NOTE: If any words are capitalised, please refer to the definition section at the end of this document.
1 GENERAL INFORMATION
1.1 Service Provider
The MoneyGram Money Transfer service is provided by NZForex Limited (CN: 2514293) which is part of the global OzForex Group. NZForex is a wholly owned subsidiary of OzForex Limited (ABN: 65 092 375 703), an Australian company.
NZForex is registered as a financial service provider on the Financial Service Providers Register (established by the Financial Service Providers (Registration and Dispute Resolution) Act 2008). NZForex’s parent company OzForex holds an Australian Financial Services Licence (No: 226 484) allowing it to deal and advise in relation to foreign exchange Transfers. As an AFSL holder, OZForex is regulated by the Australian Securities and Investment Commission ("ASIC"). It is audited by PricewaterhouseCoopers and is subject to the reporting and disclosure obligations that apply to financial advisers under the Corporations Act 2001 in Australia.
1.2 No Financial Advice
The information contained in this document is general in nature and is provided purely for information purposes. You will also find on our website some useful historical data and some charting and research tools. Additionally, we may also provide you with general oral advice about how foreign exchange transfers work during the course of our dealings with you. Please note however that none of the information we provide to you, either on our website or over the phone, will take into account your personal financial circumstances and needs. You will always need to exercise your own judgement and should obtain independent financial advice as to the amount, type and timing of any particular Transfer you enter into with us.
1.3 Contact Us
If you do not understand any part of this document or anything on our website, or require further information, please contact us by telephone on 0800 161 838 or at email@example.com
1.4 Client Agreement
You will need to enter into a Client Agreement with us before we provide you with our service. The MoneyGram Money Transfer service is offered only to individuals who are transferring funds privately. If you are representing a trust, company or commercial organisation, we are unable to service you under the terms and conditions of the MoneyGram Money Transfer service. Please identify yourself as a representative of a trust, company or commercial organisation when registering for this service.
You must ensure that you fully understand the terms set out in the relevant Client Agreement before you transact with us.
2 THE SERVICE
2.1 Our Service
We provide a 24 hour international online money transfer service. You can enter into an agreement with us to send your money overseas either immediately (ie: within the next 2 days) or at any time within the next 12 months.
2.2 Accessing and Using the Service
You can access our service directly online, by telephone or by email. We do not accept communications by fax. The simplest way to access our service is to register on our website at http://money.moneygram.co.nz. Registration is quick, costs nothing and is obligation free. Before we can actually process a Transfer for you, we will ring you and will ask you to comply with our identification procedures. The identification procedures are required by legislation (and apply to all money transmitters); as they are a legal requirement, it is very important that they are properly carried out even if they are a little bit inconvenient.
After you are fully registered, you can book exchange rates with us 24-hours a day Monday to Friday. Once a Transfer is booked, we ask you to pay the money you are transmitting into one of our accounts, either immediately or on the Delivery Date, then we convert it into the foreign currency and credit the Receiver Account you have nominated in the agreed amount of the foreign currency. Our service is very quick, but the actual time between booking a Transfer and receiving the money in the Receiver Account will vary according to the currencies involved.
2.3 Deliverable Only Service
We are a money transmission business only. We do not facilitate any kind of margin or speculative foreign exchange trading activities. In all cases, you must deliver to us the full amount of the funds you are exchanging. We do not allow you to enter into any kind of set-off arrangement which would allow you to pay or receive on settlement only the amount of any profit or loss occasioned by fluctuations in exchange rates. If you want to speculate on exchange rate movements, you should not use our service.
2.4 No Cancellation
Once you have booked a Transfer, you cannot cancel it. As soon as a Transfer is booked, we enter into a matching Transfer with our own foreign exchange provider which we have to settle whether or not you settle your Transfer. If you fail to deliver to us the full amount of the money you are transferring on the due date, or you fail to deliver any advance payment we have requested, we will close out the Transfer. Closing out a Transfer involves reversing the Transfer we have entered into with our own provider. Sometimes, we will realise a loss on the reversed Transfer as a result of exchange rate fluctuations. If there is a loss, we will ask you to pay any loss immediately. In no circumstances will we pay you any profit realised by us if we close out a Transfer that you have failed to settle.
