The Western Union Co. is moving forward with plans to expand its cross-border business-payments unit now that it has officially completed a deal to purchase a division of London-based Travelex Holdings Ltd.
The Englewood, Colo.-based company’s purchase of Travelex Global Business Payments gives it more than 95,000 small and midsize business clients in 18 countries. That market represents about a $24 billion in revenue opportunity, according to figures Western Union cited from McKinsey & Co. and its own estimates.
Western Union first announced its plans to purchase the Travelex unit in July (
The acquisition also adds 500 banks globally that will be using the Western Union business unit’s services, Western Union said earlier this year. The company will target small and midsize banks that lack the scale to offer international payment services cost-effectively.
But Western Union also will compete with banks to win businesses in that market, Ian Taylor, senior vice president of global sales for Western Union business solutions, tells PaymentsSource.
“We know have the platform, the people, the breadth, and quite frankly the balance sheet [to compete with banks in that space],” Taylor says.
Western Union wants to grow the business-payments unit to rival its traditional consumer-to-consumer business, Taylor adds. The company plans to do this by selling businesses on the technology it offers, such as online payments and the ability to make payments in 140 currencies, he says.
As Western Union builds its cross-border business-payments operations, it continues to eye developments regarding Europe’s Single Euro Payments Area system, Taylor says.
SEPA is an initiative the European banking industry launched in 2002 to link Europe’s disparate national payment systems into a standardized system usable for cross-border debit transactions.
The European Commission has revised the deadline for banks to support SEPA credit transfers and direct debits to the end of 2012 because banks were unable to meet the original December 2010 deadline (
“We maintain pretty close ties to all global discussion of initiatives, regulations and changes in [payments] procedures,” Taylor says. “We’re following the SEPA dialogue and participating in it.”
Western Union initially established its business-payments platform with the 2009 acquisition of Custom House Ltd., a Canadian company that offered international B2B payments services.
During the third quarter ended Sept. 30, Western Union’s global business payments unit generated $191.5 million in revenue, up 7% from $179.2 million a year earlier.
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