Western Union Co. is counting on growth from new online and mobile channels this year to help offset the effects of rising competition and European economic turmoil.
The company continues to add new agent locations, especially in emerging markets such as China and India, but Western Union also has set its sights on transforming its online funds-remittance business from a $100 million operation to $500 million by 2015, Hikmet Ersek, Western Union president and CEO, told analysts Feb. 7.
“What we do that other companies cannot do is that we are connecting the electronic channels with our 485,000 retail locations in 200 countries,” Ersek said during an analyst conference call to discuss its fourth-quarter earnings.
Englewood, Colo.-based Western Union this year is working to enrich its online funds-transfer offerings by hiring digital commerce experts at its online hub in San Francisco, he said.
Western Union also plans to expand its business-to-business funds-transfer offerings, where it sees potential for cross-border transaction growth around the world, Ersek said.
Mobile funds transfers represent a relatively small market for Western Union, but the company foresees significant growth this year from increased consumer use of its services through mobile applications for Apple Inc. iPhones and handsets that use Google Inc.’s Android operating system, Scott Scheirman, the firm’s chief financial officer, told analysts.
In certain emerging markets, mobile funds transfers are one of Western Union’s fastest-growing channels. For example, more than 30% of funds transfers United Kingdom Western Union customers initiate to recipients in Kenya are sent to a mobile phone, he said.
Prepaid cards also are generating growth for Western Union, which ended the year with 1.5 million of its branded reloadable prepaid cards in force, up 68% from 890,000 a year earlier.
Western Union in January added prepaid card distribution through 3,000 7-Eleven Inc. locations (see story). http://www.paymentssource.com/news/7-Eleven-Expand-In-Store-Support-Alternative-Financial-Services-3009388-1.html
In general, Western Union expects to face “a more challenging economic situation” around the world this year, Scheirman said.
The company’s outlook includes “softness” in Europe caused by local economic setbacks and transaction-volume declines in Mexico, where the company faces new compliance practices and the need to “evolve our business model,” he said.
Western Union’s revenues for the fourth quarter ended Dec. 31 rose 5.1%, to $1.43 billion from $1.36 billion a year earlier. Net income rose 86.4%, to $452.3 million to $242.6 million, boosted by a large provision for income taxes related to an agreement the company reached in December with the Internal Revenue Service.
Total transactions during the quarter rose 5.7%, to 225.8 million from 213.7 million. Total funds transferred during the quarter reached $81.3 billion, up 7.3% from $75.8 billion. The average per-transaction amount rose 1.4%, to $360 from $355 a year earlier.
Total agent locations during the quarter expanded 9%, to 485,000 from 445,000 a year earlier.
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