- Western Union executives say that the firm is looking into blockchain technology
- Cryptocurrencies still have limitations and cannot be integrated into the WU platform yet
- A WU executive explains why digital tokens are not widely used just yet
US-based payments firm Western Union is reportedly ready for cryptocurrencies, but one of its executives says that the technology and digital tokens are not yet ready to be integrated in their platform.
In an interview with Reuters Plus, the company’s Odilon Almeida said that WU has been looking into cryptos for a long time and that they are ready to integrate digital tokens when the time comes. He added that the remittance giant is also studying how blockchain technology can improve their services.
Western Union is a household brand recognised by billions around the world. It has a huge market share, an estimated 2.5 billion, according to reports.
Although the firm is interested in adopting cryptocurrencies to exchange for fiat, Almeida notes that it will only materialise once cryptos in general become mainstream. Cryptocurrencies already have other uses apart from making the flow of funds more seamless than before, but its versatility and usefulness is outweighed by the potential security risk of using it and its volatility. Cryptocurrencies have risen to popularity in the past few years but Almeida said that compliance, volatility, and governance are stopping tokens from going mainstream.
Despite fintechs disrupting the remittance and payments market and banking itself, Western Union has never moved with the trends, according to observers. In fact, it has moved based on its own data and projections.
Almeida told reporters Wednesday that the company is ready to adopt any digital token but that the time has not yet come to introduce cryptos into their platform. He said: “Technology-wise, it’s just one more currency. I think cryptocurrency may become one more option of currency, or assets, around the globe to be exchanged between people and businesses. If that happens, we will be ready to launch.”
Western Union ran a trial with fintech Ripple Labs in mid-2018 to see if blockchain technology can help the company save money, but WU CEO Hikmet Ersek said that it did not help the company improve overseas transfer rates. In an interview with Fortune magazine, Ersek said that the firm is always criticised for not being cost efficient but that the company did not see any savings from using blockchain. Ripple Labs defended its product based on reports, noting that XRP can help make it more affordable for people to transfer money internationally.
Cryptocurrencies will likely be subject to stringent regulations in the coming year, analysts say. The introduction of cryptocurrency ETFs are also being blocked by the US Securities and Exchange Commission because the cryptocurrency market is still widely unstable. Western Union will likely use cryptocurrencies in their platform once all regulations are in place, according to fintech experts.
The experience with Ripple Labs does not define the company’s outlook about blockchain technology though because Almeida is said to be optimistic about leveraging this technology to improve cross-border transactions. He notes that it is all about learning new things and that WU is studying new technologies to improve its services.
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