AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 13, 1996

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

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AMENDMENT NO. 2 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)

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

JOHN S. ZIESER
SECRETARY
MONEYGRAM PAYMENT SYSTEMS, INC.
10825 FARNAM DRIVE
OMAHA, NEBRASKA 68154
(402) 222-7215
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

COPIES TO:
KEVIN F. BLATCHFORD BRUCE K. DALLAS
SIDLEY & AUSTIN DAVIS POLK & WARDWELL
ONE FIRST NATIONAL PLAZA 450 LEXINGTON AVENUE
CHICAGO, ILLINOIS 60603 NEW YORK, NEW YORK 10017
(312) 853-7000 (212) 450-4000

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

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."

MONEYGRAM PAYMENT SYSTEMS, INC.

CROSS REFERENCE SHEET

REGISTRATION STATEMENT ITEM AND
CAPTION LOCATION OR HEADING IN PROSPECTUS
------------------------------- ---------------------------------

1.Forepart of the Registration
Statement and Outside Front Front Cover Page of Registration Statement;
Cover Page of Prospectus...... Outside Front Cover Page of Prospectus
2.Inside Front and Outside Back
Cover Pages of Prospectus..... Inside Front Cover Page of Prospectus
3.Summary Information and Risk
Factors....................... Prospectus Summary; Risk Factors
4.Use of Proceeds................. Prospectus Summary; Use of Proceeds
5.Determination of Offering Price. Outside Front Cover Page of Prospectus;
Underwriters
6.Dilution........................ Risk Factors; Dilution
7.Selling Security Holders........ Selling Stockholder
8.Plan of Distribution............ Outside Front Cover Page; Underwriters
9.Description of Securities to be Outside Front Cover Page; Prospectus
Registered.................... Summary; Dividend Policy; Description of
Capital Stock
10.Interests of Named Experts and
Counsel....................... Legal Matters; Experts
11.Information with Respect to the Outside Front Cover Page of Prospectus;
Registrant.................... Prospectus Summary; The Transition and
Ongoing Relationship with First Data; Risk
Factors; Use of Proceeds; Dividend Policy;
Dilution; Capitalization; Selected
Financial and Operating Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Ownership of Capital
Stock; Certain Relationships and Related
Transactions; Description of Capital
Stock; Selling Stockholder; Shares
Eligible for Future Sale; Financial
Statements
12.Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................... Not Applicable

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued June 13, 1996

MoneyGram Payment Systems, Inc.
[LOGO] COMMON STOCK

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OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY, ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND 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. IT IS CURRENTLY
ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER SHARE WILL BE
BETWEEN $ AND $ . 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."

----------

SEE "RISK FACTORS" BEGINNING ON PAGE 13 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 $ A SHARE

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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
-------- -------------- --------------

Per Share............................. $ $ $
Total(3).............................. $ $ $

- -----
(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 $1,500,000.
(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 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 $ ,
$ , and $ , 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
, 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
CS FIRST BOSTON
LEHMAN BROTHERS
SMITH BARNEY INC.

, 1996

[ARTWORK]

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.

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DURING THIS OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR
THE ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES
10B-6, 10B-7 AND 10B-8 UNDER THE EXCHANGE ACT.

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.

Until , 1996 (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.

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.

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TABLE OF CONTENTS

PAGE
----

Prospectus Summary........................................................ 4
The Transition and Ongoing Relationship with First Data................... 8
Risk Factors.............................................................. 13
Use of Proceeds........................................................... 23
Dividend Policy........................................................... 23
Dilution.................................................................. 23
Capitalization............................................................ 24
Selected Financial and Operating Data..................................... 25
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 26
Business.................................................................. 38
Management................................................................ 55
Ownership of Capital Stock................................................ 59
Certain Relationships and Related Transactions............................ 61
Description of Capital Stock.............................................. 68
Selling Stockholder....................................................... 70
Shares Eligible for Future Sale........................................... 70
Certain U.S. Federal Income Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 72
Underwriters.............................................................. 75
Legal Matters............................................................. 78
Experts................................................................... 78
Additional Information.................................................... 78
Index to Financial Statements ............................................ F-1

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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.

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 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 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. The Financial Statements and other financial information 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. See
"The Transition and Ongoing Relationship with First Data." 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, accounting for approximately 16% of all such transactions worldwide
in 1995. The Company offers customers the ability to transfer funds quickly,
reliably and conveniently through its network of agents (each, a "MoneyGram
Agent"), consisting of approximately 17,800 locations in 83 countries
worldwide. 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 revolving credit, time payments and
personal loans) through many MoneyGram Agent locations in the United States.

The number of MoneyGram Agent locations has grown at a compounded annual rate
of approximately 11% since 1991, increasing from 11,700 in 1991 to
approximately 17,800 as of March 31, 1996. In 1995, the number of transactions
processed by the Company grew to 5.4 million, an increase of 64% over 1994 and
164% over 1993, and the total face value of funds transferred by the Company
grew to $1.6 billion, an increase of 38% over 1994 and 103% over 1993. In the
first three months of 1996, the Company transferred approximately $400 million
of funds through 1.5 million transactions, compared to approximately $375
million of funds through 1.2 million transactions in the same period of 1995.
Substantially all of the Company's transactions originate in the United States.
In 1995, 44% 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's 1995 total revenues, total revenues from transaction fees
excluding foreign exchange revenues and investment income ("Transaction Fee
Revenues"), foreign exchange revenues and operating income were $137.1 million,
$93.8 million, $42.8 million and $29.7 million, respectively, compared to $51.9
million, $48.7 million, $3.1 million and an operating loss of $3.2 million in
1993, respectively. In 1995, the Company generated approximately 69% of its
revenues through transaction fees which are charged to customers according to a
graduated schedule based upon the face value of the transaction. In the first
three months of 1996, the Company's total revenues, Transaction Fee Revenues,
foreign exchange revenues and operating income were $35.6 million, $27.5
million, $8.0 million and $5.4 million, respectively, compared to $32.8
million, $18.8 million, $13.9 million and $11.2 million, respectively, for the
first three months of 1995.

The Company generates 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. The Company's foreign exchange revenues from its Banamex
relationship amounted to $3.0 million in 1993, $20.2 million in 1994 and $42.4
million in 1995. In the first three months of 1996, foreign exchange revenues
were $8.0 million compared to $13.9 million in the same period in 1995.

CUSTOMERS AND MARKETS

Consumers sending expatriate remittance funds and individuals without bank
accounts are the two largest segments of repetitive money transfer customers.
In the United States alone, the Federal Reserve Board of Governors estimates
that there are approximately 23 million households 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 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, representing $9
to $10 billion in face value 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. The
Company intends to target advertising and promotional campaigns to raise
awareness of MoneyGram services to new groups of consumers.

STRATEGY

MoneyGram's objective is 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 continues to pursue 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;

. Offer enhanced value to consumers;

. Increase brand recognition and loyalty;

. Expand its quality agent network;

. Grow internationally;

. Penetrate additional retail networks and other distribution channels; and

. Develop other related payment products and systems.

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 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. See "The Transition and Ongoing Relationship with First Data."
The Company will not have conducted any other 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

Common Stock offered by the Selling
Stockholder:
U.S. offering.................... shares
International offering........... shares
------------
Total.......................... shares
------------
------------
Common Stock to be outstanding 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

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(1) Excludes shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan ( shares) and 1996 Broad-Based
Stock Option Plan ( shares). It is anticipated that options to
acquire approximately shares and 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 110% 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."

RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY CERTAIN MATTERS RELATING TO
ANY INVESTMENT IN THE COMPANY. See "Risk Factors" on page 13 for a discussion
of: Factors Relating to Independence and Sale of the Company--Conflicts of
Interest with First Data, --Absence of Arm's-Length Negotiations, --Potential
Changes in the Banamex Relationship, --Licensing Requirements, --Reliance on
First Data and Limitations on Use of Certain Software, --Agreements Between the
Company and Western Union Regarding Certain Service Marks and --Loss of Use of
American Express Name; Highly Competitive Industry; Liquidity; Antitakeover
Matters and Potential Adverse Consequences of Certain Tax Provisions;
Dependence on Major MoneyGram Agents; Ability to Manage Growth and New
Management Team; Fluctuations in Quarterly Operating Results; Risk of Loss;
Foreign Transactions Risks; Extensive Regulation; Financial Statement
Presentation; 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.

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 have been derived from audited financial statements not included in this
Prospectus. The statement of operations data and balance sheet data for the
years ended December 31, 1991 and 1992 and balance sheet data as of March 31,
1995 are derived from unaudited financial statements not included in this
Prospectus. Balance sheet data as of March 31, 1996 and statement of operations
data for the three-month periods ended March 31, 1995 and 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
three months ended March 31, 1996 are not necessarily indicative of the
Company's results for any future interim period or the entire year.

THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- ----------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

STATEMENT OF OPERATIONS
DATA:
Revenues:
Fee and other.......... $ 17,735 $ 30,519 $48,815 $71,015 $94,242 $18,899 $27,567
Foreign exchange....... 594 1,280 3,070 20,373 42,826 13,928 8,044
-------- -------- ------- ------- ------- ------- -------
Total revenues....... 18,329 31,799 51,885 91,388 137,068 32,827 35,611
Income (loss) before
income taxes (1)...... (16,681) (10,270) (3,196) 19,411 29,656 11,227 5,438
Net income (loss)...... $(11,009) $ (6,778) $(2,077) $12,176 $18,294 $ 6,925 $ 3,355
Pro forma net income
(loss) per common
share (2)............. $ $ $ $ $ $ $
BALANCE SHEET DATA (AT
END OF PERIOD):
Assets restricted to
settlement of
MoneyGram
transactions.......... $ 11,338 $ 11,573 $12,827 $20,927 $26,010 $20,030 $26,281
Fixed assets at cost,
net of depreciation... 950 1,123 1,275 3,084 6,831 3,550 7,131
Costs of acquiring
Agent Contracts, net
of amortization....... 3,369 2,864 1,956 3,401 7,979 3,603 12,996
Total assets........... 16,561 16,009 16,502 28,583 42,449 28,920 48,285
Liabilities relating to
unsettled MoneyGram
transactions.......... 11,338 11,573 12,827 20,927 26,010 20,030 26,281
Total liabilities...... 15,455 14,996 17,358 35,411 40,305 30,699 39,720
Stockholder's
equity/(deficit)...... 1,106 1,013 (856) (6,828) 2,144 (1,779) 8,565
OPERATING DATA:
Number of MoneyGram
Agent locations (at
end of period)........ 11.6 13.1 14.1 16.0 17.2 16.5 17.8
Percentage change...... 11% 13% 8% 13% 8% N/A 8%
Number of transactions. 656 1,114 2,040 3,285 5,393 1,232 1,505
Percentage change...... 104% 70% 83% 61% 64% N/A 22%

- -------

(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 $300,000 in the first quarter of 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 $2 million
less for the first three months of 1996.

(2) Gives effect to the Company's issuance to IPS of shares of
Common Stock prior to the consummation of the Offering.

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 substantially 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).

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, reconfigured 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
separated 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

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 entered into an
agreement that effected the assignment of substantially all of the Agent
Contracts to IPS (the "TRS Assignment"), and IPS began performing all of the
functions previously performed by TRS under the TRS Management Agreement in
respect of such Agent Contracts. Those Agent Contracts that were not
assignable at the time of the TRS Assignment remained in the name of TRS and
the economic benefits thereunder continued to be assigned from TRS to IPS and,
pursuant to the Transition, from IPS to the Company. In connection therewith,
IPS has agreed to exercise certain rights under the TRS Management Agreement
relating to the management and control of such nonassignable Agent Contracts
on behalf of the Company. Following the Transition and the Offering, IPS, as
holder of the Required Licenses, will own and execute all Agent Contracts not
subject to the TRS Management Agreement and hold all Fiduciary Funds related
thereto in accordance with the Operations Agreement described below. The
Operations Agreement provides that IPS will assign all then assignable 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 License Agreement (the "Service Mark License Agreement"), a Human
Resources Agreement (the "Human Resources Agreement"), a Distribution Network
Enhancement Agreement (the "Network Enhancement Agreement") and a Registration
Rights Agreement (the "Registration Rights 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 certain 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
shares of Common Stock and has agreed to make cash payments to IPS
which reflect the actual value of certain tax benefits realized by the Company
from the Transition. IPS currently holds 100 shares of the Company's Common
Stock, which represent all of the currently issued and outstanding shares.

