Western Union Co. (WU - Free Report) , which was once a completely bricks-and-mortar money transfer company, is investing heavily in developing its digital money transfer platform to stay ahead of the rapidly-changing remittance industry.
Digitalization is the new way of life and the remittance industry is undergoing a sea change in the way funds are being moved across borders on a real-time basis at a fraction of the erstwhile costs when companies would operate their stores at remittance locations.
Several fintech companies like OFX, WorldFirst, TransferWise, WorldRemit, Ria, Azimo and Remitly are thronging the remittance market, thereby revolutionizing the space with their smart technology offerings, which facilitate transfer of funds via electronic modes.
These fast-coming changes also posed significant competitive challenges to even an age-old, established player in the market like Western Union.
The company’s revenues have been under pressure over the past many years due to rising competition. Grappled with this, the company prioritized investment in its digital money transfer arm as one of the key strategies to achieve long-term growth.
In fact, substantial work done on the digital front enabled the payment processor to tide over the prevalent difficult operating conditions posed by COVID-19.
The company invested substantially over the past decade in building a leading omnichannel platform for cross-border and cross-currency money transfers and payments. The company’s vast network powered with digitalization aids Western Union to deliver money and payments effectively through multiple channels across the globe.
When COVID-19 hit, the strong momentum of westernunion.com combined with acceleration in digital partnership transaction drove 50% growth in digital revenues at constant currency during the second quarter to approximately $220 million. Digitally initiated transactions accounted for 31% of C2C segment transactions, up from 15% in the second quarter of 2019.
Importantly, this digital growth is largely incremental to the company’s business and has a strong profit and customer lifetime value. Customers are drawn to Western Union to send money virtually anywhere with confidence, given the quality of its network since most of its agents are well established in essential businesses like financial institutions, postal institutions or large retailers.
To keep the westernunion.com’s growth trend alive, the company will continue to invest in acquiring customers and enhancing services like real-time payments.
Some other companies active in the digital money remittance space are MoneyGram International Inc. (MGI - Free Report) , PayPal Holdings Inc. (PYPL - Free Report) and Square Inc. (SQ - Free Report) among others.
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