World’s leading money transfer company Western Union Co. (WU - Free Report) announced the expansion of its online business payment platform in the European countries — Austria, Belgium, Netherlands and Sweden.
These countries import huge quantities of machinery and equipment, chemicals, fuels, gems and foodstuffs. Thus it becomes necessary for small and medium enterprises to make cross-border and cross-currency payments.
Western Union online payment service will enable customers to make payments worldwide 24x7 in more than 140 currencies. The service also offers customers the advantage of hedging against currency fluctuation by locking in the exchange rate favorable for them.
So far Western Union’s online business payment service was available in other European countries such as United Kingdom, Germany, Ireland, Italy and France. The company is on track with its European strategy of being closer to consumers and optimizing its operating model. Though Europe remains a weak spot for 2012, the company is positioning itself in the region for future growth.
On the other end of the spectrum, Western Union in is trying to penetrate deeper into the global business payments industry that has evolved with technological innovations. The company has devised new methods of processing payments.
The cross-border payments industry is expected to witness a boom in the future, with businesses intent on expanding their global presence. Management believes that the United States is in the midst of a transition from cash and paper checks toward electronic payment methods, which are easily accessible through multiple technologies.
Money transfer services through electronic channels accounted for approximately 3% of consolidated revenue for the year ended December 31, 2011. The company had already been providing online money transfer services in more than 20 countries during the same period. Last year, the company also announced the formation of a new unit named Western Union Ventures, which will feature the company’s new-age service offerings for customers.
Management expects the digitalized platform for the remittance market to evolve at a much faster rate than the traditional means in the upcoming period. The company’s westernunion.com business is worth over $100 million at present and management expects $500 million in revenue from this line of business by 2015.
Western Unioncompetes closely with Moneygram International, Inc. (MGI - Free Report) . Western Union currently retains a Zacks # 3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on its shares.