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Western Union sees growth

DUBAI — Western Union expects a further uptick in its global market share in 2012 on the back of expansions and new product offerings, president of Global Consumer Financial Services Stewart Stockdale said.

Last year, the global payment services company with 160 years of experience completed 226 million consumer-to-consumer, or C2C, transactions worldwide, moving $81 billion of principal between consumers, and 425 million business payments. The company operates with 485,000 agent locations in 200 countries and territories worldwide.

“We have about 18 per cent share of the global cross border money transfer business and we tend to grow share every year. We grew share last year and our expectation is to continue to grow the share. There is still a lot of room to grow from 18 per cent,” Stockdale told Khaleej Times in an interview during his recent visit to Dubai.

The UAE is the second largest market in the Middle East and Africa region after Saudi Arabia in terms of remittances, Stockdale said, adding that both of these markets are send markets because of a large population of expatriates.

He mentioned that the Arab Spring had an impact on the company’s business due to shutdowns in some markets in the region. And this year, Europe’s debt crisis is expected to impact revenue, he added.

Western Union expects a single digit growth in revenue for 2012, but chances are less for revenue growth from Europe, which is the second largest market for the company globally.

“We are talking about single-digit growth for our business [this year]... We are expecting somewhere a flat market in Europe as relates to this year,” he said, while expressing concerns about Southern Europe such as Greece, Italy and Spain.

The company reported $5.5 billion in revenues — a six per cent jump — in 2011 over 2010, he said, adding that last year, the company recorded the highest full year revenue growth since 2008. This year the company forecasts from six per cent to eight per cent in revenue, he said, adding that Western Union expects overall C2C constant currency revenue trends to be similar to the fourth quarter of 2011.

A three per cent increase in C2C revenue was reported for the last quarter of 2011 and a three per cent constant currency on transaction growth of five per cent. C2C represented 83 per cent of the company revenues. The Europe, Middle East, Africa and South Asia region saw a revenue increase of two per cent on transaction growth of three per cent in the fourth quarter last year.

“Most of our business comes from cash and we are really getting into people with more options... We are looking to offer more products at the retail level,” he added. Excerpts from the interview:

What are your thoughts for the money transfer industry?

Last year was good and we accomplished a lot of things in our money transfer business what we call our core cash to cash. This year, we are expected to grow again but we are forecasting a slowdown in some markets in relation to what is happening to Europe. If you look at Italy, Greece and Spain have been tougher ahead. Markets like Germany, France and UK are doing pretty well. In our perspective, Russia has had a little bit of slowdown. We have been very focused on financial services and now we are expanding into retail. So I think all the markets around the world have seen their natural evolution as the remittance business continues to grow. But if you look at the World Bank and IMF, they forecast growth in the industry, which is something that we like to be a part of that.

How do you see the Middle East market and what challenges are there?

We were impacted by the Arab Spring in particular because some markets shut down. So we had impact in Egypt, Libya and the Ivory Coast and those are markets that took us a while… they were shutdown and we open them up again and we saw the consumer continues to send or receive money. Our concern is for our people in those markets and then making sure the customers have the ability to receive money in many cases. In the Middle East, the big market here is Saudi Arabia, and is the second largest in the world after the US. The UAE is the second largest market in the Middle East area for us. Markets like Saudi Arabia and the UAE are more of send markets.

What are your expectations in terms of revenue this year?

If you look at our business last year and the numbers we quoted last year... We probably see similar trend that we had last year. Some markets do better and some markets do a little worse, but generally speaking we are talking about single-digit growth for our business. We are optimistic and continue to see growth and some markets will grow faster.

What’s the strategy of Western Union this year and what would be the focus area?

The focus we call “three legs of stool”. First, we call core consumer money transfer business, which includes very much global money transfer, domestic money transfer and payments. Another leg we call it new venture and we are talking about things like prepaid, some of the other product westernunion.com and the third leg is B2B business. We are now one of largest non-bank players in B2B payment business.

What are your key markets?

We segment the world in five geographic regions. We call it North America, which is the US, Canada and Mexico. We have Latin America and the Caribbean, then Asia Pacific region. We have Europe and Central Independent States and MEA. And they all are important regions to us as they contribute to over $5 billion revenues. The biggest region for us is North America and our second largest market is Europe. Our biggest quarter in the world is the US to Mexico, but that only represents around six per cent of our business. You can see in generally we have 16,000 quarters. If you want to send money from the UAE to India, Pakistan or the Philippines, these are different quarters. All these 485,000 locations have different combinations. Our Saudi to India quarter is a very big quarter. Dubai is our regional headquarters for the Middle East and Africa.

How important is technology in this industry?

We consider ourselves as a very much technology firm. Think about it all 485,000 locations you have the ability to put cash in and cash out and we do it in minutes. So if you go down the street here in Dubai and you want to send money to India you have the ability to go in, look at the price, look at foreign exchange spread and once you put your money in, the retailers put it in our system and we do all the security compliance and regulatory process we have to go through and in a matter of minutes a friend or relative could receive money in any part of the world. So from technology perspective we have great capabilities.

What new developments have you noticed in the industry?

A lot of new technologies are coming into the picture. You have a lot of different players and competition. We are doing more in investing into growing our network and our network continue to grow. So that 485,000 places will continue to grow very aggressively and we want it to get to a million locations. But by the same token we launched ATMs, so you could send from an ATM, a bank account, a phone or through westernunion.com.

— abdulbasit@khaleejtimes.com