Upon the contribution of the MoneyGram Assets to the Company pursuant to the
Contribution Agreement, IPS is expected to recognize taxable gain for federal
income tax purposes in an amount equal to the difference between the fair
market value of the MoneyGram Assets at the time of the contribution and their
tax basis at that time. As a result, the Company's tax basis in the MoneyGram
Assets is expected to be increased by the amount of such gain, and such
increased tax basis might produce a tax benefit to the Company (or another
entity holding the MoneyGram Assets) in future years through depreciation or
amortization deductions or through decreased gain or increased loss on a
disposition of any MoneyGram Asset. Therefore, the Company has agreed to make
certain cash payments to IPS, from time to time as set forth in the
Contribution Agreement, which reflect any

actual value to the Company of the tax benefits which will accrue to the
Company (or other entity holding MoneyGram Assets) over time as a result of
such increase in the tax basis of the MoneyGram Assets. See "Risk Factors--
Antitakeover Matters and Potential Adverse Consequences of Certain Tax
Provisions" 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 and certain corporate support
services. The Company will be charged 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. 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. 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, except
those that remain in the name of TRS, 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 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, except for those that are subject to the TRS
Management Agreement, 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."

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
"IPS Application 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, effective upon the termination of the data processing
services under the Operations Agreement, a perpetual, assignable,
nonexclusive, royalty-free license to reproduce, modify and use the IPS
Application Software. In general, the Software License Agreement permits the
Company to use the IPS Application Software exclusively in connection with the
data processing and operational requirements of the Company in connection with
the MoneyGram service; the Company is prohibited from using the IPS
Application Software in connection with other payment products or services.
However, IPS has agreed, at the request of the Company, to negotiate in good
faith the terms (including royalties) of an expansion of such software
licenses that would permit the Company to offer a money order product through
MoneyGram Agents, but only for so long as IPS or its affiliates provide the
data processing for such money order product. The Software License Agreement
also requires the Company to obtain IPS's consent (not to be unreasonably
withheld) prior to the assignment of its rights under the Software License
Agreement, other than to a purchaser of substantially all of the Business. 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 on January 15, 1997, 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 License Agreement. Pursuant to the Service Mark License
Agreement, 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." In addition, Western Union will covenant not to use "The
Better Way to Wire Money" in English anywhere in the world. 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. Pursuant to the Service Mark License Agreement, both the Company
and Western Union will have a six-month period, beginning at the consummation
of the Offering, 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 Service Mark 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 and Trade Marks" and "Certain Relationships and Related Transactions--
The Transition Agreements--The Service Mark License Agreement."

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. See
"Certain Relationships and Related Transactions--The Transition Agreements--The
Human Resources Agreement."

The Distribution Network Enhancement Agreement. The Company and Western Union
will enter into the Network Enhancement Agreement, which will encompass the
following structuring of the relationships among the Company, Banamex, Western
Union and Elektra S.A. de C.V., ("Elektra"), a consumer electronics retailer
and Western Union's largest agent in Mexico. First, the Company's economic
agreement with Banamex would remain unchanged, with the Company paying to
Banamex one-half of the total foreign exchange revenues on MoneyGram originated
transactions to Banamex locations in Mexico, as well as Banamex's receive
commissions. Likewise, the Western Union and Elektra relationship would remain
the same, with Western Union paying to Elektra its agreed portion of the total
foreign exchange revenues on Western Union originated transactions to Elektra
locations in Mexico, as well as Elektra's receive commissions. Second,
MoneyGram Agents would be able to send transactions via Western Union to
Elektra locations in Mexico and Western Union agents would be able to send
transactions via the Company to Banamex locations in Mexico. In each case, the
Company or Western Union, as the originator of the transaction, would receive
all of its transaction fees on each transaction sent to Mexico and pay its
agents the corresponding send commission. However, on each transaction
originated by a MoneyGram Agent sent via Western Union and received through
Elektra, Western Union still would share the total foreign exchange spread
realized on each such transaction with Elektra and pay to Elektra its receive
commission pursuant to the terms of their existing agreement, but also would
pay to the Company an amount equal to 15% of such total foreign exchange
spread. Likewise, on each transaction originated by a Western Union agent sent
via MoneyGram and received through Banamex, the Company still would pay to
Banamex its receive commission and one-half of the total foreign exchange
spread realized on each such transaction, but also would pay to Western Union
an amount equal to 15% of such total foreign exchange spread. See "Certain
Relationships and Related Transactions--The Transition Agreements--The
Distribution Network Enhancement Agreement."

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. See "Certain Relationships and Related
Transactions--The Transition Agreements--The Registration Rights Agreement."

RISK FACTORS

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.

FACTORS RELATING TO INDEPENDENCE AND SALE OF THE COMPANY

Conflicts of Interest with First Data. The sale of the Common Stock offered
hereby is being made in order to comply with the terms of the Consent Decree
entered into between First Data and the FTC in connection with First Data's
merger with FFM, the parent company of Western Union. See "The Transition and
Ongoing Relationship with First Data--Background." Western Union is the
principal competitor of the Company and has substantially greater financial
and other resources than the Company. 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). 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. Moreover, 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.
First Data also will retain ownership rights to the IPS Application Software
used in the operation of the Business and IPS's money order product, which
will be licensed to the Company pursuant to the Software License Agreement.
Subject to certain exceptions, the Company will be permitted only to use such
software in connection with the MoneyGram service (and not in connection with
any other payment product or service without the prior approval of IPS); First
Data, however, will not be restricted in its use of such software, including
any use by Western Union.

Conflicts of interest also could arise between First Data and the Company 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 described below. 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. In order for the Company to conduct
the Business on substantially the same terms as has IPS, immediately prior to
the Offering, the Company and First Data or its affiliates will enter into the
Transition Agreements. 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. Most of these
fees and expenses are dependent upon transaction volume and therefore, will
increase as transaction volumes increase. No assurances can be given that the
Company could not obtain such services at a lower cost from a third party. The
Company may terminate the Operations Agreement in its entirety or may
terminate certain related groups of services offered under the Operations
Agreement, 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. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Operations Agreement."

Potential Changes in the Banamex Relationship. 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
in Mexico. All of the MoneyGram Agents in Mexico are currently "receive only"
agents, who do not send transactions from Mexico to the U.S. Banamex, a
receive only agent, is the Company's primary MoneyGram Agent in Mexico,
representing 71% of all MoneyGram Agent locations in Mexico and 97% of the
Company's total estimated receive transaction volume in Mexico in 1995.
Pursuant to an agreement between the Company and Banamex (the "Banamex
Agreement"), which expires in April 2002, the Company may only process or pay
MoneyGram money transfers in Mexico through Banamex as its receiving MoneyGram
Agent, except in limited circumstances in which the Company had a relationship
with a MoneyGram Agent in Mexico prior to September 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.

The Company believes it would benefit from expanding the number of its
receive only agents in Mexico. To this end, the Company and Western Union have
entered into the Network Enhancement Agreement and have agreed to pursue
negotiations with Elektra and Banamex in order to permit the use of Banamex
locations as receive only locations for Western Union, as well as the Company,
and Elektra locations as receive only locations for the Company, as well as
Western Union. There can be no assurances that Elektra or Banamex will agree
to the terms and provisions, including the nonexclusive arrangements,
contemplated by the Network Enhancement Agreement, or that, if implemented,
the Network Enhancement Agreement will result in the Company realizing
increased transaction volume to, or foreign exchange revenues from, Mexico.

If such a mutual non-exclusive relationship cannot be achieved, there can be
no assurance that Banamex will not enter into an agreement pursuant to which
it will process U.S. to Mexico consumer money wire transfers for American
Express or First Data and their respective affiliates (including Western
Union), or that the performance of any such agreement will not have a material
adverse effect on the Company's business, operating results or financial
condition.

Licensing Requirements. Due to certain licensing requirements under
applicable law, the Company is not allowed to offer the MoneyGram service in
its own name or directly enter into Agent Contracts unless and until the
Company obtains the Required Licenses in substantially all jurisdictions in
the United States. Therefore, although IPS will transfer and assign the
MoneyGram Assets (including the economic benefits of, but not the title to,
the Agent Contracts) to the Company pursuant to the Transition, the Operations
Agreement provides that IPS will continue to be the licensed entity for the
Business and hold title to all current Agent Contracts (other than the non-
assignable Agent Contracts in the name of TRS) and all Agent Contracts entered
into prior to the date the Company is licensed to own and operate the Business
in its own name. Although the Company believes that it will be able to obtain
all Required Licenses within one year from the date hereof, no assurances can
be given that the Company will in fact obtain any or all such licenses. See
"The Transition and Ongoing Relationship with First Data."

Reliance on First Data and Limitations on Use of Certain Software. Prior to
the Transition, the Business was conducted as a product line of IPS and shared
certain internal operations and support systems with other IPS and First Data
operations. Under the Operations Agreement, certain data processing,
management services and corporate support services will be provided to the
Company by IPS and its affiliates. In addition, the Software License Agreement
will grant to the Company, effective upon the termination of the data
processing services under the Operations Agreement, a perpetual license to the
Company for the IPS Application Software. Under the Software License
Agreement, the Company will only have the right to use such software in
connection with the MoneyGram service, and will be prohibited from using such
software for other payment instruments or

services without the prior approval of IPS. However, First Data will not be
restricted in its use of the IPS Application Software for any purpose
whatsoever, including any use in connection with conducting the operations of
Western Union. In the event that the Company desires expanded use of the IPS
Application Software, IPS has agreed to negotiate the price and terms thereof
in good faith.

The operating success and viability of the Company are dependent, in large
part, upon the performance by First Data or its affiliates of their
obligations under the Transition Agreements. Therefore, the breach or
termination of the Operations Agreement, the Software License Agreement, the
Facility or the Service Mark License Agreement 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, access to software capable of
performing functions equivalent to the IPS Application Software 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 (other than
the non-assignable Agent Contracts in the name of TRS) has been assigned to
the Company by IPS, the Company will be precluded from operating the Business
other than under the Operations Agreement 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."

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 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 have initially refused to register "MoneyGram" on the grounds that
it is merely descriptive of the service. The Company intends to vigorously
defend 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 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
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.

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, 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
certain 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, except in certain point-of-sale advertising at MoneyGram
Agent 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.

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 3-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 to participating partner postal
administrations (such as Mexico's postal service) electronically. 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.

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 will also face future 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 recent growth in revenues and
transaction volumes has 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.

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."

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 on January 15, 1997 (unless
extended by First Data at its option), 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.

ANTITAKEOVER MATTERS AND POTENTIAL ADVERSE CONSEQUENCES OF CERTAIN TAX
PROVISIONS

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."

The Contribution Agreement generally requires the Company to make cash
payments to IPS for any tax savings arising from the increase in the tax basis
of the MoneyGram Assets as a result of the Contribution, but

only to the extent, and at the time, that a tax benefit is actually realized
by the Company or another entity holding MoneyGram Assets. However, special
rules apply following a change of control (as defined therein) of the Company
or any such entity. After a change of control, at the election of IPS, the
Company will be required to make cash payments to IPS as if such change of
control had not occurred; for example, interest expense following a leveraged
acquisition of the Company or losses or deductions of a consolidated group for
tax purposes which the Company has joined as a result of the change of control
would be disregarded in determining whether the increased tax basis produced
an actual tax benefit. Thus, if in any such circumstances the Company realized
no actual tax benefits from the increased tax basis resulting from the
Contribution, the Company would be required to disregard such deductions in
calculating the cash payments due to IPS under the Contribution Agreement.
Potential acquirors would, in certain circumstances, thus face a continuing
obligation to make cash payments to IPS irrespective of whether the Company
realized tax benefits in corresponding amounts. This feature of the
Contribution Agreement could materially impair the value of the Company to
potential acquirors. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Contribution Agreement--Taxes."

