRS against any losses, damages and costs with respect to the
payment instruments of TRS; therefore, IPS' financial statements have been
prepared as if it were the issuer of the payment instruments. Pursuant to the
terms of the TRS Management Agreement, IPS became a licensed issuer of payment
instruments during 1993 and, in addition, acquired the MoneyGram service mark
at no cost from American Express in 1994. As discussed immediately below, the
Company was formed with the intention of it assuming the Business from IPS
pursuant to the various agreements described below.

Formation of the Company

On October 27, 1995, First Data consummated a merger transaction with First
Financial Management Corporation ("FFM"). FFM, through a subsidiary, Western
Union Financial Services, Inc. ("Western Union"), provides money transfer
services similar to MoneyGram. On January 19, 1996, First Data entered into a
consent decree with the Federal Trade Commission ("FTC") regarding MoneyGram
and Western Union. Under the terms of the consent decree, First Data is
allowed to perform processing services for each of MoneyGram and Western
Union, but it is permitted to retain the sales and marketing functions of only
one of the two businesses. The required divestiture must occur no later than
January 23, 1997. In addition, First Data and the FTC entered into a "hold
separate" agreement whereby the MoneyGram business must be managed and
maintained as a separate, ongoing business, independent of all other First
Data businesses and independent of the Western Union business. Among its
provisions the "hold separate" agreement requires that, prior to consummation
of the required divestiture, IPS expend not fewer than $24 million annually on
MoneyGram advertising and promotion with no less than $10 million to be
expended for any two consecutive quarterly periods. This agreement further
requires that, during the "hold separate" period, IPS pay the MoneyGram sales
force 120% of the standard 1995 sales commission rates. The hold separate
arrangement will continue until the requisite divestiture is consummated.

First Data has decided to comply with the divestiture requirements of the
consent decree through a public stock offering of the Company's common stock
consisting of a secondary offering by IPS (the "Offering"). In conjunction
with the Offering, the Company was formed as a wholly owned subsidiary of IPS
in January 1996. In accordance with the Contribution Agreement among the
Company, First Data and IPS, certain assets necessary to operate the Business
(the "MoneyGram Assets") were transferred, subject to certain liabilities, to
the

F-7
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Company in exchange for 16,624,900 shares of the Company's common stock. The
accompanying financial statements have been prepared as if this exchange had
been consummated prior to January 1, 1993 and the assets and liabilities are
reflected therein at their historical IPS cost basis. The transferred assets
included certain proprietary rights and trademarks material to the conduct of
the Business; the net economic benefits under certain MoneyGram Agent
contracts; certain applications software; the leases, leasehold improvements,
personal property and third party contracts associated with First Data's
Lakewood, Colorado customer service center; and certain personal property and
leases related to property, such as computers and signage, provided to
MoneyGram Agents for their use in providing MoneyGram services. In addition,
pursuant to the Contribution Agreement, IPS will contribute $12 million in
cash to the Company prior to the Offering (the "IPS Cash Contribution"). Such
capital contribution will be reflected in the Company's financial statements
during the period in which it is received.

In conjunction with the Offering, the Company, IPS and affiliates of IPS
have also entered into an operations agreement (the "Operations Agreement"), a
software license agreement (the "Software License Agreement"), a short-term
working capital facility (the "Facility"), with a commitment in an amount
equal to $20 million, a service mark letter agreement (the "Service Mark
Letter Agreement") and, if requested by the Company, a Service Mark License
Agreement, a human resources agreement (the "Human Resources Agreement") and a
telecommunications services sharing agreement (the "Telecom Agreement"). The
Operations Agreement requires IPS to provide the Company with certain data
processing services, including the processing of MoneyGram transactions for a
period of two years, certain management services necessary for the Company to
comply with state licensing requirements until such time as the Company is
fully licensed in all states to offer consumer money transfer services in its
own name and certain additional support services. These services are to be
provided to the Company at First Data's good faith estimate of its actual cost
of providing such services (including reasonable allocations of overhead
expenses). The Software License Agreement provides the Company with a
perpetual, assignable, nonexclusive, royalty free, worldwide, irrevocable
license to use certain software used in operating the Business. Under the
Facility, the Company may borrow from time-to-time, on a revolving, unsecured
basis, to fund its working capital requirements. Any borrowings thereunder
will bear interest of the prime rate, as announced by Chase Manhattan Bank,
N.A., plus 1% per annum. The Facility will terminate 180 days from the
consummation of the Offering and includes customary terms, conditions,
restrictive covenants and events of default. Pursuant to the Service Mark
Letter Agreement, the Company and First Data have agreed not to sue one
another in respect of certain disputed marks for a period of two years
commencing at the consummation of the Offering and, at the option of the
Company, it may cause Western Union and IPS to enter into an agreement
pursuant to which Western Union would grant the Company a license to use
certain of these disputed service marks in certain languages. The Human
Resource Agreement provides for the transfer of employees from First Data to
the Company and the Telecom Agreement provides the Company access to
telecommunications services provided to First Data at First Data's tariff
rates.

Financial Statement Presentation

The accompanying financial statements have been prepared as if the
transaction and agreements described immediately above were consummated and/or
entered into prior to January 1, 1993. These financial statements present the
financial position, results of operations and cash flows attributable to
MoneyGram, which was operated as a product line of IPS, during each of the
periods presented. The following paragraphs set forth the methodologies and
assumptions utilized in preparing the accompanying financial statements.

