Western Union reports major growth in dot.com money transfers

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Andrea Barnes
Editor
Andrea is Communications Manager at FXcompared. Prior to joining FXcompared, she worked as a communications consultant for companies seeking guidance with their social media, marketing and digital… Read more
  • Top line results slightly below estimates
  • Results mask big gains in consumer-to-consumer dot.com business
  • Latin America, North America and Europe lead dot.com money transfers

Global international money transfers leviathan Western Union may have posted underwhelming top and bottom lines last week, but a deeper dive into the company’s figures shows some impressive gains from its digital online money transfer offerings.

Pundits have been focussing on the veteran cross-border payments firm’s overall revenues of USD $1.4bn which were published last Thursday. Yes, it’s true that while this amounted to an annual climb of 2.2%, it was still USD $20m shy of the estimates. Published earnings of 46 cents per share were out by one penny as measured against consensus.

Yet, there were welcome devils in the details. One such was the 4% quarter-on-quarter climb in consumer-to-consumer revenues, which reached 80% of the top line in the last quarter. There was also a 5% increase in transactions.

Geographically, the origination points for its money transfer services were led by Latin America, Europe and North America.

However, the biggest and most welcome devil in the details belonged to the firm’s dot.com offerings, westernunion.com where consumer-to-consumer revenues surged by a spectacular 22% – that’s 21% in constant currency.

Overall, westernunion.com’s transaction count soared by 26% compared to the same time last year. This is no minor wing of the company’s business, either. Westernunion.com accounted for 11% of the remittance giant’s consumer-to-consumer sales during the last quarter. There are still vast numbers of people relying on these services to send money home or make other forms of payment.

To return to the underwhelming side of the story momentarily, the company’s business solutions sales struggled year-on-year, ending up 4% below the level attained at the same point in 2017. As confirmed in the earnings release last Thursday, that amounts to 7% of the top line.

In his conference call with analysts, Western Union CEO Hikmet Ersek referred to some recent initiatives, including the major agreement inked with the grocery chain Albertsons which will place Western Union money transfers services in 2,300 of the latter’s locations. He also emphasised that westernunion.com is now available in 45 countries.

Ersek said: “We are working on expanding our co-branded digital offerings, such as with our bank agents, where we offer our money transfer to their online banking services and their ATMs.”

Beyond westernunion.com, he added, the firm’s other digital offerings generated an additional 2% of its consumer to consumer revenues

The firm’s Chief Finance Officer Rajesh Agrawal said that Western Union’s cross-border payments activity had grown by 9% compared to the same period last year. Diving a little deeper into the regional outcomes, he reported a rise of 3% in North America, where transactions climbed by 2%, while revenues in both the Caribbean and Latin American regions climbed by 11%, 20% in constant currency. Transactions in these regions also grew by 16%.

When probed about Zelle and Venmo, Ersek confirmed that the bulk of his company’s business comes from its cross-border payments services. These, he noted, remained Western Union’s speciality; the firm has no fewer than 20,000 money transfer corridors. Meanwhile, he confirmed that the company’s domestic money transfer services constituted a relatively diminutive part of its overall business at around 7% of revenues.

For more about the Western Union-Albertson’s deal, you might like to read our recent coverage of it here.


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