Western Union Co. expects a rebound in international migration to drive expansion of the company's core cash transaction operations.
"There are secular trends in new growth in new migrant flows, and history shows migrants prefer cash-to-cash transfers," Chief Executive Hikmet Ersek said Thursday in New York at his first investor day meeting since becoming CEO on Sept. 1.
Ersek said the Englewood, Colo., company also is investing in Internet and mobile phone technologies to transfer money. Western Union announced a deal Wednesday with State Bank of India for customers to receive funds from abroad through their mobile phones, starting next year.
Western Union earns 85% of its revenue from fees for consumer-to-consumer money transactions and faces increasing competition from electronic money transfer services. Its shares have fallen about 6% this year on a slump in domestic sales.
Western Union said Thursday that it expects third-quarter revenue to increase 1%, to $1.33 billion from 1.31 billion in the second quarter. It is scheduled to report third-quarter results Oct. 26.
Migrant remittances to developing countries fell 6%, to $316 billion in 2009 because of the international economic slump, and are expected to rebound by 6.2% this year and 7.1% next year, according a World Bank survey released in April.
Large-scale migration to the developed world is inevitable because of higher incomes and an aging work force, Ersek said.
"New migrants prefer cash when they first begin to send money, and receivers on the other side prefer cash for the simple fact that this is how the consumers live in day-to-day life," he said.