Balance Sheets

The balance sheet caption "Liabilities relating to unsettled MoneyGram
transactions" represents the face value of all unsettled MoneyGram
transactions. It includes amounts attributable to transactions where proceeds
have been received from selling agents as well as an estimate of amounts due
from selling agents for customer

F-8
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
transactions occurring on or prior to the statement date but not yet settled.
Because IPS did not maintain specific cash or investment portfolio accounts
for its products, the accompanying balance sheet reflects zero balances for
cash and cash equivalents and the balance sheet caption "Proceeds including
proceeds due from/(to) IPS relating to unsettled MoneyGram transactions"
represents the amount necessary to fund the liability. Specific fiduciary
assets maintained by IPS for MoneyGram and the consequent amounts due to or
from IPS relative to the liability are included in the accompanying balance
sheet under the caption "Assets restricted to settlement of MoneyGram
transactions," which is comprised of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31 DECEMBER 31
1994 1995
----------- -----------
<S> <C> <C>
Cash and advances to certain receive agents...... $13,831 $11,446
Receivables from selling agents, including $2,421
and $1,055, respectively, from TRS.............. 11,903 9,809
Due (to) from IPS................................ (4,807) 4,755
------- -------
$20,927 $26,010
======= =======
</TABLE>

Statements of Operations

The statements of operations reflect revenues and related commission
expenses that are distinct and separately identifiable to MoneyGram as well as
an estimate of allocable investment earnings based upon IPS investment returns
applied to an estimated average cash position. Allocable investment earnings
included in revenues amounted to $.1 million, $.2 million and $.4 million
during the years ended December 31, 1993, 1994 and 1995, respectively.

During the periods presented, MoneyGram was a part of IPS' retail services
product group; accordingly, with the exception of agent commission and
advertising expenses, a substantial portion of the expenses in the
accompanying statements of operations represents allocations of IPS costs.
IPS' accounting systems provide for the capturing of costs on a functional
cost center basis. Certain cost centers relate exclusively to the MoneyGram
service and have been 100% allocated to the Company and others relate
substantially, and have been allocated substantially, to the Company. The
expenses, included in the accompanying statements of operations, attributable
to these cost centers amounted to $11.5 million, $13.7 million and $26.0
million for the years ended December 31, 1993, 1994 and 1995, respectively.
These expenses relate principally to IPS' two customer service centers. The
remaining $7.8 million, $10.0 million and $12.8 million of expenses, excluding
agent commissions and advertising, represent allocations that are based upon
various factors which, in the opinion of management, approximate actual usage.
These allocated expenses relate to data processing, facilities, legal, finance
and accounting, treasury, human resources, sales and other support functions.
Included in these allocated expenses are allocations of IPS general and
administrative expenses, based upon the Company's proportion of IPS' gross
revenues, of $0.8 million for each of years ended December 31, 1993 and 1994
and $1.0 million for the year ended December 31, 1995. The statements of
operations do not include any allocations of First Data general and
administrative expenses as such costs are not considered to be variable as a
result of the Company's operations. Management of the Company believes that
costs have been determined and allocated on a reasonable basis and all costs
attributable to conducting the Business have been included in the accompanying
statements of income.

In the opinion of the Company's management, the Company's expenses, as
reflected in the accompanying statements of operations, will not be materially
affected as a result of it becoming a stand-alone entity and its execution of
the Contribution Agreement, the Operations Agreement and the Facility.

F-9
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Fee revenue represents the transaction fee charged by the selling agent to
the consumer and is recognized at the date of sale. Foreign exchange revenue
represents the Company's share of amounts attributable to favorable spreads
between wholesale foreign currency purchase rates and the retail exchange rate
charged to consumers, principally with respect to Mexican pesos. Commissions
to agents are either a percentage of the transaction fee charged to the
consumer or a fixed dollar amount per transaction and also include amounts
attributable to minimum commission guarantees with respect to certain agents.
Commissions to agents, including guaranteed commissions, are expensed as
incurred.

Fixed Assets

Fixed assets are comprised of agent location signage and personal computers,
equipment, furniture and fixtures, and leasehold improvements and are
depreciated over their estimated useful lives ranging from 3 to 8 years.
Depreciation is computed using the straight-line method.

Income Taxes

The Company has accounted for income taxes under the liability method
required by SFAS No. 109, Accounting for Income Taxes. The taxable income of
the Company is included in the taxable income of IPS, which is included in the
consolidated U.S. federal income tax return of First Data. Except as described
below, the Company's provision for income taxes has been computed as if it
were a separate tax-paying entity.

During the periods presented there was no formal tax-sharing agreement
between the Company, IPS and First Data, however, First Data subsidiaries
remit current taxes payable to First Data and they are entitled to
reimbursement from First Data for current tax benefits. The provision for
income taxes has been computed as if the Company were a subsidiary of First
Data and, therefore, the tax benefits resulting from taxable losses incurred
by the Company during and prior to 1993 have been recorded in those years. As
a result, the accompanying financial statements do not reflect any benefit for
utilization of tax loss carryforwards.

As a result of the Transition, the tax basis (for federal income tax
purposes) of the MoneyGram Assets will increase from their tax basis in the
hands of IPS and its affiliates at the time of the Contribution to their fair
market value at that time (determined by reference to the initial public
offering price). Such tax basis is generally expected to produce a tax benefit
to the Company in future years through depreciation or amortization deductions
or through decreased gain or (subject to certain limitations) increased loss
on a disposition of any MoneyGram Asset. However, the "anti-churning" rules
under Section 197 of the Internal Revenue Code (the "Code") might apply to
disallow such amortization with respect to certain intangible assets of the
Company.