3.1 What is Foreign Exchange?
While we offer only a money transmission service, the Transfers we enter into with you are referred to technically as "deliverable foreign exchange" Transfers. Whenever you exchange one currency for another, you are effectively engaging in a foreign exchange Transfer. The term "foreign exchange" refers to the simultaneous purchase of one currency and sale of another currency at an agreed exchange rate.
3.2 Exchange Rates
The "exchange rate" is the price at which one currency can be bought or sold in exchange for another currency. An exchange rate is the price of one currency expressed in terms of another currency. For example, if the current exchange rate for the New Zealand dollar against the Australian dollar is 0.7894, this means that a New Zealand dollar is equal to, or can be exchanged for, approximately 79 Australian cents.
3.3 Quotation of Exchange Rates
The foreign currency market is an over-the-counter ("OTC") market, which means that there is no official or benchmark exchange rate for foreign currencies. Different service providers will quote different exchange rates at different times of the day. We cannot guarantee to offer the best rate available on the day, but we endeavour to be very competitive and will try to match any better rates.
3.4 Exchange Rate Fluctuation
Exchange rates fluctuate constantly and thereby give rise to risk and uncertainty. The chart below shows the fluctuations in the NZD/AUD exchange rate between 4 September 2007 and 1 September 2010.
Please note: The following is a hypothetical scenario. The exchange rates mentioned are based on Table 1 above, but are used for the purposes of illustration only.
On 11 November 2008, Jane Smith, a New Zealand resident, entered into a Cash on Delivery ("COD") transfer with XYZ Pty Ltd a company in Australia to buy a Boat for delivery on 20 May 2009. On 11 November 2008, the exchange rate was 0.9150, which means that the cost of the transfer in New Zealand dollars was NZD$218,579. When the boat was delivered on 20 May 2009, the exchange rate was 0.7750 which means that the amount payable was NZD$258,064. Jane had to pay approximately NZD$40,000 more than she had anticipated.
We make our profit primarily from our Margin. The Margin refers to the difference between the rate we obtain from our own providers on the wholesale foreign exchange market (which we refer to as the Interbank Spot Rate) and the rate we quote you. The Margin will vary from currency to currency and from time to time. While we do not disclose our Margin on every Transfer, you are always free to compare the exchange rate we quote you with other providers to ensure that we are offering you a good rate.
3.6 Transfer Fees
MoneyGram Money Transfer charges a small fixed Transfer fee, but only on Transfers under NZD$10,000 (or foreign currency equivalent). This is a separate fee, the amount of which is unrelated to the exchange rate. You must factor this fee into the cost of the Transfer as well. If you are comparing rates, you should bear in mind that an attractive exchange rate may be offset by a high Transfer Fee (or vice versa).
3.7 Transferral Risk
When you enter into a Transfer with us, moneys you place with us are not held in a separate account or on trust for you. You are therefore assuming a risk in relation to our solvency. While we maintain surplus liquid funds at all times, our liabilities are not guaranteed in any way by any other entity in the OzForex Group. However, as we don't assume any risk in relation to exchange rate fluctuations and have netting arrangements in place with other institutions to protect future cash flows, our business model is generally a low risk one.
4.1 Exchange Rates
As a technical matter, exchange rates may generally be quoted as:
(i) Value Today (or "T");
(ii) Value Tomorrow (or "T+1");
(iii) Spot Transfer (or "T+2"); and
(iv) Forward Transfer (up to 12 months).
We offer only Spot Transfer ("T+2") and Forward Transfers, not Value Today or Value Tomorrow Transfers. When comparing rates, you should make sure that you compare only T+2 rates, not T or T+1 rates, as they could be appreciably different.
We also offer an arrangement whereby you can enter into a Spot Transfer or a Forward Transfer only when a target exchange rate is reached. For a more detailed explanation of how our limit orders work, please go to paragraph 7.
5 SPOT TRANSFERS
5.1 What is a Spot Transfer?
A Spot Transfer is an agreement to exchange one currency for another at an agreed exchange rate within 2 days of the agreement being entered into. An individual or a company will enter into a Spot Transfer when they want to transfer money overseas immediately; for example, when they are making a purchase overseas in a foreign currency and need to transfer funds to pay for the purchase.
