On Oct 7, 2016, we updated our research report on Western Union Co. (WU - Analyst Report) , which is one of the leaders in the money remittance market. The company by virtue of its size and reach is poised to benefit from the growing global remittance market.
Western Union is eyeing long-term growth from maintaining leadership in the traditional retail money transfer business. It is also investing heavily in digital money transfer, and leveraging its cross-border platform to serve new customers.
One of the major feats achieved by the company this year was the successful implementation of all regulatory recommendations pertaining to the Southwest Border Agreement, which relates to anti-money laundering. The company, which was earlier under intense scrutiny and had obligations to fulfill if found guilty of noncompliance, has now gained investors’ confidence. Staying clear of anti-money laundering activities is crucial for the money remittance companies and Western Union has made relentless efforts in this regard.
Western Union, which has a wide agent network and market dominance in the money transfer industry, has grown over the past many years via several alliances with banks, post offices, retailers, telecom operators and other carriers worldwide.
The company has traditionally derived a huge chunk of business from physical money transfer. It is now aggressively growing its digital business. In this regard, the company has developed services like prepaid, westernunion.com, and mobile money transfer. Also, WesternUnion.com online transaction sites have spread to 37 countries.
Western Union’s international business is a feather in its crown. More than 80% of its agents are based internationally, where Western Union faces less competition than the U.S. market. In the U.S., other players like Paypal Holdings Inc. (PYPL - Snapshot Report) , MoneyGram International Inc. (MGI - Analyst Report) , Global Payments Inc. (GPN - Snapshot Report) have significant presence.
Also, the intelligent use of capital via share buyback will sustain Western Union’s bottom-line growth.
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