Pursuant to the requirements of SFAS No. 109 the Company will record a
deferred tax asset (with a corresponding credit to capital surplus) for the
tax effect of the excess of the tax basis of the MoneyGram Assets following
the Contribution over their net book value. Solely for financial accounting
and reporting purposes, such tax basis will be reduced to take into account
management's assessment of the possible application of the "anti-churning"
rules under Section 197 of the Code. The amount of the deferred tax asset
which will be recorded at the time of the Contribution will be further reduced
by a valuation allowance which will be based upon management's judgment as to
the likelihood of the Company generating sufficient taxable income to realize
the assets through future tax deductions, under the "more likely than not"
criteria prescribed by SFAS No. 109. Adjustments of the net deferred tax asset
attributable to the resolution of the uncertainties associated with provisions
of the Code will be charged against or credited to capital surplus while
adjustments of the valuation allowance will be charged to or credited against
income tax expense in the Company's income statement.

F-10
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Costs of Acquiring Agent Contracts

Amounts paid to acquire multi-year exclusive contracts with agents are
capitalized and amortized on a straight-line basis over the life of the
related contract (3 to 5 years).

Pro Forma Per Share Data

Pro forma net (loss) income per share has been computed as if the Company
had 16,625,000 shares of its common stock outstanding during each of the
periods presented.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

3. RELATED PARTY TRANSACTIONS

In addition to the relationships set forth and the other information
described in Note 1, IPS, and consequently the Company, have other
transactions and relationships with American Express and First Data.

American Express

Travel Services Offices of TRS ("TSOs") act as agents with respect to
MoneyGram. MoneyGram Transaction Fee Revenues (revenues excluding foreign
exchange revenues and allocated investment income) derived from TSO
transactions amounted to approximately $10.1 million, $10.9 million and $5.1
million for the years ended December 31, 1993, 1994 and 1995, respectively.
Commissions paid to TRS for send and receive transactions amounted to
approximately $5.3 million, $5.6 million and $3.3 million for the respective
years.

In conjunction with the 1992 IPO, an intercompany agreement was entered into
by IPS and First Data with American Express (the "Intercompany Agreement") the
provisions of which included:

(i) An annual license fee of $1.0 million for use of the American Express
name by IPS. The amounts allocated to the Company in the 1993 and 1994
statements of operations amounted to $0.4 million and $0.1 million,
respectively. No allocation of such cost was made subsequent to March 1994
when the American Express name was deleted from MoneyGram's media
advertising.

(ii) An agreement by American Express to reimburse First Data and/or IPS
for expenses of up to $10.6 million relating to the change of First Data's
name, its change in status to a publicly owned corporation and advertising
IPS' payment instruments under a new name. During 1993, IPS was reimbursed
$0.8 million under the Intercompany Agreement for 1993 advertising and
related expenses incurred, of which $0.2 million related to the deletion of
the American Express name from MoneyGram. During 1994, IPS was reimbursed
$5.2 million, substantially all of which related to MoneyGram. This
reimbursement of expenses incurred has been treated similar to a capital
contribution in the accompanying financial statements.

First Data

The allocated expenses in the accompanying statements of operations, as
described in Note 1, include allocations from First Data and affiliates of
$2.9 million, $2.6 million and $3.9 million for the years ended December 31,
1993, 1994 and 1995, respectively. The First Data allocations relate
principally to the Company's estimated portion of IPS' participation in
certain First Data insurance, benefit and incentive plans, as well as certain
other services provided during those periods, including the Company's
estimated portion of charges to IPS for data processing services provided by
First Data Technologies, Inc., a wholly owned subsidiary of First Data, of
$1.7 million, $1.6 million and $2.2 million for the years ended December 31,
1993, 1994 and 1995, respectively.

F-11
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. INCOME TAXES

The income tax (benefit)/provision consists of the following (thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------
<S> <C> <C> <C>
Federal........................................... $(1,119) $6,556 $ 9,850
State and local................................... -- 679 1,512
------- ------ -------
Total............................................. $(1,119) $7,235 $11,362
======= ====== =======
</TABLE>

Deferred income taxes result from the recognition of temporary differences.
Temporary differences are differences between the tax basis of assets and
liabilities and their reported amounts in the financial statements that will
result in differences between income for tax purposes and income for financial
statement purposes in future years. The income tax (benefit)/provision is
comprised of the following (in thousands):

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------
<S> <C> <C> <C>
Current.......................................... $ (959) $7,210 $11,384
Deferred......................................... (160) 25 (22)
------- ------ -------
Total............................................ $(1,119) $7,235 $11,362
======= ====== =======
</TABLE>

The Company's net deferred tax assets consist of the following (in
thousands):

<TABLE>
<CAPTION>
DECEMBER
31,
---------
1994 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Accrued and other liabilities................................ $197 $303
---- ----
Total deferred tax assets.................................. 197 303
Valuation allowance............................................ -- --
---- ----
Deferred tax assets, net of valuation allowance................ 197 303
Deferred tax liabilities:
Depreciation and amortization................................ -- 82
Other........................................................ 26 28
---- ----
Total deferred tax liabilities............................. 26 110
---- ----
Net deferred tax assets.................................... $171 $193
==== ====
</TABLE>