Example: In Example A above, Jane could have entered into a Spot Transfer on about 18 May 2009, 2 days before for the boat was due, at which time the Spot Rate was 0.7710, so Jane would have paid about NZD$259,403.
In a Spot Transfer, there are a number of variables that need to be agreed upon, including:
(a) The denomination and amount of the currency being bought.
(b) The denomination and amount of the currency being sold.
(c) The exchange rate.
A Spot Transfer must be settled within 2 days of the Transfer being booked. This means that you must pay us the money you are exchanging within 2 days. Actual receipt of the funds transferred by us into your nominated Receiver Account will take longer than 2 days and the actual timing of the payment to the Receiver Account will depend on the destination of the funds and the intermediary banks involved.
The following Fees/costs may apply to a Spot Transfer.
The Margin will vary from time to time and from currency to currency.
(b) Exchange Rate
The Spot Rate quoted by us will be calculated by taking into account the Interbank Spot Rate and the Margin.
(c) Transfer Fees
We charge a Transfer Fee which is presently NZD$15.00 (or foreign currency equivalent) for transfers up to NZD$10,000. We do not charge Transfer fees for Transfers over NZD$10,000 (or foreign currency equivalent).
(d) Third Party Transfer Fees
In some cases, the intermediary banks we use to process payments may deduct Transfer fees that we have not anticipated and, in some jurisdictions, the receiving bank could charge a receiving bank fee, however we will try to send money through a low value network to avoid such fee deductions. We will try and notify you of these additional fees but, as they are outside our control, we cannot always do so in advance. You may find, in some cases, that the total amount you expect to receive in your Receiver Account is slightly less because such fees have been deducted. You should bear this in mind if you are paying the precise amount of an invoice, for example. If you have any questions regarding likelihood of third party Transfer fees being levied by intermediary banks for your Transfer, you should ask one of our dealers when you book a Transfer and we will be more than happy to indicate from our experience the type of third party Transfer fees that may be charged in the jurisdiction where your nominated Receiver Account is held and with regard to the currency being exchanged.
(e) Fee Bundling
We provide all Customers using the MoneyGram Money Transfer service with the option to buy "bundled transfers" and lock in lower average Transfer Fee(s). The "bundled transfer" pricing options available are published on our Website. These prices may be subject to change and the Company reserves the right to amend the pricing options without notice.
5.5 Significant Benefits
The significant benefits of entering into a Spot Transfer with us are:
(i) speed and ease of transferring money.
(ii) certainty in relation to the exchange rate we offer you; and
(iii) access to real time pricing.
5.6 Significant Risks
The significant specific risks involved in entering into a Spot Transfer are:
(i) as exchange rates fluctuate quite rapidly, you may find that the rate improves very soon after you lock in a rate or that another provider is offering a slightly better rate at any particular point in time;
(ii) delays, which are rare but do happen; they can be caused by technical or administrative problems experienced by NZForex, MoneyGram, or by intermediaries for reasons entirely outside NZForex's control.
6 FORWARD TRANSFERS
6.1 What is a Forward Transfer?
A Forward Transfer is a Transfer that allows you to transfer money at some time (up to 12 months) in the future at an exchange rate that you agree now, so that you know what the exchange rate will be at the time the exchange of currencies becomes necessary. This allows you to avoid the risks and uncertainties associated with adverse exchange rate movements.
6.2 Purpose of a Forward Transfer
The purpose of a Forward Transfer is primarily to achieve certainty and to avoid possible losses attributable to adverse exchange rate movements. A Forward Transfer enables future exchange risk to be avoided (although you may still face a loss if you do not settle the Forward Transfer on or before the Delivery Date). A Forward Transfer may be useful in the following circumstances:
(a) importing and exporting goods where the invoice is in a foreign currency;
(b) borrowing in foreign currencies;
(c) investing in foreign currencies;
(d) buying or selling property overseas;
(e) receiving pension payments from an overseas jurisdiction; or
(f) repatriating salary or interest payments received overseas.
