ATM Czar Euronet Adds U.S. To A Global Growth Engine

The fall of Russia’s communist era in the early 1990s opened business opportunities for a number of entrepreneurial capitalists.

One of them was Missouri native Michael Brown.

In 1994, Brown co-founded an ATM business in Budapest, Hungary, to bring Western-style electronic financial payment services to former Soviet-bloc regions in Central and Eastern Europe.

That company, Euronet Worldwide (NASDAQ:EEFT), is now one of the largest independent, nonbank operators of ATMs in the world, with more than 19,800 units in 47 countries.

Revenue in 2013 topped $ 1.4 billion. Brown still leads the company as its chairman and CEO.

The World And Wal-Mart

From Hungary, Poland and Germany, Euronet Worldwide expanded to other emerging markets in Europe, the Middle East, Africa, Asia and South America.

As it grew its global footprint, Euronet added other products and services, such as money transfer and prepaid mobile, now under its “epay” business segment.

Epay is also seeing strong growth from nonmobile products such as Apple (NASDAQ:AAPL) iTunes and Google‘s (NASDAQ:GOOGL) Google Play gift and self-buy cards, sold at retail-partner outlets.

In the last year, Euronet says, it became the top provider of prepaid mobile phone time in India, and it now processes more than 1 million transactions a day in the country.

Though Euronet has long been headquartered in Kansas, “it is primarily an international company,” said Peter Heckmann, an analyst at Avondale Partners.

But that’s changing. Thanks to a deal with Wal-Mart Stores (NYSE:WMT), the U.S. has recently emerged as a growth market, too — for a Euronet subsidiary, Ria Money Transfer. R ia is the third-largest money-transfer firm after Western Union (NYSE:WU) and MoneyGram International (NYSE:MGI).

In April, Wal-Mart began offering low-cost money transfers among more than 4,000 U.S. stores via Ria.

Ria did transfers from the U.S. to countries such as Mexico and between other countries. But until Wal-Mart, “it had zero U.S.-to-U.S. business,” Heckmann said.

Walmart-2-Walmart, as the service is called, charges a flat fee of $ 9.50 for transfers of $ 50 to $ 900, the maximum accepted. That’s much lower than similar offerings on the market, analysts say.

“This is going to be a big business for Euronet,” said Piper Jaffray analyst Michael Grondahl. “Rough math: they probably did $ 20 to $ 25 million in the third quarter.”

Euronet didn’t disclose numbers, nor did its executives agree to an interview for this article. But in its third quarter — the first full quarter with Wal-Mart’s business — revenue in its money-transfer business jumped 58% from a year earlier.

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