The reconciliation of income tax computed at the U.S. federal statutory tax
rate to income tax (benefit)/expense is (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------
<S> <C> <C> <C>
Tax at U.S. statutory rate....................... $(1,119) $6,794 $10,379
Increases in taxes resulting from
State and local taxes, net of federal income
tax benefit................................... -- 441 983
------- ------ -------
Income tax (benefit)/expense................. $(1,119) $7,235 $11,362
======= ====== =======
</TABLE>

F-12
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. RETIREMENT PLANS

First Data sponsors a defined benefit and a defined contribution retirement
plan covering full-time employees of First Data and its participating
subsidiaries, of which IPS is one. Retirement benefits under the defined
benefit plan are based primarily upon length of service and compensation. The
defined contribution plan allows eligible employees to contribute a percentage
of their compensation to the plan and provides for certain employer matching,
service-related and other contributions. During 1994, First Data restructured
these plans to allow employees to elect to cease accruing benefits under the
defined benefit plan in exchange for enhanced employer contributions under the
defined contribution plan. Employees hired subsequent to 1994 do not
participate in the defined benefit plan.

Included in the allocated expenses from First Data discussed in Note 3 are
$0.2 million, $0.2 million and $0.3 million for the years ended December 31,
1993, 1994 and 1995, respectively, relative to MoneyGram's estimated portion,
based on gross salary costs, of amounts charged by First Data to IPS for
participation of its employees in the plans.

Pursuant to the terms of the Human Resources Agreement among First Data, IPS
and the Company, employees transitioning from First Data to the Company have
been fully vested in their First Data retirement benefits. During 1996 the
Company plans to adopt and implement a defined contribution plan and does not
plan to provide a defined benefit plan.

6. OPERATING LEASE COMMITMENTS

Certain facilities and operating equipment utilized in the operations of the
Business are leased under cancelable and noncancelable agreements. A portion
of the rent expense attributable to IPS' two customer service centers, which
has been allocated to the Company, amounted to $0.4 million, $0.4 million and
$0.8 million for the years ended December 31, 1993, 1994 and 1995,
respectively. A portion of the rent expense relates to a sublease from an
affiliate of IPS. At December 31, 1995, the minimum allocated calendar year
rental commitment for these facilities was: 1996--$0.4 million; 1997--$0.1
million.

7. COMMITMENTS AND CONTINGENCIES

In certain instances, certain MoneyGram Agents have been guaranteed minimum
commissions. As of December 31, 1995, the remaining maximum commitment amounts
to approximately $68.0 million as follows on a calendar year basis: 1996--
$10.0 million; 1997--$12.0 million; 1998--$13.0 million; 1999--$14.0 million;
2000--$15.0 million; and years following--$4.0 million. Historically,
MoneyGram's volume growth has been sufficient to mitigate required performance
under these guarantees, and net payments under these guarantees amounted to
$2.5 million, $2.0 million and $1.3 million during the years ended December
31, 1993, 1994 and 1995, respectively.

IPS is involved in litigation primarily arising in the normal course of its
business. In the opinion of management, IPS' recovery or liability, if any,
under any pending litigation relating to MoneyGram would not materially affect
the Company's financial condition or operations.

8. CREDIT RISK AND CERTAIN RELATIONSHIPS

Credit risk results from the possibility that a loss may occur from the
failure of another party to perform according to the terms of a contract. In
the case of MoneyGram, the principal risk centers around that of a selling
agent failing to remit the proceeds of a transaction to the Company. The
Company mitigates this risk through extensive credit evaluations prior to
entering into a contractual relationship and thereafter monitors performance

F-13
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONCLUDED)
to ensure compliance. MoneyGram Agents conduct business in thousands of
locations. Further, the nature of the agents' principal businesses is diverse
and the agent base includes supermarkets, department and convenience stores,
travel agents and check cashing establishments. Other than TSOs with respect
to the years ended December 31, 1993 and 1994, no Transaction Fee Revenues
attributable to a single MoneyGram Agent accounted for more than 8% of
MoneyGram's total Transaction Fee Revenues during the periods presented.
However, during the years ended December 31, 1993, 1994 and 1995,
approximately 17%, 16% and 15% of total Transaction Fee Revenues were derived
from a consortium of Chicago MoneyGram Agents.

Approximately 49%, 60% and 64% of MoneyGram's total revenues (including
foreign exchange revenues and allocated investment income) were derived from
money transfer transactions from the United States to Mexico during the years
ended December 31, 1993, 1994 and 1995, respectively. The Mexican receive
agent for substantially all of these transactions is a major Mexican financial
institution under the terms of a contract expiring in April 2002. The caption
"cash and advances to certain receive agents" in Note 1 to the accompanying
Financial Statements includes IPS' funding of these transactions pursuant to
the terms of this contract. Many MoneyGram Agents also act as agents with
respect to the sale of American Express(R) Money Orders. One such agent has
entered into a financing agreement with IPS (the "Financing Agreement"). The
Financing Agreement provides for, among other items:

--a deferred remittance schedule with respect to proceeds from the sale of
American Express(R) Money Orders.

--the agent to receive interest bearing working capital and long-term
advances.

