As an independent, Global Money Orders faces stiff competition.
On a warehouse facade in the outskirts of Washington, D.C., there is a small sign that describes a business that doesn't exist. Neighbors of the CIA are used to such disguises, but in this case, the goings-on within have no international significance, despite the company's bona fide name -- Global Money Orders Inc. The family-run enterprise prints, peddles, and finances its own brand of money orders, placing tiny Global in cheeky rivalry not only with American Express Co., inventor of the instrument 105 years ago, and The Greyhound Corp., whose 27,000-agent Travelers Express Co. subsidiary is its largest dealer, but also with the U.S. Postal Service, for which an annual sale of 116 million checks garners a steady -- if rare -- governmental profit.
Ordinarily, Global's founders -- Milton and Harriet Mersky -- would be delighted to keep the books for barely a hundredth that number in the two states (Virginia and Maryland, plus D.C.) they are bonded and licensed to serve. But events have conspired to undo their six-figure idyll. For one, reaction to steepening banking charges has revitalized the industry. Second, a competitor was picked up by Travelers, leaving Global as the East Coast's only independent. And then the two frisky Mersky boys, Barry and Randy, joined the business. And Global has gone onto computer, anticipating that orderly accounts in a pencil-intensive industry would pave its way to fresh territory.
But it has been tough ground to gain. While American Express distributes its money orders largely to financial institutions, few flossy bank lobbies exist at the street-sales end of the trade. A Global foyer is the stoop of a corner store. Only about one-quarter of low-income, minority families use banks at all, and those that need money orders aren't sending away for gifts so much as paying utility bills. After 23 years, some 300 local merchants have been elisted by Global as agents, attracted not so much by 90?-per-transaction fees, split with Global, but by the spenders the service brings in. "Inner-city people don't trip all over town," explains vice-president Barry Mersky. "That's the long and short of our business."
Shorter still, transactions with vendors are cash-only, an urban fiscal tradition that keeps Global close to home and suggests why it is so chary of discovery that it disguises its whereabouts. Besides the possible theft of blank drafts, Global would just as soon its customers didn't know where to come with unsettling requests -- like for more time to pay up. Purveying an un-markupable product that yields a profit margin as flimsy as carbon paper, Global can ill afford to carry receivables. Unchecked, a vendor could amass a liability of $40,000 in a month, frets Global, and disappear. To improve chances of seeing such sums returned to their proper places in its Baltimore bank, Global extracts personal pledges of houses and other belongings from vendors. And twice each week, employees fetch the deposits in person. That way, explains the family scion, "nobody tells us it's in the mail. Our delivery service comes to their door, and we let them know that on every Tuesday and every Friday, they better be ready."
Even if they are, such exclusively money-order operations as Global suffer peculiar handicaps. Unlike traveler's checks, money orders are drawn to the penny for specific purposes and are spent immediately. Because local checks may be debited against the company's local account virtually overnight, the float that other exchange situations gainfully employ is severely curtailed. For Global to increase clearing times and, concomitantly, its return from invested float like the big companies do, checks would have to be dispensed in faraway Federal Reserve zones. But in such alien lands, Global has neither office, muscle, nor reputation.
Stymied? Not just yet. The Federal Crime Insurance Program, which since the early 1970s has underwritten corecity policies that private companies prefer to avoid, likely won't be renewed. Since these are the same mean streets in which Global gained its smarts, the Merskys have been lobbying in Congress to take over most of the territory, insuring not only their own agents, but the 39,000 core-city policyholders throughout the country that the government has been edgily covering. There can't be too much difference in risk between money orders and insurance, they figure, and at least here the little company will have a country-wide edge over the Post Office.