Forward Transfers are generally used by importers, exporters and investors who seek to lock in exchange rates for a future date in order to achieve contractual or cash flow certainty by avoiding adverse exchange rate movements. However, they can also be used by individuals migrating or buying property overseas who want to lock in a good exchange and not take the risk the exchange rate will be worse when they actually need the money.
Example: In Example A above, Jane could have entered into a Forward Transfer on 11 November 2008 when the exchange rate was 0.9150 and locked in a Forward Rate of say 0.9110, which means that the cost of the transfer in New Zealand dollars would have been NZD$219,538 on 30 May 2009, rather than NZD$259,403, which is what it would have been if she had waited and entered into a Spot Transfer on 18 May 2009.
The variables in a Forward Transfer are:
(a) The denomination and amount of the currency being received.
(b) The denomination and amount of the currency being sent.
(c) The exchange rate.
(d) The Delivery Date.
6.4 Forward Rate
In determining the rate of exchange for a Forward Transfer, there are two components:
(i) the current Spot Rate; and
(ii) the forward rate adjustment ("Forward Points").
The Forward Rate quoted by MoneyGram Money Transfer will not be the same as the Spot Rate, because it will take into account the interest costs in holding the money until the Delivery Date. It may be better or worse than the prevailing Spot Rate on the day depending on the difference in interest rates between the country from which the funds are sent and the country to which the funds are being sent.
The calculation of Forward Points is a complicated one. It will be influenced not just by interest rates in the two relevant countries, but also by the duration of the Forward Transfer and less tangible factors such as the expected direction of interest rates in the two relevant countries prior to the Delivery Date. You may find that the Forward Points change quite significantly over a short period of time as a result of developments impacting on expectations of future interest rate changes.
6.5 Variation to the Delivery Date
We may, entirely in our discretion, agree to allow you to vary the Delivery Date you have booked by paying to us some, or all, of the amount you are transferring at some time before the Delivery Date ("Pre-Delivery") or by extending the Delivery Date("Rollover"). If we do agree to such a variation, the Forward Points will change.
6.6 Advance Payment
All Forward Transfers must be settled by delivery of the full amount being transferred on the Delivery Date (also referred to as the Settlement Date). This means that we must be able to see the cleared funds in our bank account on the Settlement Date. There is a risk that you might not be able to settle the Transfer on the date that you have agreed to. We therefore bear a Settlement Risk. To cover this Settlement Risk, in most cases, we will request that you make an Advance Payment in relation to a Forward Transfer.
The amount of any initial Advance Payment requested will be a fixed percentage of the value of the Transfer and will normally be between 5% and 10% of the value of the Transfer, but could be more depending on the duration of the Forward Transfer. While the amount of any Advance Payment is at NZForex’s complete discretion, as a general guide, short term Advance Payments (with a Delivery Date occurring within 0-3 months) will attract a 5% initial Advance Payment and long dated Forward Transfers(with a Delivery Date occurring within 3-12 months) will incur a 10% Advance Payment.
Whether or not you have already paid an initial Advance Payment, if the exchange rate continues to move unfavourably for you, we may ask you for one or more additional Advance Payments to cover the default risk.
In the event that we have requested payment of a Advance Payment at any stage of the Transfer, you must pay it promptly. We expect to receive the Advance Payment within 48 hours of the request, failing which we reserve the right to Close Out the Transfer without notice and ask you to pay the full amount of any loss occasioned by us immediately.
We do not pay interest on Advance Payments.
IMPORTANT: You should not enter into a Forward Transfer if you are unable or unwilling to pay an initial Advance Payment of between 5% and 10% of the value of the Transfer with the possibility of one or more further Advance Payments being requested at any time prior to the Delivery Date. If we ask you to pay an Advance Payment at any time and fail to do so, we may Close Out your Forward Transfer without prior notice.
6.7 Closing Out Transfers
The liability for an adverse exchange rate movement is crystallised at the commencement of the Forward Transfer and not on settlement. If you want to calculate your liability to pay a Advance Payment at any point in time prior to the Delivery Date or your liability to pay a loss in the event that the transfer is Closed Out, you need to consider the exchange rate at the time of Closing Out, because Closing Out involves entering into the same Transfer in reverse and selling bought currency back into the market. In the event that a Forward Transfer is Closed Out, we will calculate, as at the closing out date, the value of the Transfer using prevailing market rates chosen by us in good faith.