The Financing Agreement contains various restrictive covenants, limitations
on the amount of deferred remittances and working capital advances and a $18.5
million limit on long-term advances. Working capital advances are based upon
the agent's money order sales. The amount of long-term advances outstanding as
of December 31, 1995 was $9.4 million. No portion of the long-term advances
has been included in the accompanying balance sheets due to the commingled
nature of the agent relationship and the resulting inability to segregate that
which would be attributable to MoneyGram.

9. SUBSEQUENT EVENTS

On December 10, 1996, the MoneyGram assets were transferred, subject to
certain liabilities, to the Company pursuant to the terms of the Contribution
Agreement and the Company will file an amended registration statement with the
Securities and Exchange Commission relating to the Offering. Including the
underwriters over-allotment option, 16,625,000 shares of the Company's common
stock are being registered for sale by IPS, as selling stockholder.

In connection with the Offering, the Board of Directors of the Company will
adopt, and IPS as the Company's sole stockholder will approve, the Company's
1996 Stock Option Plan (the "1996 Stock Option Plan") and the Company's 1996
Broad-Based Stock Option Plan. The Company has reserved for issuance under the
1996 Stock Option Plan and the 1996 Broad-Based Stock Option Plan 1,175,000
and 25,000 shares of common stock, respectively.

F-14
<PAGE>

INDEPENDENT ACCOUNTANTS' REVIEW REPORT

The Board of Directors of
MoneyGram Payment Systems, Inc.

We have reviewed the accompanying balance sheet of MoneyGram Payment
Systems, Inc. as of September 30, 1996, and the related statements of income
and cash flows for the nine-month period ended September 30, 1996. These
financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards with the
objective of expressing an opinion regarding the financial statements taken as
a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements at September 30, 1996
and for the nine-month period then ended for them to be in conformity with
generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of MoneyGram Payment Systems, Inc. as of
September 30, 1995 (not presented herein), and the related statements of
income, stockholder's equity (not presented herein), and cash flows for the
nine-month period then ended and in our report dated December 8, 1995 (except
as to Notes 1 and 9 as to which the date is December 10, 1996) we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying statements of income and cash flows
for the nine-month period ended September 30, 1995, is fairly stated, in all
material respects, in relation to the statements of income and cash flows from
which such information has been derived.

Ernst & Young LLP

Denver, Colorado
October 16, 1996,
except as to Note 2, as to which the date is

December 10, 1996

F-15
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
SEPTEMBER 30,
ASSETS 1996
- ----------------------------------------------------------------- -------------
<S> <C>
Cash and cash equivalents........................................ $ --
Assets restricted to settlement of MoneyGram transactions........ 26,059
Fee revenue receivable........................................... 780
Prepaid and other current assets................................. 829
-------
Total current assets......................................... 27,668
Fixed assets at cost, net of depreciation: $6,234................ 6,822
Deferred income taxes............................................ 153
Costs of acquiring Agent Contracts, net of amortization: $4,016.. 14,840
-------
Total assets................................................. $49,483
=======
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
- -----------------------------------------------------------------
<S> <C>
Liabilities relating to unsettled MoneyGram transactions......... $26,059
Accounts payable................................................. 2,343
Commissions payable.............................................. 6,116
Accrued advertising.............................................. 2,549
Employee-related liabilities..................................... 2,048
Accrued and other liabilities.................................... 2,264
-------
Total current liabilities.................................... 41,379
Stockholder's equity:
Common stock, $.01 par value, authorized 100,000,000 shares;
issued and outstanding 16,625,000 shares...................... 166
Capital surplus................................................ 5,679
Retained earnings.............................................. 2,259
-------
Total stockholder's equity................................... 8,104
-------
Total liabilities and stockholder's equity................... $49,483
=======
</TABLE>

See accompanying notes.

F-16
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
30,
---------------
1995 1996
------- -------
<S> <C> <C>
Revenues
Fee and other................................................ $72,934 $84,154
Foreign exchange............................................. 33,145 22,821
------- -------
Total revenue.............................................. 106,079 106,975
Expenses:
Agent commissions and amortization of Agent Contract
acquisition costs........................................... 25,587 33,865
Processing................................................... 17,500 18,698
Advertising and promotion.................................... 24,015 22,347
Selling and service.......................................... 5,245 7,645
General and administrative................................... 4,140 3,847
------- -------
Total expenses............................................. 76,487 86,402
------- -------
Income before income taxes..................................... 29,592 20,573
Income tax expense............................................. 11,338 7,858
------- -------
Net income..................................................... $18,254 $12,715
======= =======
Pro forma net income per common share.......................... $ 1.10 $ .76
======= =======
</TABLE>

See accompanying notes.

F-17
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
30,
----------------
1995 1996
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $18,254 $12,715
Adjustments to reconcile net income to net cash provided by
operating activities:
Direct depreciation and amortization expense*............. 2,255 4,497
Other noncash charges..................................... 45 40
Changes in operating assets and liabilities:
Assets restricted to settlement of MoneyGram
transactions........................................... (2,240) (49)
Accounts receivable..................................... (1,371) 385
Prepaid and other assets................................ (741) (558)
Liabilities relating to unsettled MoneyGram
transactions........................................... 2,240 49
Accounts payable and other liabilities.................. (3,965) 881
------- -------
Net cash provided by operating activities................... 14,477 17,960
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of signage and equipment........................... (4,310) (3,103)
Costs of acquiring Agent Contracts.......................... (5,869) (9,077)
------- -------
Net cash used by investing activities....................... (10,179) (12,180)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transfer to IPS......................................... (4,298) (5,780)
------- -------
Net cash used by financing activities....................... (4,298) (5,780)
------- -------
Net change in cash and cash equivalents..................... $ -- $ --
======= =======
</TABLE>
- --------
*Relates only to MoneyGram assets as reflected on the accompanying balance
sheet.

