Western Union Financial Services Inc., a subsidiary of First Data Corp., is beefing up its presence in Mexico by signing a 10-year agreement with Elektra, one of Mexico's largest retailers.
In addition, the money transfer company purchased Elektra's interest in two companies in which both Western Union and Elektra were part owners.
The companies, Servicio Mexicano de Entregas, and Servicio Internacional de Envios, provide money transfer services that Western Union considers essential for its growth strategy in the market.
Servicio Mexicano's principal business is "Dinero en Minutos" or money in 10 minutes, which is offered through 650 locations including banks and retailers. The second company will offer money transfer services from Mexico to other countries once the Mexican economy improves, said a Western Union spokesman.
Western Union, which has operated in Mexico for some 100 years, only offers money transfer services from other countries into Mexico.
Elektra, a retailer selling appliances, linens, and furniture in 400 outlets, has disbursed money for Western Union since 1993, but this latest agreement, locks the two companies into a long-term relationship, said the spokesman.
Western Union's international business grew by more than 20% last year, and money transfers into Mexico were responsible for the majority of that growth.
"These transactions assure Western Union's competitiveness in what has become one of the fastest growth segments of the money transfer industry," said Paul Vornle, president.
Under the agreement Elektra will provide only Western Union services or other money transfer services provided by First Data Corp., which may want to launch new wire transfer services in the future, said the Western Union spokesman.
First Data also owns the competing Moneygram service, operating in Mexico since 1990.
As a result of First Data's acquisition of First Financial Management Corp. last June, First Data is expected to sell Moneygram by November, and is currently talking to prospective buyers. The Federal Trade Commission raised antitrust issues over First Data's ownership of two major wire transfer services.
The competing services have been sister companies since October.
Moneygram does not offer a wire transfer service from Mexico to other countries.