IMPORTANT: If there is a loss on a Transfer that is Closed Out, you will be liable to compensate NZForex immediately upon demand for the full amount of that loss which could exceed the amount of any Advance Payment already held. In no circumstances shall NZForex be liable to pay to you any profit arising from the closing out of a Transfer.
Set out below is an example of what it might cost a client if we are required to Close Out a Forward Transfer.
Example: In Example A above, assuming that Jane Smith had entered into a Forward Transfer on 11 November 2008, she may have found that at the end of March 2009 she no longer wanted to buy the boat for some reason or that the Australian company selling her the boat was unable to fill the order. However, she would still be bound to settle the Forward Transfer with NZForex even though she no longer had a need to send money to Australia. If Jane were to advise NZForex that she was not going to settle the Transfer, NZForex would Close Out the Transfer or, if Jane simply failed to deliver the funds on the Settlement Date, NZForex would Close Out the Transfer at that time. In either event, on the day the Forward Transfer is Closed Out, NZD will sell back the AUD that we bought for Jane’s Transfer at the time that she entered into the Forward Transfer contract and the exchange rate that applies on that day will apply. If the Forward Transfer had been closed out on say 30 March 2009, the exchange rate was 0.7850 at that time. The loss would therefore have been NZDD$35,240, which Jane would have to pay to NZForex within 7 days.
6.8 Significant Benefits
The significant benefits of entering into a Forward Transfer are:
(i) cash flow certainty; and
(ii) protection from adverse exchange rate movements.
6.9 Significant Risks
The significant specific risks involved in entering into a Forward Transfer are:
(i) The opportunity to make financial gains as the result of favourable exchange rate movements is precluded; if you enter into a Forward Transfer, you must always settle it on the agreed terms whatever the exchange rate is on the Delivery Date.
(ii) If the reason for entering into the Forward Transfer ceases to exist (eg: the relevant supply transfer is cancelled) prior to the Delivery Date, the Forward Transfer may need to be Closed Out early and that may result in a loss if the exchange rate has moved unfavourably, as you are not able to cancel the Transfer or transfer your obligations to anybody else.
(iii) An Advance Payment may be requested of at least 5% to 10% of the value of the Transfer either at the beginning of the Transfer or at any time prior to the Delivery Date, so you must ensure that you have the funds available to meet any such request. If for any reason you are unable to pay the Advance Payment, we may Close Out your Transfer without notice.
(iv) Interest will be foregone on the amount of any Advance Payment/s held by us as we do not pay any interest on Advance Payments.
What is an Order?
You may enter into an agreement with NZForex whereby your Spot Transfer or Forward Transfer becomes binding only when a certain exchange rate ("Target Rate") is reached. You are able to amend or cancel your Instructions by telephone at any time before the Target Rate is reached. However, once the Target Rate is reached and the Order is filled by us, you are bound to settle the Transfer in accordance with its terms (please see Parts 5 and 6 for a discussion of Spot Transfers and Forward Contracts).
8 GENERAL BENEFITS OF USING THE MONEYGRAM MONEY TRANSFER SERVICE
Our trading platform offers:
(i) real-time pricing (just login and request a live, and dealable, rate);
(ii) immediate access to a trading platform 24-hours a day Monday to Friday;
(iii) reduced Transfer costs;
(iv) competitive exchange rates;
(v) accurate Transfer records with your personal Transfer history accessible at anytime by using your personal login on our website;
(vi) access to market research; and
(vii) we offer visibility to wholesale pricing and a completely transparent service where you can compare our rates against wholesale rates and against your banks rates.
9 APPLICABLE LAWS
9.1 Money Laundering Regulations
By entering into the Client Agreement, you undertake that you will not knowingly do anything to put NZForex in breach of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and other subordinate rules (AML/TF Laws). You undertake to notify NZForex if you are aware of anything that would put NZForex in breach of the AML/TF Laws. NZForex is required to comply with these laws, including the need to establish your identity (and, if relevant, the identity of other persons associated with your account). Instructions for completion of the identification process are included in the Client Agreement that you will need to complete. Additionally, from time to time, we may require further information to assist with this process.