See accompanying notes.

F-18
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS)

<TABLE>
<CAPTION>
(ACCUMULATED TOTAL
COMMON CAPITAL DEFICIT)/RETAINED STOCKHOLDER'S
STOCK SURPLUS EARNINGS EQUITY
------ ------- ----------------- -------------
<S> <C> <C> <C> <C>
Balance December 31, 1995....... $166 $11,459 $(10,456) $ 1,169
Net income.................... -- -- 12,715 12,715
Capital contribution to IPS... -- (5,780) -- (5,780)
---- ------- -------- -------
Balance September 30, 1996...... $166 $ 5,679 $ 2,259 $ 8,104
==== ======= ======== =======
</TABLE>

See accompanying notes.

F-19
<PAGE>

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

1. The financial statements of MoneyGram Payment Systems, Inc. ("the
Company") should be read in conjunction with the Company's financial
statements for the year ended December 31, 1995. Significant accounting
policies disclosed therein have not changed. For interim reporting purposes
during 1995, the Company allocated advertising and promotion expenses based on
transaction volumes. For the nine months ended September 30, 1996, advertising
and promotion expenses reflect actual expenses incurred during the period as
the Company believes this is a more objective method of accounting under its
current circumstances, which circumstances include the minimum spending on
advertising and promotion required under the Hold Separate Agreement with the
Federal Trade Commission and the Company's emergence as an independent
publicly-held entity. Advertising and promotion expenses for the nine months
ended September 30, 1996 would have been approximately $100,000 less if the
Company continued to allocate these costs for interim reporting purposes based
on transaction volumes. This change had minimal impact on net income and pro
forma net income per common share.

The financial statements are unaudited; however, in the opinion of
management, they include all normal recurring adjustments necessary for a fair
presentation of the financial position of the Company at September 30, 1996
and the results of its operations and cash flows for the nine months ended
September 30, 1996 and 1995. Results of operations reported for interim
periods are not necessarily indicative of results for the entire year.

2. Pursuant to the terms of the contribution agreement between the Company,
Integrated Payment Systems Inc. ("IPS") and First Data Corporation, as
described in Note 1 to the Company's December 31, 1995 financial statements,
on December 10, 1996, certain assets were contributed to the Company subject
to certain liabilities. The Company will file an amended registration
statement with the Securities and Exchange Commission for the initial public
offering of 100% (including the underwriters' over-allotment option) of its
issued and outstanding 16,625,000 shares of common stock. All such shares will
be offered by IPS, as selling stockholder.

F-20
<PAGE>

ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS

PROSPECTUS

14,463,750 Shares
MoneyGram Payment Systems, Inc.
COMMON STOCK

---------------

OF THE 14,463,750 SHARES OF COMMON STOCK BEING OFFERED HEREBY, 2,892,750 ARE
BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND 11,571,000 ARE BEING OFFERED INITIALLY IN
THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. ALL OF THE
SHARES OF COMMON STOCK BEING OFFERED HEREBY ARE BEING SOLD BY
INTEGRATED PAYMENT SYSTEMS, INC. ("IPS" OR THE "SELLING
STOCKHOLDER"), A WHOLLY OWNED SUBSIDIARY OF FIRST DATA
CORPORATION. SEE "SELLING STOCKHOLDER." THE COMPANY WILL NOT
RECEIVE ANY OF THE NET PROCEEDS FROM THE SALE OF SHARES OF
COMMON STOCK OFFERED HEREBY. PRIOR TO THE OFFERING,
THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK
OF THE COMPANY. SEE "UNDERWRITERS" FOR A DISCUSSION
OF THE FACTORS CONSIDERED IN DETERMINING THE
INITIAL PUBLIC OFFERING PRICE.

---------------

THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK
EXCHANGE ("NYSE"), SUBJECT TO OFFICIAL NOTICE OF ISSUANCE,
UNDER THE SYMBOL "MNE."

---------------

SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

---------------

PRICE $12 A SHARE

---------------

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
-------- -------------- -------------
<S> <C> <C> <C>
Per Share........................... $12.00 $.72 $11.28
Total(3)............................ $173,565,000 $10,413,900 $163,151,100
</TABLE>
- -------
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.
(2) Before deducting expenses payable by the Selling Stockholder estimated
at $2,100,000.

---------------

The shares of Common Stock are offered,subject to prior sale, when as and if
accepted by the Underwriters named herein and subject to approval of certain
legal matters by Davis Polk & Wardwell, counsel for the Underwriters. It is
expected that delivery of the shares of Common Stock will be made on or about
December 16, 1996 at the office of Morgan Stanley & Co. Incorporated, New
York, NY, against payment therefor in immediately available funds.

---------------

MORGAN STANLEY & CO.
International
LEHMAN BROTHERS
MONTGOMERY SECURITIES
SMITH BARNEY INC.