DEPENDENCE ON MAJOR MONEYGRAM AGENTS

In 1995, the Company's top ten 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. As of May 22, 1996, Agent Contracts representing approximately 8,000
locations and approximately 63% of the Company's 1995 Transaction Fee Revenues
expire during 1998 or thereafter. Agent Contracts representing approximately
400 locations and approximately 2% of the Company's 1995 Transaction Fee
Revenues expire between May 23, 1996 and December 31, 1997. 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.

Two MoneyGram Agents, Banamex and the Chicago Currency Exchange, each were
involved in transactions representing over 10% of the Company's total
revenues. 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 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. The
loss of or significant reduction in business from one or more of the Company's
significant MoneyGram Agents, including Banamex and 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."

ABILITY TO MANAGE GROWTH AND NEW MANAGEMENT TEAM

The Company's business has grown significantly over the past several years.
To enhance its growth prospects, the Company 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
quality 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. In
addition, future growth may require additional operational facilities and
enhanced management information and telecommunications systems and other
operations, causing the Company to incur additional expenses. There can be no
assurance that the Company will continue to grow or effectively manage its
future growth, particularly as a stand-alone entity, with its new management.

Certain members of the Company's senior management group, including Mr.
Calvano, the Chief Executive Officer, and Mr. Friedman, the Chief Financial
Officer, began working with the Company in February and April

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 effectively implement 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."

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.

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.
All of the Company's voice center and other customer service operations are
located in its Lakewood Facility. 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.
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 could incur. See "Business--Operations."

FOREIGN TRANSACTIONS RISKS

Approximately 75% of the Company's total revenues (including foreign
exchange revenues) in each of 1994 and 1995 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 transaction from approximately $26 in the
first three months of 1995 to approximately $14 in the first three 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 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."

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 forty-three 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 regulation
includes both international anti-money laundering initiatives and local
regulation of money transmission. While the Mexican government currently is
considering 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."

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.

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
shares of Common Stock and an additional shares reserved
for issuance under the Company's 1996 Stock Option Plan ( shares) and
1996 Broad-Based Stock Option Plan ( shares). See "Management--Stock
Plans." 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 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.

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 any 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."
First Data has advised the Company that, in order to comply with its
divestiture obligations under the Consent Decree and subject to prevailing
market conditions from time to time, it intends to cause IPS to sell, transfer
or dispose any remaining shares of Common Stock owned by IPS as soon as
practicable and in any case no later than January 23, 1997. 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 and the Selling Stockholder 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) 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 90 days after the date
hereof, in the case of the Selling Stockholder, 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 or (c) one or more
registration statements relating to the Company's 1996 Stock Option Plan, the
1996 Broad-Based Stock Option Plan and the MoneyGram Agent Stock Option Plan.
See "Shares Eligible for Future Sale" and "Underwriters."

DILUTION

As of March 31, 1996, the Company had a pro forma net tangible book value
per share of Common Stock of $ (after giving effect to the issuance of
shares of Common Stock to IPS and the IPS Cash Contribution in the
Transition). Based on an assumed initial public offering price of $ per
share, purchasers of Common Stock in the Offering will experience an immediate
dilution of $ per share. See "Dilution."

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 March 31, 1996,
was $7.6 million or $ per share of Common Stock (after giving effect to the
issuance of shares of Common Stock to IPS and the IPS Cash
Contribution in the Transition, as if the Transition occurred on March 31,
1996.) See "The Transition and Ongoing Relationship with First Data" and
"Capitalization." 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 an assumed initial public offering
price of $ per share:

Assumed initial public offering price per share................... $
Net tangible book deficit per share prior to the Offering and
the IPS Cash Contribution...................................... $( )
Increase in net tangible book value per share attributable to
the IPS Cash Contribution......................................
Pro forma net tangible book value per share after giving effect to
the Transition...................................................
------
Dilution to purchasers of Common Stock in the Offering............ $
======

CAPITALIZATION

The following table sets forth the pro forma cash, short-term debt and
capitalization of the Company as of March 31, 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.

MARCH 31, 1996
--------------
(IN THOUSANDS)

Cash...................................................... $12,000
=======
Short-term debt(1)........................................ $ --
-------
Long-term debt............................................ --
-------
Stockholders' equity:
Common Stock, $.01 par value, 100,000,000 shares
authorized; issued and outstanding(2).......
-------
Capital surplus(3)...................................... 27,666
Accumulated deficit..................................... (7,101)
-------
Total stockholders' equity............................ 20,565
-------
Total capitalization................................ $20,565
=======

- -------

(1) 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 on
January 15, 1997, 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."

(2) Excludes shares of Common Stock reserved for issuance under the
Company's 1996 Stock Option Plan ( shares) and 1996 Broad-Based
Stock Option Plan ( shares). See "Management--Stock Plans" and
"Shares Eligible for Future Sale."
(3) Includes $12 million, representing the IPS Cash Contribution.

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 have been derived from audited Financial
Statements not included in this Prospectus. The statement of operations data
and balance sheet data for the years ended December 31, 1991 and 1992 and
balance sheet data as of March 31, 1995 are derived from unaudited financial
statements not included in this Prospectus. Balance sheet data as of March 31,
1996 and statement of operations data for the three-month periods ended March
31, 1995 and 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 three months ended March 31, 1996
are not necessarily indicative of the Company's results for any future interim
period or the entire year.

THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------------- ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)

STATEMENT OF OPERATIONS
DATA:
Revenues:
Fee and other.......... $ 17,735 $ 30,519 $48,815 $71,015 $94,242 $18,899 $27,567
Foreign exchange....... 594 1,280 3,070 20,373 42,826 13,928 8,044
-------- -------- ------- ------- ------- ------- -------
Total revenues....... 18,329 31,799 51,885 91,388 137,068 32,827 35,611
Expenses:
Agent commissions and
amortization of Agent
Contract acquisition
costs................. 11,612 17,957 22,112 28,742 34,801(1) 5,770(1) 10,925
Processing costs....... 9,791 11,022 12,361 15,334 25,542 5,289 6,822
Advertising and
promotion (2)......... 8,800 7,847 13,708 19,523 33,822(3) 7,737 8,814
Selling, service and
general and
administrative........ 4,807 5,243 6,900 8,378 13,247(4) 2,804 3,612(4)
-------- -------- ------- ------- ------- ------- -------
Total expenses....... 35,010 42,069 55,081 71,977 107,412 21,600 30,173
Income (loss) before
income taxes.......... (16,681) (10,270) (3,196) 19,411 29,656 11,227 5,438
Net income (loss)...... $(11,009) $ (6,778) $(2,077) $12,176 $18,294 $ 6,925 $ 3,355
Pro forma net income
(loss) per common
share (5)............. $ $ $ $ $ $ $
BALANCE SHEET DATA (AT
END OF PERIOD):
Assets restricted to
settlement of
MoneyGram
transactions.......... $ 11,338 $ 11,573 $12,827 $20,927 $26,010 $20,030 $26,281
Fixed assets at cost,
net of depreciation... 950 1,123 1,275 3,084 6,831 3,550 7,131
Costs of acquiring
Agent Contracts, net
of amortization....... 3,369 2,864 1,956 3,401 7,979 3,603 12,996
Total assets........... 16,561 16,009 16,502 28,583 42,449 28,920 48,285
Liabilities relating to
unsettled MoneyGram
transactions.......... 11,338 11,573 12,827 20,927 26,010 20,030 26,281
Total liabilities...... 15,455 14,996 17,358 35,411 40,305 30,699 39,720
Stockholder's
equity/(deficit)...... 1,106 1,013 (856) (6,828) 2,144 (1,779) 8,565
OPERATING DATA:
Number of MoneyGram
Agent locations (at
end of period)........ 11.6 13.1 14.1 16.0 17.2 16.5 17.8
Percentage change...... 11% 13% 8% 13% 8% N/A 8%
Number of transactions. 656 1,114 2,040 3,285 5,393 1,232 1,505
Percentage change...... 104% 70% 83% 61% 64% N/A 22%

- -------

(1) After deducting 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 million less for the first three 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 $300,000 in the first quarter
of 1996.

(5) Gives effect to the Company's issuance to IPS of shares of Common
Stock prior to the consummation of the Offering.

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, accounting for approximately 16% of all such transactions worldwide
in 1995. The Company offers customers the ability to transfer funds quickly,
reliably and conveniently through its approximately 17,800 MoneyGram Agent
locations in 83 countries worldwide. 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 revolving
credit, time payments 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. In the United States alone, the Federal Reserve
Board of Governors estimates that there are approximately 23 million
households 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, representing $9 to $10 billion in face
value 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.
Advertising and promotional campaigns should continue to raise awareness of
money transfer services to new groups of consumers, thereby increasing demand.

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
value 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 the U.S. to U.S., U.S. to Mexico, and U.S. and 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 three months of 1996 were $239, $266 and $382
for transactions from the U.S. to U.S., U.S. to Mexico, and U.S. and
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.

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 growth potential 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 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 due 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
$26 in the first three months of 1995 to approximately $14 in the first three
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
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. See "Risk Factors--
Potential Changes in the Banamex Relationship."

Investment income represents income allocated from IPS for funds which have
been transferred through the MoneyGram system and collected by the Company,
but not yet collected by the recipient. 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 (30.6% of 1995
expenses), advertising and promotion expenses (31.5% of 1995 expenses),
processing expenses (23.8% of 1995 expenses), selling, service and general and
administrative expenses (12.3% of 1995 expenses) and the amortization of Agent
Contract acquisition payments (1.8% 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 includes 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

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 Contribution Agreement, the Operations Agreement and the
Facility. See Note 1 of the Notes to Financial Statements.

Taxes

Upon the contribution of the MoneyGram Assets by IPS to the Company pursuant
to the Contribution Agreement, IPS is expected to recognize taxable gain for
federal income tax purposes in an amount equal to the difference between the
fair market value of the MoneyGram Assets at the time of the contribution and
their tax basis at such time. As a result, the tax basis of the MoneyGram
Assets will be increased by the amount of such gain and generally amortized on
a straight-line basis for tax purposes over a fifteen-year period. The
Contribution Agreement provides, in general, that to the extent the Company or
any entity holding MoneyGram Assets is entitled to utilize such increased tax
basis following the Contribution (through depreciation, amortization, reduced
gain or increased loss) and thereby reduce federal, state or local income or
franchise taxes payable by the Company, such entity or other entities filing
tax returns on a combined basis with the Company or such entity (as defined
more fully in the Contribution Agreement, a "Company Tax Group"), the Company
will pay IPS the amount by which such taxes are so reduced. Such payments will
be made at the times specified in the Contribution Agreement (which are
intended to correspond with the times the Company or the relevant Company Tax
Group otherwise would remit estimated, year-end or other taxes to a taxing
authority). Subject to certain exceptions, tax benefit payments are intended
to be limited to actual tax benefits received by the Company or the relevant
Company Tax Group as a result of the increased tax basis in the MoneyGram
Assets. See "Risk Factors--Antitakeover Matters and Potential Adverse
Consequences of Certain Tax Provisions" and "Certain Relationships and Related
Transactions--The Transition Agreements--The Contribution Agreement--Taxes."

Quarterly Results of Operations

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.

