In an effort to further penetrate into Mexico, Western Union Co. (WU - Free Report) has joined forces with Walmart de Mexico y Centroamérica.
Per the agreement, Western Union will provide international money transfer services under the Western Union, Vigo and Orlandi Valuta brands via Walmart de Mexico.
This service by Western Union will be made available to customers during the third quarter of 2016. They will be able to receive money transferred to them across 1,266 Bodega Aurrera, Mi Bodega Aurrera, Walmart, Superama and Suburbia stores in all of Mexico’s 31 states and in Mexico City, during store hours, throughout the year.
The company is highly optimistic about its Mexico business. Last month, the company disclosed that its initiatives to expand in Mexico have yielded results as evident from its outperformance in the region.
The company is capable of transferring funds from the United States directly to nearly all bank accounts in Mexico. The amount of money that customers have been sending through its three brands has been exceeding the market for 12 consecutive quarters.
At the same time, transactions have grown for more than 11 consecutive quarters. During the same period, the Mexico market grew 5% on average in principal and 7% in transactions.
Western Union’s Mexico Expansion Paying Off
The company has been making efforts since the past many years to expand its reach in Mexico which is the fourth largest recipient of remittances globally. According to data from Banco de Mexico, the region saw $24.8 billion in remittances in 2015, up 4.75% year over year. The region is expected to see a surge in remittance volumes going ahead owing to its long tradition of international migration, with more than 13.2 million or 9.4% of its native population living overseas. Per the World Bank, Mexico–United States is the largest migration corridor in the world.
Western Union has been operating in the region for nearly two decades and in recent years has entered into tie-ups with banks, national retail chains and independent locations. In 2015, the company added 3200 agent locations in the region, bringing the number of agent locations to 13,600.
In the first quarter of 2016, the company benefited from strong growth in U.S. outbound to Mexico and Latin America with the Mexico business outpacing the market based on the latest findings by Banco de México.
Also, the Banco de Mexico data revealed that Western Union’s U.S.-to-Mexico transaction and principal growth outpaced the market in the first quarter 2016 due to recent tie-ups.
Western Union’s Recent Mexico Tie-Ups
In Jan 2015, the company launched international direct-to-bank money transfers to Mexico from the United States via the Grupo Financiero Banorte’s UniTeller network, an International Money Payments Processor.
In Mar 2014, Western Union collaborated with Farmacias Guadalajara, a Mexican drugstore chain. This deal enabled Western Union to provide money transfer services in 1,100 drugstores and retail locations across Mexico.
Before that in Apr 2013, Western Union Company and Banorte, one of the largest financial institutions in Mexico, entered into a five-year agreement to offer Western Union global money transfer services.
Mexico is one of the major receive locations. Receive locations have large inbound remittance markets. Western Union, in conjunction with its Orlandi Valuta and Vigo brands, connects consumers in Mexico to more than 500,000 agent locations across 200 countries and territories worldwide. Although Mexico is an important location for Western Union, tougher immigration and money transfer standards in light of security concerns have impeded growth in the U.S.-to-Mexico corridor.
The country’s vast remittance market has also caught the attention of another prominent player in the industry Moneygram International, Inc. (MGI - Free Report) . The company offers its services in the Mexican market in partnership with Visa Inc. (V - Free Report) .
Western Union carries a Zacks Rank #4(Sell). A better-ranked stock in this space is Global Payments Inc. (GPN - Free Report) with a Zacks Rank #2 (Buy).
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