9.2 Refusal to Transact
As a result of our obligations under international money laundering regulations, we reserve the right to refuse at any time and entirely at our discretion, to accept you as a client and to refuse to provide you with our service without explaining our reasons for doing so and without incurring any liability to you as a result of such a decision. This would usually happen before we transact with you if you failed to satisfy our internal identification requirements, but there may also be circumstances in which we are obliged to refuse to continue to provide our service to you after we have accepted you as a client and even though we have transacted with you in the past. This could happen if, for example, it came to our attention that information you provided to us when you registered subsequently appeared to be misleading or incorrect. In some (rare) circumstances, we may be obliged to freeze your account completely and retain any funds we are holding for you pending further investigation.
10 DISPUTE RESOLUTION PROCESS
10.1 Internal Complaints Procedure
We have an internal dispute resolution process in place to resolve any complaints you may have quickly and fairly. Please see the Complaints Handling Policy on our website.
10.2 Approved Dispute Resolution Scheme
If the dispute cannot be resolved under our internal disputes policy, you may formally submit the dispute to the approved dispute resolution scheme of which we are a member for the purposes of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 for determination in accordance with the rules of that scheme. For more information, please refer to the Complaints Handling Policy on our website.
10.3 Recovery of Sums Payable by You in Court
If we Close Out a Transfer and you become liable to pay us an amount by way of loss on the Transfer, we will pursue any such unpaid amount immediately through legal action in court. Any such recovery action shall not be subject to our internal complaints procedure or to arbitration.
Advance Payment means a part payment of the amount being exchanged in such amount as we shall deem necessary to cover our Settlement Risk.
AUD means Australian Dollar.
Client Agreement means the umbrella agreement that we will ask you to enter into before we begin transacting with you.
Close Out means cancelling the Transfer and selling back the currency we have bought for you when you entered into the Transfer.
Currency Pair means the two currencies that are the subject of the Transfer.
Delivery means payment to us of the full amount of the currency you are exchanging (less any Advance Payment already made).
Delivery Date means the agreed Settlement Date which may be brought forward or extended by us at our discretion.
Fees means all fees, costs and charges associated with your Transfer.
Forward Transfer means an agreement where one currency is sold or bought against another currency at an agreed exchange rate for settlement on a specified date in the future.
Forward Points means the amount by which a Forward Rate varies from the Spot Rate as a result of the differential in interest rates between the countries of the Currency Pair.
Forward Rate means the Spot Rate adjusted on the basis of Forward Points.
Instructions means a request made by you to enter into a Transfer.
Interbank Spot Rate means the wholesale Spot Rate that we receive from the foreign exchange interbank market, being a preferential transfer rate given to organisations conducting large and frequent Transfers.
Margin means the difference between the exchange rate we pay our provider, which we access through the wholesale foreign exchange market, and the rate that we quote to you.
MoneyGram means MoneyGram Payment Systems, Inc. of, 1550 Utica Avenue South, Minneapolis, MN 55416, USA..
NZD means New Zealand dollar.
OzForex means OzForex Limited (ACN: 092 375 703), an Australian company.
OzForex Group means OzForex Limited and its related bodies corporate including NZForex Limted, CanadianForex Limited, UKForex Limited and USForex LLC.
Receiver Account means the bank account nominated by you to which we send your funds that could be an account in your name or an account of a third party (ie: a party whom you are paying for goods or services).
Settlement Date means the date on which the funds that are being exchanged must be received by us.
Settlement Risk means the risk we assume that you will fail to settle a Transfer in accordance with its terms and that a loss will be realised by us as a consequence of exchange rate fluctuations.
Spot Transfer refers to a foreign exchange transfer that must be settled within 2 days (48 hours) and is sometimes referred to as T+2.
Spot Rate means the exchange rate for settlement within 2 business days from the date the Transfer was booked.
Transfer Fee means a fixed fee charged on smaller Transfers to cover administrative costs.
Value Today refers to a foreign exchange transfer that must be settled on the day it is entered into.
Value Tomorrow refers to a foreign exchange transfer that must be settled within 1 day (24 hours) and is sometimes referred to as T+1.
We or Us means NZForex Limited (CN: 2514293).
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