QUARTER ENDED
----------------------------------------------------------------------------------
1994 1995 1996
--------------------------------- ------------------------------------ --------
MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31 JUNE 30 SEPT. 30 DEC. 31 MARCH 31
-------- ------- -------- ------- -------- ------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenues:
Fee and other.......... $14,738 $18,800 $19,494 $17,983 $18,899 $28,420 $25,615 $21,308 $27,567
Foreign exchange....... 1,950 5,399 5,457 7,567 13,928 10,480 8,737 9,681 8,044
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues........ 16,688 24,199 24,951 25,550 32,827 38,900 34,352 30,989 35,611
Expenses:
Agent commissions and
amortization of Agent
Contract acquisitions
costs................. 5,988 7,454 7,956 7,344 5,770(1) 10,475 9,342 9,214 10,925
Processing............. 3,092 4,132 4,070 4,040 5,289 6,338 5,873 8,042 6,822
Advertising and
promotion(2).......... 3,766 4,866 5,145 5,746 7,737 8,265 8,013 9,807(3) 8,814
Selling and service.... 894 929 914 963 1,510 1,742 1,993 2,280(4) 2,221(4)
General and
administrative........ 1,044 1,115 1,182 1,337 1,294 1,391 1,455 1,582 1,391
------- ------- ------- ------- ------- ------- ------- ------- -------
Total expenses........ 14,784 18,496 19,267 19,430 21,600 28,211 26,676 30,925 30,173
------- ------- ------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................. 1,904 5,703 5,684 6,120 11,227 10,689 7,676 64 5,438
Income tax expense...... 710 2,126 2,118 2,281 4,302 4,095 2,941 24 2,083
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income.............. $ 1,194 $ 3,577 $ 3,566 $ 3,839 $ 6,925 $ 6,594 $ 4,735 $ 40 $ 3,355
======= ======= ======= ======= ======= ======= ======= ======= =======
Pro forma net income per
common share(5)........ $ $ $ $ $ $ $ $ $
Number of transactions.. 633 819 866 967 1,232 1,316 1,276 1,569 1,505

- --------

(1) After deducting a $2.5 million commission rebate from Banamex received by
the Company during the first quarter of 1995.

(5) Gives effect to the Company's issuance to IPS of shares of
common stock prior to the consummation of the Offering.

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.

PERCENTAGE OF TOTAL REVENUES
----------------------------------
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
-------------------- -----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----

Revenues:
Transaction Fees.................. 93.8% 77.4% 68.5% 57.4% 77.2%
Foreign exchange.................. 5.9 22.3 31.2 42.4 22.6
Investment income................. .3 .3 .3 .2 .2
----- ----- ----- ----- -----
Total revenues................ 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Agent commissions................. 40.9 30.4 24.0 16.2 28.9
Amortization of Agent Contract
acquisition costs................ 1.7 1.1 1.4 1.4 1.8
Processing........................ 23.8 16.8 18.6 16.1 19.2
Advertising and promotion......... 26.4 21.3 24.6 23.6 24.7
Selling and service............... 5.8 4.0 5.5 4.6 6.2
General and administrative........ 7.5 5.1 4.2 3.9 3.9
----- ----- ----- ----- -----
Total expenses................ 106.1 % 78.7% 78.3% 65.8% 84.7%
----- ----- ----- ----- -----
Income (loss) before income taxes... (6.1)% 21.3% 21.7% 34.2% 15.3%
----- ----- ----- ----- -----
Net income (loss)................... (4.0)% 13.3% 13.4% 21.1% 9.4%
===== ===== ===== ===== =====

Three Months Ended March 31, 1996 Compared to Three Months Ended March 31,
1995

Revenues. The Company's revenues increased 8% in the first three months of
1996 to $35.6 million from $32.8 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 46% in the first three months of 1996 to
$27.5 million from $18.8 million for the same period in 1995. This growth was
due to a 22% increase in transactions to 1.5 million transactions in the first
three months of 1996 from 1.2 million transactions in the same period of 1995
and an increase of 20% in the average gross fee per transaction to $18.26
compared to $15.27 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 three
months of 1996, as well as the expansion of the MoneyGram Agent network by 8%.
The increase in average gross fee per transaction was due to the Company
sponsoring only three weeks of price promotions in 1996 compared to 13 weeks
of price promotions during the same period in 1995. The impact of the price
promotion was slightly offset by a 12% decrease in the average face amount per
transaction to $267 for the first three months of 1996 from $303 for the same
period in 1995.

Foreign exchange revenues, substantially all of which arise from U.S. to
Mexico transactions, decreased 42% to $8 million in the first three months of
1996 compared to $13.9 million for the same period in 1995. The average
foreign exchange revenue per Banamex transaction decreased 46% in the first
three months of 1996 to approximately $14 from $26 for the same period in
1995. The unusually high foreign exchange revenue during the first three
months of 1995 was primarily due to the higher volatility of the peso during
this period and a higher average face amount of funds transferred of $317
compared to $259 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.

The peso to U.S. dollar exchange revenue for the Company and Banamex
averaged 11% of the average face amount during the first three months of 1996
compared to 16% 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. The foreign exchange revenue
decrease was offset slightly by a 10% increase in the number of Banamex
transactions to 584,000 for the first three months of 1996 compared to 532,000
transactions for the same period in 1995.

Expenses. The Company's total operating expenses increased 40% to $30.2
million in the first three months of 1996 compared to $21.6 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 three months of 1996, the Company paid approximately $300,000
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 approximately $2 million during the first three 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 17% during the
first three months of 1996, which is more consistent with transaction volume
growth of 22% for this same period.

As a percentage of total revenues, total operating expenses increased to 85%
during the first three months of 1996 compared to 66% 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 128%
in the first three months of 1995 to 101% in the first three months of 1996.

MoneyGram Agent commissions and amortization of Agent Contract acquisition
payments increased 88% to $10.9 million during the first three months of 1996
from $5.8 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 three months of
1996 from 31% 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 44% in 1995.

Processing expenses increased 29% to $6.8 million during the first three
months of 1996 from $5.3 million during the same period in 1995. As a
percentage of Transaction Fee Revenues, processing expenses decreased to 25%
during the first three months of 1996 from 28% during the same period in 1995,
primarily due to an increase in the average Transaction Fee Revenue per
transaction in the first three months of 1996 described above.

Advertising and promotion expenses increased 14% to $8.8 million during the
first three months of 1996 from $7.7 million during the same period in 1995.
As a percentage of total revenues, advertising and promotion expenses
increased to 25% during the first three months of 1996 compared to 24% 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 $2 million less for the first three months of 1996 and would
have represented 19% of total revenues.

Selling and service expenses increased by 47% to $2.2 million during the
first three months of 1996 from $1.5 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 8%
during the first three months of each of 1996 and 1995. During the first three
months of 1996 the Company incurred approximately $300,000 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 increased by 7% to $1.4 million during
the first three months of 1996 from $1.3 million during the same period in
1995 due to an overall growth in the Business. As a percentage of Transaction
Fee Revenues, general and administrative expenses decreased to 5% during the
first three months of 1996 from 7% during the same period in 1995.

Operating Income. Operating income decreased by 52% to $5.4 million in the
first three months of 1996 from $11.2 million during the same period in 1995.
As a percentage of total revenues, operating income decreased to 15% during
the first three months of 1996 from 34% during the same period in 1995.

Net Income. The Company's net income decreased 51% in the first three months
of 1996 to $3.4 million from $6.9 million during the same period in 1995. The
decrease in net income primarily resulted from the 42% decrease in foreign
exchange revenues caused by less volatility in the value of the Mexican peso
compared to the U.S. dollar, a 40% increase in total operating expenses due to
an increase in transaction volumes, the 1995 Banamex Rebate and the $2 million
increase in advertising and promotion expenses resulting from the Company's
accounting change relating thereto. The increase in operating expenses was
offset substantially by a 46% 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 67% increase in the number of such transactions
from 1.4 million to 2.3 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.

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 from 79% in 1994 to 78% in 1995. 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 from
32% in 1994 to 25% in 1995 of total revenues. MoneyGram Agent commissions and
amortization of Agent Contract acquisition payments as a percentage of
Transaction Fee Revenues decreased from 40% in 1994 to 37% in 1995. 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 from 22% in 1994 to 27% in 1995,
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 $1.3 million. As a percentage of total revenues, advertising and
promotion expense increased from 21% in 1994 to 25% in 1995. 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 12% 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 from 5% in
1994 to 8% in 1995. 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 from 7% in 1994 to 6%
in 1995.

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 from 21% to 22%. 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.

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.

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 from 106% in 1993 to 79% in 1994. 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 from 43% to 31%. MoneyGram Agent
commissions and the amortization of Agent Contract acquisition payments
decreased from 45% to 40% 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 from 25% in 1993 to
22% in 1994.

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 from
26% in 1993 to 21% in 1994. 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 from 6% in 1993 to 5% in 1994. 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 from 8%
in 1993 to 7% in 1994.

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 $5.9 million to $48.3 million at
March 31, 1996 from $42.4 million at December 31, 1995. The $26.3 million of
assets attributable to unsettled MoneyGram transactions at March 31, 1996, was
comparable to the balance at December 31, 1995. "Costs of acquiring Agent
Contracts, net of amortization," increased by $5 million from $8.0 million at
December 31, 1995 to $13 million at March 31, 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 1996, the Company has already paid $5.7 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 $4 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 three months of 1996, cash flows from operating activities
increased by $.3 million to $3.6 million from $3.3 million during the same
period in 1995. This was due to reduced cash outflows related to working
capital items somewhat offset by lower net income in the first three months of
1996 compared to 1995.

During the first three months of 1996, cash flows used by investing
activities increased by $5.2 million to $6.7 million from $1.5 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. As a result of this increased investing activity, the Company
required $3.1 million of funding from IPS during the 1996 period as compared
to returning capital of $1.9 million to IPS during the 1995 period.

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 $600,000 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 on
January 15, 1997, 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 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 March 31, 1996, the remaining maximum
commitment equalled approximately $64 million over the next six 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.

BUSINESS

OVERVIEW

The Company is a leading non-bank provider of consumer money wire transfer
services, accounting for approximately 16% of all such transactions worldwide
in 1995. The Company offers customers the ability to transfer funds quickly,
reliably and conveniently through its approximately 17,800 MoneyGram Agent
locations in 83 countries worldwide. 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
revolving credit, time payments and personal loans) through many MoneyGram
Agent locations in the United States.

The number of MoneyGram Agent locations has grown at a compounded annual
rate of approximately 11% since 1991, increasing from 11,700 in 1991 to
approximately 17,800 as of March 31, 1996. In 1995, the number of transactions
processed by the Company grew to 5.4 million, an increase of 64% over 1994 and
164% over 1993, and the total face value of funds transferred by the Company
grew to $1.6 billion, an increase of 38% over 1994 and 103% over 1993. In the
first three months of 1996, the Company transferred approximately $400 million
of funds through 1.5 million transactions, compared to approximately $375
million of funds through 1.2 million transactions in the same period of 1995.
Substantially all of the Company's transactions originate in the United
States. In 1995, 44% 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's 1995 total revenues, Transaction Fee Revenues, foreign
exchange revenues and operating income were $137.1 million, $93.8 million,
$42.8 million and $29.7 million, respectively, compared to $51.9 million,
$48.7 million, $3.1 million and an operating loss of $3.2 million in 1993,
respectively. In 1995, the Company generated approximately 69% of its revenues
through transaction fees which are charged to customers according to a
graduated schedule based upon the face value of the transaction. In the first
three months of 1996, the Company's total revenues, Transaction Fee Revenues,
foreign exchange revenues and operating income were $35.6 million, $27.5
million, $8.0 million and $5.4 million, respectively, compared to $32.8
million, $18.8 million, $13.9 million and $11.2 million, respectively, for the
first three months of 1995.

The Company generates 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. The Company's foreign exchange revenues from its Banamex
relationship amounted to $3.0 million in 1993, $20.2 million in 1994 and $42.4
million in 1995. In the first three months of 1996, foreign exchange revenues
were $8.0 million compared to $13.9 million in the same period in 1995.

CUSTOMERS AND MARKETS

. Reliability and Security. The Company believes that 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. The 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.

. 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, representing $9 to $10 billion in face
value of transferred funds.

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. 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 broad network coverage of its target market without
saturation. Through its network and highly focussed advertising and
promotional campaigns, the Company targets these groups 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 ten-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.

. 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 currently advertises through national and
spot television, radio, print and other media including billboards and
bus benches. The Company believes it has been successful in targeting
frequent users of money transfer services. The Company also uses its
MoneySaver frequent user program to build customer loyalty and enhance
the MoneyGram brand image.

