Western Union Co. says its new foreign exchange unit could open doors into new markets though the purchase is unlikely to have any quick impact on its bottom line.
Western Union, an Englewood, Colo., remittance company, announced late Tuesday that it had closed its $370 million cash purchase of Custom House Ltd., a Victoria, Canada, specialist in international payments for small and midsize businesses.
"This gets us into a new category," said Ranjana Clark, Western Union's executive vice president of global payments and global strategy.
Western Union said Custom House is on track for $100 million of revenue this year; the deal is expected to reduce Western Union's earnings this year by about a penny a share and increase its revenue by less than 1%.
Nearly 85% of Western Union's revenue comes from person-to-person money transfers. But the company has been striving to build up its role in business payments. In July, it announced that Wells Fargo & Co. had agreed to offer Western Union's same-day bill-payment capabilities to online banking customers.
Custom House adds a different kind of network, Clark said. "We do pick up a very robust account-to-account network here."
She described it as "not an alternative but a complement to" international wire transfers and international automated clearing house transactions.
Custom House will be rebranded under the Western Union umbrella, but will maintain its headquarters in Victoria.