Western Union (NYSE:WU) is a leading person-to-person (P2P) international remittance company. According to the World Bank, there are close to 300 million people living outside their country of origin and of those 45-50 million live in the US. Western Union provides P2P services to this constituency through its extensive network of 600k agents in 200 countries sending $100 billion annually back home to friends and family worldwide. Western Union’s black and gold logo is one of the most recognized global brands, spending $200 million on advertising per year supported by approximately $4.3 billion in revenue and 20% operating margin. These metrics suggest a business with significant transaction processing scale, but the 15-year industry shift to all things digital, first on the desktop and then to mobile P2P alternatives, has applied downward pricing pressure on the company’s services. Consequently, the top line and profitability is flat-ish, which is accompanied by a whirlwind of cost cutting and redesigned digital services.
Net net, Western Union is still the default P2P service provider for those depositing cash with a sending agent who speaks their native language, is located where they work or live, and has earned the trust of the receiver that the transaction value will arrive where and when intended. The cross currents of managing a large physical network of cash receiving and sending agents while building up a meaningful digital presence without cannibalizing the former is a true balancing act. The fintech and payments concern is certainly noteworthy due to its global brand, scale, and reach in a remittance marketplace exploding in usage and adoption of new technologies.