. Expand its Quality 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
(i.e. consumer money wire transfer services vs. check cashing) and
commitment to providing the MoneyGram service. In order to retain its
agents, MoneyGram provides them with a number of enhanced services,
including product training and traffic building programs as well as
advertising and 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 as well as receive capabilities by MoneyGram Agents in Latin
America is broadening the Company's consumer 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 experiencing rapid growth (e.g. Vietnam, India and
China), suffering from inefficient and expensive delivery systems (e.g.
the European continent) or currently unavailable due to embargoes (e.g.
Cuba). 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 postal and packaging outlets,
photocopy centers 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 plans to
capitalize on its existing MoneyGram Agent network to develop
complementary products and services such as money order, pre-

paid 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 Company to
potential agents and the value of its services to its customers. The
Company intends to develop a money order product, for which IPS has agreed
to provide software support and processing services, the terms and
conditions of which are subject to negotiation.

THE MONEYGRAM AGENT NETWORK

The Company has an extensive network of MoneyGram Agent locations in the
United States (approximately 14,000) and in Mexico (approximately 1,000, of
which approximately 700 are Banamex locations). The Company has an additional
3,000 MoneyGram Agent locations in over 83 other countries, of which
approximately 17% are American Express Travel Service Offices or
representative offices (collectively, "TSOs"). Approximately 800 of the
approximately 17,800 MoneyGram Agent locations are TSOs, and of the 800
approximately 170 are receive-only agents. TSOs represented approximately 9%,
6%, 2% and 1% of the Company's 1993, 1994 and 1995 and the three-month period
ended March 31, 1996, transaction volume respectively. As a result of the
Transition, American Express has indicated that its wholly owned TSO's will no
longer serve as MoneyGram Agents. The loss of these TSO's will reduce the
number of MoneyGram Agents to approximately 17,000 and reduce the number of
countries with MoneyGram Agents from 83 to 51.

The Company estimates that 14,000 to 15,000 of the 17,800 MoneyGram Agent
locations in any given month, on average, initiate or receive a transaction.
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 volume. MoneyGram Agent locations also include travel
agencies, collection agencies, bus stations and credit unions. Management
believes that there are significant agent network expansion opportunities for
the Company, particularly in international markets with significant growth
potential, such as India, China and Vietnam.

The total number of MoneyGram Agent locations has increased from
approximately 14,100 in 1993 to 17,800 at March 31, 1996. As of May 22, 1996,
Agent Contracts representing approximately 8,000 locations and approximately
63% of the Company's 1995 Transaction Fee Revenues expire during 1998 or
thereafter. Agent Contracts representing approximately 400 locations and
approximately 2% of the Company's 1995 Transaction Fee Revenues expire between
May 23, 1996 and December 31, 1997. 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. Although the Company has lost approximately
2,700, 3,600 and 400 MoneyGram Agents for the years ended 1994 and 1995 and
the three-month period ended March 31, 1996, respectively, it has added
approximately 4,500, 4,900 and 1,000 new MoneyGram Agents, respectively,
during such periods. The Company believes that this 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 service
providers, is normal for the industry. While Western Union will be prohibited
under the Consent Decree from contracting with any selling MoneyGram Agent
until the scheduled expiration of its Agent Contract (without giving effect to
any contract extensions or renewal provisions that become effective after the
consummation of the Offering), there can be no assurance that MoneyGram Agents
will not choose to transfer to Western Union following the expiration of their
Agent Contracts. In addition, 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.

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 ten 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. Two MoneyGram Agents, Banamex and the Chicago Currency Exchange,
each were involved in transactions representing over 10% of the Company's
total revenues. 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, while 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. The
loss of or a significant reduction in business from one or more of the
significant MoneyGram Agents, including Banamex 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 currently expects to implement the MoneyGram Agent Stock
Option Plan, pursuant to which the Company would reserve shares of
Common Stock. 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.

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 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.

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. 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.

[Chart depicting the flow of funds from a sending customer to a receiving
customer.]
[Chart depicting the flow of funds of funds from a selling MoneyGram Agent to
the Company and from the Company to a receiving MoneyGram Agent.]

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 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.

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 value of the
transaction. Prices are set to maximize transaction volume at certain
"frequent" face value amounts. The average face amounts for the Company's
transactions during 1995 were $238, $302 and $446 for transactions from the
U.S. to U.S., U.S. to Mexico and U.S. and 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 three months of 1996 were $239, $266 and $382 for transactions from
the U.S. to U.S., U.S. to Mexico, and U.S. and 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 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. 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 three-month period ended March 31, 1996 total
revenues from foreign exchange were $8.0 million compared to $13.9 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 earned per transaction from
approximately $24

in the first three months of 1995 to approximately $16 in the first three
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 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 national and 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 including 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 three months of 1996, 32% and
37%, 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
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.

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.
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 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 three months ended March 31, 1996, approximately 70% 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 2,100
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 600,000 transactions in the first three months of 1996
compared to approximately 530,000 transactions in the same period in 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.

The Company believes it would benefit from expanding the number of its
receive only agents in Mexico. To this end, the Company and Western Union have
agreed to pursue negotiations with Elektra and Banamex in

order to permit the use of Banamex locations as receive only locations for
Western Union, as well as the Company, and Elektra locations as receive only
locations for the Company, as well as Western Union. In the event that Elektra
and Banamex each agree, the Company and Western Union will enter into the
Network Enhancement Agreement which will encompass the following structuring
of such non-exclusive relationships. First, the Company's economic agreement
with Banamex would remain unchanged, with the Company paying to Banamex one-
half of the total foreign exchange revenues on MoneyGram originated
transactions to Banamex locations in Mexico, as well as Banamex's receive
commissions. Likewise, the Western Union and Elektra relationship would remain
the same, with Western Union paying to Elektra its agreed portion of the total
foreign exchange revenues on Western Union originated transactions to Elektra
locations in Mexico, as well as Elektra's receive commissions. Second,
MoneyGram Agents would be able to send transactions via Western Union to
Elektra locations in Mexico and Western Union agents would be able to send
transactions via the Company to Banamex locations in Mexico. In each case, the
Company or Western Union, as the originator of the transaction, would receive
all of its transaction fees on each transaction sent to Mexico and pay its
agents the corresponding send commission. However, on each transaction
originated by a MoneyGram Agent sent via Western Union and received by
Elektra, Western Union still would share the total foreign exchange spread
realized on each such transaction with Elektra and pay to Elektra its receive
commission pursuant to the terms of their existing agreement, but also would
pay to the Company an amount equal to 15% of such total foreign exchange
spread. Likewise, on each transaction originated by a Western Union agent sent
via MoneyGram and received by Banamex, the Company still would pay to Banamex
its receive commission and one-half of the total foreign exchange spread
realized on each such transaction, but also would pay to Western Union an
amount equal to 15% of such total foreign exchange spread. There can be no
assurances that Elektra or Banamex will agree to the terms and provisions,
including the nonexclusive arrangements, contemplated by the Network
Enhancement Agreement, or that, if implemented, the Network Enhancement
Agreement will result in the Company realizing increased transaction volume to
or increased foreign exchange revenues from Mexico.

If such a mutual non-exclusive relationship cannot be achieved, there can be
no assurance that Banamex will not enter into an agreement pursuant to which
it will process (but not pay) U.S. to Mexico consumer money wire transfers for
American Express and First Data and their respective affiliates (including
Western Union), or that the performance of any such agreement will not have a
material adverse effect on the Company's business, operating results or
financial condition.

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.

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. The Company has
increased its send transaction volume to Asia and to the Caribbean and Latin
America. The advent of send as well as receive capabilities by MoneyGram
Agents in Latin America is broadening the Company's

consumer base and fostering growth in this key market. In addition, the
Company is currently negotiating new MoneyGram 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. Future markets of focus include those countries experiencing rapid
growth (e.g. Vietnam, India and China), suffering from inefficient and
expensive delivery systems (e.g. the European continent) or currently
unavailable due to embargoes (e.g. Cuba). 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.

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 3-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 to participating
partner postal administrations (such as Mexico's postal service)
electronically. 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. post office 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.

expensive than consumer money wire transfer services and are available to
customers through more extensive distribution networks.

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 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.

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.
Moreover, 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. First
Data also will retain ownership rights to the IPS Application Software used in
the operation of the Business and IPS' money order product, which will be
licensed to the Company pursuant to the Software License Agreement. Subject to
certain exceptions, the Company will be permitted only to use such software in
connection with the MoneyGram service (and not in connection with any other
payment product or service without the prior approval of IPS); First Data,
however, will not be restricted in any use of such software, including its use
by Western Union.

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.

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, the Company and Western Union will enter into the Service Mark
License Agreement at or prior to the consummation of the Offering under which
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." In addition, Western
Union will covenant not to use "The Better Way to Wire Money" in English
anywhere in the world. 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." Pursuant to the Service Mark
License Agreement, both the Company and Western Union will have a six-month
period, beginning at the consummation of the Offering, 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 arrangements
concerning such marks, or of the inability to use certain marks in Spanish,
may have on the Business, the Company's operating results or financial
condition. See "Certain Relationships and Related Transactions--The Service
Mark License 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, the Company's operating results or
financial condition.

Pursuant to the Contribution Agreement, IPS will transfer to the Company the
registrations IPS has obtained and, to the extent possible prior to
registration, the pending applications to register these marks. IPS will
allow, to the extent permissible, the Company to continue to pursue pending
applications in the name of IPS. See "Certain Relationships and Related
Transactions--The Transition Agreements--The Contribution Agreement."

Software

IPS developed the MoneyGram and IPS Application 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 IPS Application
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 processing and for compliance with the respective Agent Contracts,
including calculation of MoneyGram Agent commissions. The MoneyGram and IPS
Application Software also allows 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. See "Certain Relationships and Related Transactions--The
Transition Agreements--The Contribution Agreement."

The Software License Agreement will provide that IPS will grant to the
Company, effective upon the termination of the data processing services under
the Operations Agreement, a perpetual, assignable, nonexclusive, royalty-free
license to reproduce, modify and use the IPS Application Software, provided
that the IPS Application Software may be used by the Company (i) only on a
computer system owned, leased or operated by the Company or by any third
person providing service bureau data processing services on behalf of the
Company and (ii) only for the data processing requirements of the Company
relating to the MoneyGram service and not for use in connection with other
payment products or services. IPS has agreed, at the request of the Company,
to negotiate in good faith the terms (including royalties) of an expansion of
such software licenses that would permit the Company to offer a money order
product through the MoneyGram Agents, but only for so long as IPS or its
affiliates provide data processing for such money order product. The Software
License Agreement also requires the Company to obtain IPS's consent (not to be
unreasonably withheld) prior to the assignment of its rights under the
Software License Agreement, other than to a purchaser of substantially all of
the Business. See "Certain Relationships and Related Transactions--The
Transition Agreements--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).

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. While the Mexican
government currently is considering 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 760 employees, including approximately 90 in
sales, marketing and customer service, 610 in customer service center
operations and 60 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.

MANAGEMENT

DIRECTORS

The Board of Directors currently consists of five members and is divided
into three classes serving staggered terms as follows: Class 1, comprised of
one person 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:

INITIAL TERM
NAME EXPIRES POSITION
---- ------------ --------

Robbin L. Ayers....... 1999 Executive Vice President and Director
James F. Calvano*..... 1999 Chairman and Chief Executive Officer
Brian J. Fitzpatrick*. 1998 Director
William D. Guth*...... 1997 Director
Sanford Miller*....... 1998 Director

--------
*Has agreed to serve, but has not yet been elected

Mr. Ayers, 44, has served as Executive Vice President and General Manager--
International since 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, excluding Mexico, Latin America
and the Caribbean. 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
1987 and was its General Manager until 1991. Mr. Ayers is currently based in
London. He holds a B.A. in Sociology and an M.B.A. in Marketing from the
University of Cincinnati.

Mr. Calvano, 58, has served as Chairman and Chief Executive Officer of the
Company since , 1996. Prior to joining the Company, Mr. Calvano was
employed by the Travelers Group as Executive Vice President of Marketing and
by Travelers Insurance Companies 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 ,
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.