December 11, 1996
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses (other than underwriting discounts and commissions) payable in
connection with the sale of the Common Stock offered hereby (including the
Common Stock which may be issued pursuant to the over-allotment option) are as
follows:

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
SEC registration fee......................................... $ 182,691
NASD filing fee.............................................. 30,500
New York Stock Exchange listing fee.......................... 200,000*
Printing and engraving expenses.............................. 150,000*
Legal fees and expenses...................................... 700,000*
Accounting fees and expenses................................. 700,000*
Blue Sky fees and expenses (including legal fees and
expenses)................................................... 15,000*
Transfer agent and registrar fees and expenses............... 25,000*
Miscellaneous................................................ 96,809*
----------
Total.................................................... $2,100,000
==========
</TABLE>
--------
*Estimated

The Selling Stockholder will bear all expenses shown above.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided that such officer or director acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests, and, for criminal proceedings, had no
reasonable cause to believe his conduct was illegal. A Delaware corporation
may indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to
be liable to the corporation in the performance of his duty. Where an officer
or director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the
expenses which such officer or director actually and reasonably incurred.

In accordance with Section 102(b)(7) of the DGCL, the Company's Certificate
of Incorporation provides that directors shall not be personally liable for
monetary damages for breaches of their fiduciary duty as directors except for
(i) breaches of their duty of loyalty to the Company or its stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, (iii) certain transactions under Section 174 of the
DGLC (unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) transactions from which a director derives an improper
personal benefit. The effect of this provision is to eliminate the personal
liability of directors for monetary damages for actions involving a breach of
their fiduciary duty of care, including any actions involving gross
negligence.

The Certificate of Incorporation and the By-laws of the Company provide for
indemnification of the Company's officers and directors to the fullest extent
permitted by applicable law, except that the By-laws

II-1
<PAGE>

provide that the Company is required to indemnify an officer or director in
connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of the Company. In addition, the
Company maintains insurance policies which provide coverage for its officers
and directors in certain situations where the Company cannot directly
indemnify such officers or directors.

The Underwriting Agreement provides for indemnification of directors and
officers of the Company by the Underwriters against certain liabilities.

Pursuant to Section 145 of the DGCL and the Certificate of Incorporation and
the By-laws of the Company, the Company maintains directors' and officers'
liability insurance coverage.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In the three years preceding the filing of this Registration Statement, the
Company has issued the following securities that were not registered under the
Securities Act of 1933, as amended (the "Securities Act").

In connection with the incorporation and organization of the Company on
January 4, 1996, 100 shares of Common Stock were issued to IPS, the sole
stockholder of the Company, in exchange for $2,000. In connection with the
Contribution Agreement, prior to the consummation of the Offering, the Company
will issue shares of Common Stock to IPS.

No Underwriters were involved in the foregoing sales of Common Stock. Such
sales were made in reliance upon an exemption from the registration provisions
of the Securities Act set forth in Section 4(2) thereof relative to
transactions by an issuer not involving any public offering or the rules and
regulations thereunder. All of such shares of Common Stock are deemed
restricted securities within the meaning of Rule 144 under the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
1.1** --Form of Underwriting Agreement.
2.1** --Form of Contribution Agreement among the Company, First Data Corporation
and Integrated Payment Systems Inc.
3.1** --Certificate of Incorporation of the Company, as amended.
3.2** --By-laws of the Company.
5.1** --Opinion of Sidley & Austin as to the legality of the shares of Common
Stock being offered.
8.1** --Opinion of Sidley & Austin as to certain tax matters.
9.1** --Form of Irrevocable Voting Trust Agreement.
10.1** --Form of Operations Agreement among the Company and Integrated Payment
Systems Inc. and First Data Technologies, Inc.
10.2** --Form of Software License Agreement between the Company and Integrated
Payment Systems Inc.
10.3** --Form of Registration Rights Agreement between the Company and Integrated
Payment Systems Inc.
10.4** --Form of Service Mark Letter Agreement among Western Union Financial
Services, Inc., First Data Corporation and MoneyGram Payment Systems,
Inc., which includes the Service Mark License Agreement among such
parties as an exhibit thereto.
10.5** --Form of Human Resources Agreement among the Company, Integrated Payment
Systems Inc. and First Data Corporation.
10.6** --Form of Telecommunications Services Sharing Agreement between the
Company and First Data Corporation.
10.7** --Agreement among American Express Travel Related Services Company, Inc.,
Banco Nacional de Mexico, S.N.C., and California Commerce Bank, as
amended (subject to a request for confidential treatment pursuant to Rule
406 of the Securities Act).
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
10.8** --Form of 1996 Stock Option Plan of the Company.
10.9** --Form of 1996 Broad-Based Stock Option Plan.
10.10** --Lease Agreement between the Company and the Mutual Life Insurance
Company of New York in respect of certain facilities located in Lakewood,
Colorado.
10.11** --Form of Short-Term Working Capital Facility between First Data
Corporation and the Company.
10.12** --Letter Agreement between the Company and Western Union Financial
Services, Inc. regarding Banamex.
15.1* --Letter from Ernst & Young LLP re: unaudited interim financial
information
18.1** --Letter from Ernst & Young LLP re: change in accounting principle
23.1* --Consent of Ernst & Young LLP.
23.2 --Consent of Sidley & Austin (included in Exhibit 5.1).
24.1 --Powers of Attorney (see page II-4).
27.1** --Financial Data Schedule.
99.1** --Agreement containing Consent Order dated August 28, 1995 and Hold
Separate Agreement dated September 20, 1995, each between First Data
Corporation and the Federal Trade Commission.
</TABLE>
- --------
*Filed herewith.
**Previously filed.