Dr. Guth, 63, has served as a director of the Company since , 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 , 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 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 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 members of the Audit Committee have not yet been appointed,
however, the Company intends to appoint two independent directors to this
committee.

The Compensation Committee 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 members of the Compensation Committee
have not yet been appointed, however, the Company intends to appoint two
independent directors to this committee (Mr. Miller will not serve on the
Compensation Committee).

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 and Calvano 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.

NAME POSITION
---- --------

Robbin L. Ayers......... Executive Vice President and Director
James F. Calvano........ Chairman and Chief Executive Officer
Alan H. Friedman........ Senior Vice President and Chief Financial Officer
Isaac F. Lasky.......... Vice President--Advertising

Mr. Friedman, 50, has served as Senior Vice President and Chief Financial
Officer of the Company since , 1996. Prior to joining the Company,
Mr. Friedman was employed by Western Union Financial Services, Inc. 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.

Mr. Lasky, 51, has served in the Office of the President of the Company
since September 1995 and has primary responsibility for the Company's
worldwide marketing and Latin American and Spanish speaking Caribbean
operations. Prior to his appointment to the Office of the President, Mr. Lasky
served from January 1995 to September 1995 as Vice President, Latin American
and Caribbean Retail Services for the Business. From 1993 to January 1995 Mr.
Lasky was Vice President, International Sales and Marketing, where he was
responsible for the Business' overseas expansion. From 1990 to 1993, he served
as Vice President, Mexico and Product Development. Mr. Lasky is a native of
Mexico. He holds a C.P.A. from the National University of Mexico and an M.B.A.
from Washington University in St. Louis.

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.

EXECUTIVE COMPENSATION

The Company was incorporated as a subsidiary of IPS in January 1996. The
assets and liabilities attributable to the Business will be contributed to and
assumed by the Company pursuant to the Contribution Agreement. 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 and Mr. Friedman, the
Chief Financial Officer of the Company, did not begin to serve in such
capacities until February and April, 1996, respectively. Prior to his
appointment as Chief Executive Officer, Mr. Calvano had a consulting contract
with First Data.

SUMMARY COMPENSATION TABLE

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
SECURITIES
BONUS OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION($) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- --------- ------- --------------- ------------ ------------------

Robbin L. Ayers......... 1995 $138,112 $60,000 $47,320 5,000 14,100
Executive Vice President
Isaac F. Lasky.......... 1995 $119,407 $32,000 $ 34 0 5,924
Vice President--
Advertising

- --------
(1) Messrs. Ayers and Lasky will be paid bonuses of $30,000 and $34,100,
respectively, upon consummation of the Offering and additional bonuses of
$30,000 and $34,100, respectively, on the one-year anniversary of the
consummation of the Offering.
(2) Represents amounts contributed by First Data to defined contribution
plans.

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.

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% ($)
- ---- ---------- ------------- --------- ---------- -------- --------

Mr. Ayers...... 5,000(4) (5) $51.125 3/15/05 $160,775 $407,425
Mr. Lasky...... 0 0 0 0 0 0

- --------
(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) 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.

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

Mr. Ayers............... 2,500 $67,188 10,107 / 11,302 $ 314,876 / $213,570
Mr. Lasky............... 0 0 3,342 / 3,388 106,045 / 95,624

- --------
(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).

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.

Mr. Lasky did not opt out of the Retirement Plan. The annual pension
benefits under the Retirement Plan generally are based on a participant's
average base salary plus overtime and certain incentive compensation for the
five highest paid consecutive years during his or her last ten years before
retirement or employment

termination. The annual pension benefit provided by the Retirement Plan for
the benefit of Mr. Lasky upon retirement at age 65 (unreduced for survivor
protection), assuming continuation of 1995 compensation levels through
retirement and assuming Mr. Lasky will receive a straight life annuity on a
monthly basis is $36,813. Substantially all compensation shown in the salary
and bonus columns of the summary compensation table above is included in
pensionable compensation under the Retirement Plan. These benefits are not
subject to deductions for Social Security benefits or other offset amounts. As
of January 1, 1996, Mr. Lasky had six whole years of credited service under
the Retirement Plan.

STOCK PLANS

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 (for executives and other key officers) 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
shares of Common Stock. The Compensation Committee, which will administer the
1996 Stock Option Plan, is expected to grant, subject to consummation of the
Offering, options to purchase Common Stock as follows: options to Mr.
Calvano; options to Mr. Friedman; options to Mr. Ayers;
options to Mr. Lasky; and options to other employees of the
Company. Each option will have an exercise price equal to 110% 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 shares of Common Stock. The Company expects to grant
under the 1996 Broad-Based Stock Option Plan upon consummation of the Offering
options to purchase shares of Common Stock to each employee of the
Company (other than certain officers and certain U.K. employees) as of the
date of the closing of the Offering. Each such option will have an exercise
price equal to 110% 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 or will have sole voting
and investment power with respect to all shares indicated as beneficially
owned by the Selling Stockholder.

PRIOR TO OFFERING AFTER OFFERING(1)
----------------- -----------------
PERCENT OF PERCENT OF
NAME AND ADDRESS NUMBER CLASS NUMBER CLASS
- ---------------- ------ ---------- ------ ----------

Integrated Payment Systems Inc.............. 100% 13%
6200 South Quebec
Englewood, CO 80111

- --------
(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.

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:

NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------- -------------------- ----------

American Express Company
American Express Tower
World Financial Center
New York, NY 10285........................... 27,227,310(1)(3) 12.2%
Janus Capital Corporation (2)
100 Fillmore Street,Suite 300
Denver, CO 80208............................. 14,802,043(3) 6.6%

- --------
(1) 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.
(2) 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.
(3) 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 December 31, 1995, 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.

AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS
- ---- ----------------------- ----------

DIRECTORS
EXECUTIVE OFFICERS
Robbin L. Ayers............................. 10,162(2) (5)
James F. Calvano............................ 5,000 (5)
Alan H. Friedman............................ -- (5)
Isaac F. Lasky.............................. 3,346(3) (5)
All directors and executive officers as a
group (4 persons).......................... 84,892(4) (5)

- --------
(1) The number of shares reported includes options that are exercisable within
60 days of December 31, 1995.
(2) Includes 10,107 shares issuable upon exercise of options.
(3) Includes 3,342 shares issuable upon exercise of options.
(4) Includes 84,789 shares issuable upon exercise of options.
(5) Less than one percent.

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, reconfigured the shared customer service
centers so that the Lakewood Facility would be used exclusively in the
Business and separated 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, the Human Resources Agreement, the Network Enhancement
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 License Agreement, the Human
Resources Agreement, the Network Enhancement 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 Marks; (b) the PC
MoneyGram and the MoneyGram Application Software, (c) the economic benefits
under certain 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 will be transferred
to the Company prior to the consummation of the Offering "as is, where is,"
and in consideration therefore, the Company will issue and deliver to IPS
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 remain in the name of TRS
and the economic benefits thereunder will be assigned from TRS to IPS and,
pursuant to the Transition, from IPS to the Company. In connection therewith,
IPS has agreed to exercise certain rights under the TRS Management Agreement
relating to the management and control of such nonassignable Agent Contracts
on behalf of the Company and will continue to seek the assignment of such
contracts through the term of the TRS Management Agreement. Any Agent Contract
that is not assignable by its terms from TRS at the end of the term of the TRS
Management Agreement 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 then
assignable Agent Contracts to the Company, and the Company will assume all
liabilities and obligations related thereto.

The PCs currently located at approximately 2,100 MoneyGram Agent locations
are used to process both MoneyGram wire transactions and IPS's money order and
other payment services. These PC's 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
Transition 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 Transition. 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.

Upon the contribution of the MoneyGram Assets by IPS to the Company pursuant
to the Contribution Agreement, IPS is expected to recognize taxable gain for
federal income tax purposes in an amount equal to the difference between the
fair market value of the MoneyGram Assets at the time of the contribution and
their tax basis at such time. As a result, the tax basis of the MoneyGram
Assets will be increased by the amount of such gain. The Contribution
Agreement provides, in general, that to the extent the Company or any entity
holding MoneyGram Assets is entitled to utilize such increased tax basis
following the Contribution (through depreciation, amortization, reduced gain
or increased loss) and thereby reduce federal, state or local income or
franchise taxes payable by the Company, such entity or other entities filing
tax returns on a combined basis with the Company or such entity (as defined
more fully in the Contribution Agreement, a "Company Tax Group"), the Company
will pay IPS the amount by which such taxes are so reduced. Such payments will
be made at the times specified in the Contribution Agreement (which are
intended to correspond with the times the Company or the relevant Company Tax
Group otherwise would remit estimated, year-end or other taxes to a taxing
authority). Such payments are required to be calculated by comparing the
Company's or any relevant Company Tax Group's actual taxes to the taxes which
would have been owed at each such time had the increase in tax basis not
occurred. Subject to an exception with respect to a change of control
(discussed below), tax benefit payments are

intended to be limited to actual tax benefits received by the Company or the
relevant Company Tax Group as a result of the increased tax basis in the
MoneyGram Assets.

IPS will repay the Company any payments IPS receives from the Company if,
and to the extent, it is determined that the Company was not entitled to
utilize such increased tax basis (in addition, IPS will reimburse the Company
for any interest and penalties owed by the Company or the relevant Company Tax
Group to a taxing authority).

The Company has agreed that it will not enter into any transaction the
principal purpose of which is to materially reduce the amount payable to IPS
pursuant to the Contribution Agreement. In the event of certain business
combinations or other transactions involving, directly or indirectly, the
Company or any entity holding the MoneyGram Assets (a "Change of Control") the
computations described above may be made, at IPS's election, without taking
such change of control into account. If IPS were to elect not to take a Change
of Control into account for example, interest expense following a leveraged
acquisition of the Company or losses or deductions of a consolidated group for
tax purposes which the Company joined as a result of a change of control would
be disregarded in determining whether the increased tax basis produced an
actual tax benefit. Thus, if in any such circumstances, the Company realized
no actual tax benefits from the Contribution, the Company would be required to
disregard such deductions in calculating the cash payments due to IPS under
the Contribution Agreement. Potential acquirors would thus face a continuing
obligation to make cash payments to IPS irrespective of whether the Company
realized tax benefits in corresponding amounts. This feature of the
Contribution Agreement could materially impair the value of the Company to
potential acquirors and also could limit the Company's ability to grow or
diversify by using its stock as consideration in acquisitions.

Pursuant to the Contribution Agreement, the Company has agreed that the
Company and each relevant Company Tax Group will file tax returns in a manner
consistent with certain tax assumptions set forth in the Contribution
Agreement which include claiming amortization deductions generally permitted
by the Code based upon the increased tax basis in the MoneyGram Assets
described above. There is uncertainty as to whether the Internal Revenue
Service will agree with some or all of these tax assumptions, in particular
the ability of the Company to amortize certain amounts (if any) related to
goodwill, going-concern value or certain other assets of the Company. If the
Internal Revenue Service or a state or local taxing authority gives notice of
any pending federal, state, local or foreign tax audits, examinations or
assessments that relate, to a tax assumption, then IPS will have the right to
participate in and control, at the expense of IPS, any such audit or
administrative or court proceeding (including control of procedural matters
relating to all issues being contested in connection therewith) in good faith
after consultation with the Company and its representatives. Under certain
circumstances, therefore, the Company and any potential acquiror of the
Company would have to yield control over certain audits and administrative and
court proceedings to IPS. This feature of the Contribution Agreement could be
viewed adversely by a potential acquiror of the Company. In the event the
Internal Revenue Service successfully challenges, some or all of these
assumptions, the Company may be obligated to remit payments to the Internal
Revenue Service and rely upon IPS's obligation to reimburse the Company for
previous payments made by the Company to IPS pursuant to the Contribution
Agreement, as described above. See "Risk Factors--Antitakeover Matters and
Potential Adverse Consequences of Certain Tax Provisions."

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 and certain corporate support services. Under the
Operations Agreement, the Company will be charged 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. 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 except for those that remain in the name of TRS 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 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.

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.

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. 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. The Operations Agreement will
provide that prior to the termination thereof, 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 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,
effective upon the termination of the data processing services under the
Operations Agreement, a perpetual, assignable, nonexclusive, royalty-free
license to reproduce, modify and use the IPS Application Software, provided
that IPS Application Software may be used by the Company (i) only on a
computer system owned, leased or operated by the Company or by any third
person who provides service bureau data processing services on behalf of the
Company and (ii) only for the data processing requirements of the Company
relating to the MoneyGram service and not for use in connection with other
payment products or services, unless in each case IPS gives its prior
approval. Upon the expiration or termination of the data processing services
provided by IPS or its affiliates under the Operations Agreement, the Company
also will have the right to reproduce and modify the IPS Application Software.

In the event that the Company desires expanded use of the IPS Application
Software, IPS has agreed to negotiate the price and terms thereof in good
faith. In the event such desired expansion is in connection with the money
order product described above under the Operations Agreement, IPS has agreed
to negotiate such

expansion in good faith so long as IPS or its affiliates provide the data
processing services to the Company for such product. The Software License
Agreement also requires the Company to obtain IPS's consent (not to be
unreasonably withheld) prior to the assignment of its rights thereunder, other
than an assignment to a purchaser of substantially all of the Business.

Pursuant to the Software License Agreement, 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 IPS Application
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 IPS Application 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 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.

IPS will have the right to terminate the Software License Agreement and the
license granted thereunder if the Company breaches any of its material
obligations thereunder, which breach is not substantially cured within a
specified time period after notice is given by IPS to the Company.

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 on January 15,
1997, at which time all outstanding borrowings thereunder would have to be
repaid or refinanced by the Company. See "Risk Factors--Liquidity."

The Facility interest rate is 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, which will not 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 arms-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
mandatorily 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 License Agreement

Pursuant to the Service Mark License Agreement, 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 "Licensed Marks"). In
addition, Western Union will covenant not to use "The Better Way to Wire
Money" in English anywhere in the world. The Company will relinquish to
Western Union any rights it 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." Pursuant to the Service Mark
License Agreement, both the Company and Western Union will have a six-month
period, beginning at the consummation of the Offering, 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.

The Network Enhancement Agreement

The Company and Western Union will enter into the Network Enhancement
Agreement, which will encompass the following structuring of the relationships
among the Company, Banamex, Western Union and Elektra. First, the Company's
economic agreement with Banamex would remain unchanged, with the Company
paying to Banamex one-half of the total foreign exchange revenues on MoneyGram
originated transactions to Banamex locations in Mexico, as well as Banamex's
receive commissions. Likewise, the Western Union and Elektra relationship
would remain the same, with Western Union paying to Elektra its agreed portion
of the total foreign exchange revenues on Western Union originated
transactions to Elektra locations in Mexico, as well as Elektra's receive
commissions. Second, MoneyGram Agents would be able to send transactions via
Western Union to Elektra locations in Mexico and Western Union agents would be
able to send transactions via the Company to Banamex locations in Mexico. In
each case, the Company or Western Union, as the originator of the transaction,
would receive all of its transaction fees on each transaction sent to Mexico
and pay its agents the corresponding send commission. However, on each
transaction originated by a MoneyGram Agent sent via Western Union and
received through Elektra, Western Union still would share the total foreign
exchange spread realized on each such transaction with Elektra and pay to
Elektra its receive commission pursuant to the terms of their existing
agreement, but also would pay to the Company an amount equal to 15% of such
total foreign exchange spread. Likewise, on each transaction originated by a
Western Union agent sent via MoneyGram and received through Banamex, the
Company still would pay to Banamex its receive commission and one-half of the
total foreign exchange spread realized on each such transaction, but also
would pay to Western Union an amount equal to 15% of such total foreign
exchange spread.

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 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 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.

If the option granted by IPS to the U.S. Underwriters to purchase up to
additional shares of Common Stock to cover over-allotments, if any,
is not exercised in full, then IPS will own up to approximately 13% of the
issued and outstanding shares of Common Stock upon consummation of the
Offering.

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 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, when issued and paid for, 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
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,
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.

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 Chemical Mellon
Shareholder Services, L.L.C.

SELLING STOCKHOLDER

Immediately prior to the sale of the shares of Common Stock in the Offering,
IPS will own all of the 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 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 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
shares of Common Stock. Of these shares, the shares sold
in the Offering (or 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 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 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. First Data has advised the
Company that, in order to comply with its divestiture obligations under the
Consent Decree and subject to prevailing market conditions from time to time,
it intends to cause IPS to exercise, if applicable, its registration rights
under the Registration Rights Agreement and, subject to the next succeeding
sentence, sell, transfer or dispose any remaining shares of Common Stock owned
by IPS as soon as practicable and in any case no later than January 23, 1997.
In connection with the Offering, subject to certain exceptions, the Company
and the Selling Stockholder 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 (in the case of the Company) and 90 days (in the case of the
Selling Stockholder) after the date of this hereof 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 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. See "Underwriters."

In connection with the Offering, the Company expects to grant to certain
officers options to acquire up to an aggregate shares of Common
Stock under the 1996 Stock Option Plan and to grant to certain other employees
options to acquire up to an aggregate shares of Common Stock under
the 1996 Broad-Based Stock Option Plan, in each case at a price equal to 110%
of the initial public offering price set forth on the cover page of this
Prospectus. An additional and 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 pursuant to which the Company
would reserve shares of Common Stock. 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 Internal Revenue Code of 1986, as amended (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.

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-United States 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-United States
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.

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.

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, CS First Boston
Corporation, Lehman Brothers Inc. and Smith Barney Inc. are acting as U.S.
Representatives, and the International Underwriters named below, for whom
Morgan Stanley & Co. International Limited, CS First Boston Limited, Lehman
Brothers International (Europe) 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:

NUMBER OF
NAME SHARES
---- ----------

U.S. Underwriters:
Morgan Stanley & Co. Incorporated............................
CS First Boston Corporation..................................
Lehman Brothers Inc..........................................
Smith Barney Inc.............................................
----------
Subtotal...................................................
----------
International Underwriters:
Morgan Stanley & Co. International Limited...................
CS First Boston Limited......................................
Lehman Brothers International (Europe).......................
Smith Barney Inc.............................................
----------
Subtotal...................................................
----------
Total....................................................
==========

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 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 1995, 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 $ per share under the public offering price. The
Underwriters may allow and such dealers may reallow a concession not in excess
of $ 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 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 and Selling Stockholder 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 (in the case of the Selling Stockholder) 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
90 days after the date of this Prospectus, in the case of the Selling
Stockholder, 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.

At the request of the Company, the Underwriters have reserved up to
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 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.

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, CS First Boston Corporation, Lehman
Brothers Inc. 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 will be determined by
negotiations between the Selling Stockholder and the U.S. Representatives.
Among the factors to be considered in determining the initial public offering
price, in addition to prevailing market conditions, are 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
three-month period ended March 31, 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.

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 John S. Zieser, Secretary,
MoneyGram Payment Systems, Inc. 10825 Farnam Drive, Omaha, Nebraska 68154,
telephone number (402) 222-7215.

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.

MONEYGRAM PAYMENT SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS PAGE
- ---------------------------- ----

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

UNAUDITED INTERIM FINANCIAL STATEMENTS
- --------------------------------------

Independent Accountants' Review Report.................................... F-15
Balance Sheet as of March 31, 1996........................................ F-16
Statements of Income for the Three Months Ended March 31, 1996 and 1995... F-17
Statements of Cash Flows for the Three Months Ended March 31, 1996 and
1995..................................................................... F-18
Statement of Changes in Stockholder's Equity for the Three Months Ended
March 31, 1996........................................................... F-19
Notes to Financial Statements............................................. F-20

F-1

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 Note 1, as to which
the date is .

* * * *

The foregoing report is in the form that will be signed upon the completion
of the transactions and restatement of capital accounts described in Note 1 to
the financial statements under the caption "Formation of the Company."

Denver, Colorado

June 13, 1996

Ernst & Young LLP

F-2

MONEYGRAM PAYMENT SYSTEMS, INC.

BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

DECEMBER 31,
------------------
ASSETS 1994 1995
- ----------------------------------------------------------- -------- --------

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--$4,097.............................................. 3,084 6,831
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 $ 42,449
======== ========

LIABILITIES AND STOCKHOLDER'S EQUITY/(DEFICIT)
- -----------------------------------------------------------

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 2,140
-------- --------
Total current liabilities.............................. 35,411 40,305
Stockholder's equity/(deficit):
Common stock, $.01 par value, authorized 100,000,000
shares; issued and outstanding shares........ -- --
Capital surplus.......................................... 21,922 12,600
Accumulated deficit...................................... (28,750) (10,456)
-------- --------
Total stockholder's equity/(deficit)................... (6,828) 2,144
-------- --------
Total liabilities and stockholder's equity/(deficit)... $28,583 $ 42,449
======== ========

See accompanying notes.

F-3

MONEYGRAM PAYMENT SYSTEMS, INC.

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

YEAR ENDED DECEMBER 31,
-------------------------
1993 1994 1995
------- ------- --------

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......... $ $ $
======= ======= ========

See accompanying notes.

F-4

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED DECEMBER 31,
---------------------------
1993 1994 1995
------- -------- --------

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) (5,613)
Costs of acquiring Agent Contracts............... -- (2,404) (6,474)
------- -------- --------
Net cash used by investing activities............ (762) (5,143) (12,087)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transfer from/(to) IPS....................... 208 (18,148) (9,322)
------- -------- --------
Net cash provided/(used) by financing activities. 208 (18,148) (9,322)
------- -------- --------
Net change in cash and cash equivalents.......... $ -- $ -- $ --
======= ======== ========

- --------
* Relates only to MoneyGram assets as reflected on the accompanying balance
sheet.

See accompanying notes.

F-5

MONEYGRAM PAYMENT SYSTEMS, INC.

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

TOTAL
COMMON CAPITAL ACCUMULATED STOCKHOLDER'S
STOCK SURPLUS DEFICIT EQUITY/(DEFICIT)
------ -------- ----------- ---------------

Balance January 1, 1993........... $-- $ 39,862 $(38,849) $ 1,013
Net loss........................ -- -- (2,077) (2,077)
Capital contribution from IPS... -- 208 -- 208
---- -------- -------- --------
Balance December 31, 1993......... -- 40,070 (40,926) (856)
Net income...................... -- -- 12,176 12,176
Return of capital to IPS........ -- (18,148) -- (18,148)
---- -------- -------- --------
Balance December 31, 1994......... -- 21,922 (28,750) (6,828)
Net income...................... -- -- 18,294 18,294
Return of capital to IPS........ -- (9,322) -- (9,322)
---- -------- -------- --------
Balance December 31, 1995......... $-- $ 12,600 $(10,456) $ 2,144
==== ======== ======== ========

See accompanying notes.

F-6

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 dated ,
1996 among the Company, First Data and IPS, certain assets necessary to
operate the Business (the "MoneyGram Assets") were transferred, subject to
certain

F-7

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

liabilities, to the Company in exchange for shares of the Company's
common stock and cash payments which reflect the actual value of certain tax
benefits to the Company from the transfer of the MoneyGram Assets. 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 license agreement (the "Service Mark
License Agreement"), a human resources agreement (the "Human Resources
Agreement") and a distribution network enhancement agreement (the "Network
Enhancement 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
license to use certain software used in operating the Business and IPS' money
order 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 on
January 15, 1997 and includes customary terms, conditions, restrictive
covenants and events of default. Pursuant to the Service Mark License
Agreement, Western Union licenses the Company the use of certain service marks
in certain languages that were previously subject to conflicting use between
the Company and Western Union. The Human Resource Agreement provides for the
transfer of employees from First Data to the Company and the Network
Enhancement Agreement provides the Company and Western Union access to each
other's distribution networks in Mexico.

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

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):

DECEMBER 31 DECEMBER 31
1994 1995
----------- -----------

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
======= =======

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

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.