(b) FINANCIAL STATEMENT SCHEDULES:

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because they are not required under the related instructions, are not
applicable or the information has been provided in the Financial Statements,
or the notes thereto, included in this Registration Statement.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act,
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned registrant hereby undertakes (1) to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser; (2) that for
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective; and (3) that for the
purpose of determining any liability under the Securities Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York on December 11, 1996.

MONEYGRAM PAYMENT SYSTEMS, INC.

/s/ James F. Calvano
By: _________________________________
James F. Calvano
Chairman of the Board and Chief
Executive Officer

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of MoneyGram Payment Systems,
Inc. hereby severally constitute and appoint David Treinen and John Zieser,
and each of them singly, our true and lawful attorneys, with full power to
them and each of them singly, to sign for us in our names in the capacities
indicated below, all pre-effective and post-effective amendments to this
registration statement, and generally to do all things in our names and on our
behalf in such capacities to enable the Company to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
--------- -------- ----
<S> <C> <C>
/s/ James F. Calvano Chairman of the Board and 12/11/96
____________________________________ Chief Executive (Principal
James F. Calvano Executive Officer)

/s/ Robbin L. Ayers Director and Executive Vice 12/11/96
____________________________________ President
Robbin L. Ayers

/s/ John M. Fowler Director and Executive Vice 12/11/96
____________________________________ President and
John M. Fowler Chief Financial
Officer (Principal
Financial and
Accounting Officer)

/s/ Brian J. Fitzpatrick Director 12/11/96
____________________________________
Brian J. Fitzpatrick

/s/ William D. Guth Director 12/11/96
____________________________________
William D. Guth

/s/ Sanford Miller Director 12/11/96
____________________________________
Sanford Miller

</TABLE>

II-4
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <C> <S>
1.1** -- Form of Underwriting Agreement.
2.1** -- Form of Contribution Agreement among the Company, First Data
Corporation and
Integrated Payment Systems Inc.
3.1** -- Certificate of Incorporation of the Company, as amended.
3.2** -- By-laws of the Company.
5.1** -- Opinion of Sidley & Austin as to the legality of the shares of
Common Stock being offered.
8.1** -- Opinion of Sidley & Austin as to certain tax matters.
9.1** -- Form of Irrevocable Voting Trust Agreement.
10.1** -- Form of Operations Agreement among the Company and Integrated
Payment Systems Inc. and First Data Technologies, Inc.
10.2** -- Form of Software License Agreement between the Company and Inte-
grated Payment Systems Inc.
10.3** -- Form of Registration Rights Agreement between the Company and
Integrated Payment Systems Inc.
10.4** -- Form of Service Mark Letter Agreement among Western Union Finan-
cial Services, Inc., First Data Corporation and MoneyGram Pay-
ment Systems, Inc., which includes the Service Mark License
Agreement among such parties as an exhibit thereto.
10.5** -- Form of Human Resources Agreement among the Company, Integrated
Payment
Systems Inc. and First Data Corporation.
10.6** -- Form of Telecommunications Services Sharing Agreement between
the Company and First Data Corporation.
10.7** -- Agreement among American Express Travel Related Services Compa-
ny, Inc., Banco Nacional de Mexico, S.N.C., and California Com-
merce Bank, as amended (subject to a request for confidential
treatment pursuant to Rule 406 of the Securities Act).
10.8** -- Form of 1996 Stock Option Plan of the Company.
10.9** -- Form of 1996 Broad-Based Stock Option Plan.
10.10** -- Lease Agreement between the Company and the Mutual Life Insur-
ance Company of New York in respect of certain facilities lo-
cated in Lakewood, Colorado.
10.11** -- Form of Short-Term Working Capital Facility between First Data
Corporation and the Company.
10.12** -- Letter Agreement between the Company and Western Union Financial
Services, Inc. regarding Banamex.
15.1* -- Letter from Ernst & Young LLP re: unaudited interim financial
information.
18.1** -- Letter from Ernst & Young LLP re: change in accounting princi-
ple.
23.1* -- Consent of Ernst & Young LLP.
23.2 -- Consent of Sidley & Austin (included in Exhibit 5.1).
24.1 -- Powers of Attorney (see page II-4).
27.1** -- Financial Data Schedule.
99.1** -- Agreement containing Consent Order dated August 28, 1995 and
Hold Separate
Agreement dated September 20, 1995, each between First Data
Corporation and the Federal Trade Commission.
</TABLE>

- --------
* Filed herewith.
** Previously filed.

<PAGE>

EXHIBIT 15.1

December 10, 1996

The Board of Directors of
MoneyGram Payment Systems, Inc.

We are aware of the inclusion in Amendment No. 6 to the Registration
Statement (Form S-1 No. 333-228) and related Prospectus of MoneyGram Payment
Systems, Inc. of our report dated October 16, 1996 (except as to Note 2, as to
which the date is December 10, 1996) relating to the unaudited interim
financial statements of MoneyGram Payment Systems, Inc. for the nine-month
period ended September 30, 1996.

Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.

ERNST & YOUNG LLP

Denver, Colorado

<PAGE>

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated February 2, 1996 (except as to Notes 1 and 9, as
to which the date is December 10, 1996) in Amendment No. 6 to the Registration
Statement (Form S-1 No. 333-228) and related Prospectus of MoneyGram Payment
Systems, Inc.

ERNST & YOUNG LLP

Denver, Colorado

December 10, 1996