Upon the contribution of the MoneyGram Assets by IPS to the Company pursuant
to the Contribution Agreement, IPS is expected to recognize taxable gain for
federal income tax purposes in an amount equal to the difference between the
fair market value of the MoneyGram Assets at the time of the contribution and
their tax basis at such time. As a result, the tax basis of the MoneyGram
Assets is expected to be increased by the amount of such gain. The
Contribution Agreement provides, in general, that to the extent the Company or
any entity holding MoneyGram Assets is entitled to utilize such increased tax
basis following the Contribution (through depreciation, amortization, reduced
gain or increased loss) and thereby reduce federal, state or local income or
franchise taxes payable by the Company, such entity or other entities filing
tax returns on a combined basis with the Company or such entity (as defined
more fully in the Contribution Agreement, a "Company Tax Group"), the Company
will pay IPS the amount by which such taxes are so reduced. Such payments will
be made at the times specified in the Contribution Agreement (which are
intended to correspond with the times the Company or the relevant Company Tax
Group otherwise would remit estimated, year-end or other taxes to a taxing
authority). Such payments are required to be calculated by comparing the
Company's or any relevant Company Tax Group's actual taxes to the taxes which
would have been owed at each such time had the increase in tax basis not
occurred. Subject to an exception with respect to a change of control, tax
benefit payments are intended to be limited to actual tax benefits received by
the Company or the relevant Company Tax Group as a result of the increased tax
basis in the MoneyGram Assets.

F-10

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 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

F-11

MONEYGRAM PAYMENT SYSTEMS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Data, of $1.7 million, $1.6 million and $2.2 million for the years ended
December 31, 1993, 1994 and 1995, respectively.

4. INCOME TAXES

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

YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------

Federal........................................... $(1,119) $6,556 $ 9,850
State and local................................... -- 679 1,512
------- ------ -------
Total............................................. $(1,119) $7,235 $11,362
======= ====== =======

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):

YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------

Current.......................................... $ (959) $7,210 $11,384
Deferred......................................... (160) 25 (22)
------- ------ -------
Total............................................ $(1,119) $7,235 $11,362
======= ====== =======

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

DECEMBER
31,
---------
1994 1995
---- ----

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
==== ====

The reconciliation of income tax computed at the U.S. federal statutory tax
rate to income tax (benefit)/expense is (in thousands):

YEAR ENDED DECEMBER
31,
-----------------------
1993 1994 1995
------- ------ -------

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
======= ====== =======

F-12

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

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 January 10, 1996, the Company filed a registration statement with the
Securities and Exchange Commission relating to the Offering. Including the
percent underwriters over-allotment option, 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
and shares of common stock, respectively. Each option will have an
exercise price equal to .

F-14

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 March 31, 1996, and the related statements of income and
cash flows for the three-month period ended March 31, 1996. These financial
statements are the responsibility of the Company's management. We did not make
a similar review of the statements of income and cash flows for the
corresponding period of the prior year.

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 March 31, 1996 and
for the three month period then ended for them to be in conformity with
generally accepted accounting principles.

Ernst & Young LLP

Denver, Colorado

May 17, 1996

****

The foregoing report is in the form that will be signed upon the completion
of the transactions and restatement of capital accounts described in Note 1 to
the audited financial statements as of and for the year ended December 31,
1995, under the caption "Formation of the Company".

Ernst & Young LLP

Denver, Colorado

June 13, 1996

F-15

MONEYGRAM PAYMENT SYSTEMS, INC.

BALANCE SHEET

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

MARCH 31,
ASSETS 1996
- --------------------------------------------------------------------- ---------

Cash and cash equivalents............................................ $ --
Assets restricted to settlement of MoneyGram transactions............ 26,281
Fee revenue receivable............................................... 1,435
Prepaid and other current assets..................................... 166
-------
Total current assets............................................. 27,882
Fixed assets at cost, net of depreciation: $5,145.................... 7,131
Deferred income taxes................................................ 276
Costs of acquiring Agent Contracts, net of amortization: $2,510...... 12,996
-------
Total assets..................................................... $48,285
=======

LIABILITIES AND STOCKHOLDER'S EQUITY
- ---------------------------------------------------------------------

Liabilities relating to unsettled MoneyGram transactions............. $26,281
Accounts payable..................................................... 953
Commissions payable.................................................. 6,819
Accrued advertising.................................................. 2,211
Employee-related liabilities......................................... 916
Accrued and other liabilities........................................ 2,540
-------
Total current liabilities........................................ 39,720
Stockholder's equity:
Common stock, $.01 par value, authorized 100,000,000 shares; issued
and outstanding shares................................. --
Capital surplus.................................................... 15,666
Accumulated deficit................................................ (7,101)
-------
Total stockholder's equity....................................... 8,565
-------
Total liabilities and stockholder's equity....................... $48,285
=======

See accompanying notes.

F-16

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS
ENDED MARCH 31,
---------------
1995 1996
------- -------

Revenues
Fee and other................................................ $18,899 $27,567
Foreign exchange............................................. 13,928 8,044
------- -------
Total revenue.............................................. 32,827 35,611
Expenses:
Agent commissions and amortization of Agent Contract
acquisition costs........................................... 5,770 10,925
Processing................................................... 5,289 6,822
Advertising and promotion.................................... 7,737 8,814
Selling and service.......................................... 1,510 2,221
General and administrative................................... 1,294 1,391
------- -------
Total expenses............................................. 21,600 30,173
------- -------
Income before income taxes..................................... 11,227 5,438
Income tax expense............................................. 4,302 2,083
------- -------
Net income..................................................... $ 6,925 $ 3,355
------- -------
Pro forma net income per common share.......................... $ $
======= =======

See accompanying notes.

F-17

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

THREE MONTHS
ENDED MARCH
31,
--------------
1995 1996
------ ------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................... $6,925 $3,355
Adjustments to reconcile net income to net cash provided by
operating activities:
Direct depreciation and amortization expense*............... 789 1,375
Other noncash charges....................................... (45) (83)
Changes in operating assets and liabilities:
Assets restricted to settlement of MoneyGram transactions. 897 (271)
Accounts receivable....................................... (456) (270)
Prepaid and other assets.................................. (65) 105
Liabilities relating to unsettled MoneyGram transactions.. (897) 271
Accounts payable and other liabilities.................... (3,815) (856)
------ ------
Net cash provided by operating activities..................... 3,333 3,626
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of signage and equipment............................. (831) (1,019)
Costs of acquiring Agent Contracts............................ (626) (5,673)
------ ------
Net cash used by investing activities......................... (1,457) (6,692)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES
Net transfer from/(to) IPS.................................... (1,876) 3,066
------ ------
Net cash provided/(used) by financing activities.............. (1,876) 3,066
------ ------
Net change in cash and cash equivalents....................... $ -- $ --
====== ======

- --------

*Relates only to MoneyGram assets as reflected on the accompanying balance
sheet.

See accompanying notes.

F-18

MONEYGRAM PAYMENT SYSTEMS, INC.

STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY

(IN THOUSANDS)

TOTAL
COMMON CAPITAL ACCUMULATED STOCKHOLDER'S
STOCK SURPLUS DEFICIT EQUITY
------ ------- ----------- -------------

Balance December 31, 1995.............. $-- $12,600 $(10,456) $2,144
Net income........................... -- -- 3,355 3,355
Capital contribution from IPS........ -- 3,066 -- 3,066
---- ------- -------- ------
Balance March 31, 1996................. $-- $15,666 $ (7,101) $8,565
==== ======= ======== ======

See accompanying notes.

F-19

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 three months ended March 31, 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 three months
ended March 31, 1996 would have been approximately $2 million less if the
Company continued to allocate these costs for interim reporting purposes based
on transaction volumes. The impact of this change was to decrease net income
and pro forma net income per common share by approximately $1.2 million and
$ , respectively.

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 March 31, 1996 and
the results of its operations and cash flows for the three months ended March
31, 1996 and 1995. Results of operations reported for interim periods are not
necessarily indicative of results for the entire year.

F-20

ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued June 13, 1996
Shares
MoneyGram Payment Systems, Inc.
[LOGO] COMMON STOCK
----------

OF THE SHARES OF COMMON STOCK BEING OFFERED HEREBY, ARE
BEING OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND 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. IT
IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER
SHARE WILL BE BETWEEN $ AND $ . 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 13 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.

----------

PRICE $ A SHARE

----------

UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
-------- -------------- -------------

Per Share............................. $ $ $
Total(3).............................. $ $ $

- -----
(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 $1,500,000.
(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 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 $ ,
$ , and $ , respectively. See "Underwriters."

----------

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
, 1996 at the office of Morgan Stanley & Co. Incorporated, New York, NY,
against payment therefor in immediately available funds.

----------

MORGAN STANLEY & CO.
International
CS FIRST BOSTON
LEHMAN BROTHERS
SMITH BARNEY INC.

, 1996

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:

AMOUNT
----------

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...................................... 400,000
Accounting fees and expenses................................. 400,000
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.................................................... $1,500,000
==========

--------
*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

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:

EXHIBIT
NO. DESCRIPTION
------- -----------

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.
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.
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 License Agreement among Western Union Financial
Services, Inc., Integrated Payment Systems Inc. and MoneyGram Payment
Systems, Inc.
10.5*** --Form of Human Resources Agreement among the Company, Integrated Payment
Systems Inc. and First Data Corporation.
10.6*** --Form of Distribution Network Enhancement Agreement between the Company
and Western Union Financial Services, Inc.
10.7*** --Agreement among American Express Travel Related Services Company, Inc.,
Banco Nacional de Mexico, S.N.C., and California Commerce Bank, as
amended.
10.8** --1996 Stock Option Plan of the Company.
10.9*** --1996 Broad-Based Stock Option Plan

II-2

EXHIBIT
NO. DESCRIPTION
------- -----------

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.
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.
99.2* --Consent of Brian J. Fitzpatrick
99.3* --Consent of William Guth
99.4* --Consent of Sanford Miller
99.5* --Consent of James F. Calvano

- --------
*Filed herewith.
**Previously filed.
***To be 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

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 June 13, 1996.

MONEYGRAM PAYMENT SYSTEMS, INC.

/s/ Paul A. Seader
By: _________________________________
Paul A. Seader
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.

SIGNATURE TITLE(S) DATE
--------- -------- ----

/s/ Paul A. Seader Chairman of the Board and Chief 6/13/96
____________________________________ Executive (Principal Executive
Paul A. Seader Officer)

/s/ Robbin Ayers Director and President 6/13/96
____________________________________
Robbin Ayers

/s/ David Treinen Director and Vice President and 6/13/96
____________________________________ Chief Financial Officer (Principal
David Treinen Financial and Accounting Officer)

/s/ John Zieser Director and Vice President and 6/13/96
____________________________________ Secretary
John Zieser

II-4

EXHIBIT INDEX

SEQUENTIAL
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
------- ----------- ----------

1.1** -- Form of Underwriting Agreement.
2.1** -- Form of Contribution Agreement among the Company,
First Data Corporation and Integrated Payment Sys-
tems Inc.
3.1** -- Certificate of Incorporation of the Company.
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.
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 Com-
pany 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 License Agreement among West-
ern Union Financial Services, Inc., Integrated
Payment Systems Inc. and MoneyGram Payment Sys-
tems, Inc.
10.5*** -- Form of Human Resources Agreement among the Compa-
ny, Integrated Payment Systems Inc. and First Data
Corporation.
10.6*** -- Form of Distribution Network Enhancement Agreement
between the Company and Western Union Financial
Services, Inc.
10.7*** -- Agreement among American Express Travel Related
Services Company, Inc., Banco Nacional de Mexico,
S.N.C., and California Commerce Bank, as amended.
10.8** -- 1996 Stock Option Plan of the Company.
10.9*** -- 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.
15.1* -- Letter from Ernst & Young LLP re: unaudited interim
financial information.
18.1* -- Letter from Ernst & Young LLP re: change in ac-
counting 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.
99.2* -- Consent of Brian J. Fitzpatrick.
99.3* -- Consent of William Guth.
99.4* -- Consent of Sanford Miller.
99.5* -- Consent of James F. Calvano.

- --------
* Filed herewith.
** Previously filed.
***To be filed.