U.S. Markets closed

Western Union Expands Real-Time Cross-Border Payment Service

Zacks Equity Research

World’s leading money transfer company, Western Union Co. WU has made available its real-time cross-border platform. This service will accelerate international consumer, consumer-to-business and business-to-consumer payments to eligible accounts, cards and digital wallets.

Real-time payments are gaining traction across the globe with participants such as consumers, merchants and financial institutions demanding settlement of money remittances, bill payments and other money transfer related services, at the drop of the hat.

Real-time payments services, which make funds available instantly, have witnessed a huge demand from financial institutions (FIs), merchants, consumers and society due to its inherent conveniences such as better cash management and improvement in liquidity. Instant settlement of funds reduces requirement of working capital for businesses and makes it easier for them to conduct their business. Technology, high speed data networks and consumer behavior are some of the factors fueling the demand for speedier payment settlement.

For international cross-border real-time payments, Western Union is leveraging its core assets – including global settlement capabilities, network across 20,000 corridors in local currency, and compliance and technology systems.

This move signals Western Union’s strategy to expand beyond its niche in C2C remittances to a platform of real-time payments for businesses and FIs for their diverse cross-border payments needs.

Western Union’s consumer-to-consumer real time cross-border payments capability is now active when sending to select banks or digital wallet providers in 17 countries. The company will roll out the service to another 100 countries by the end of 2020.

Western Union’s real-time payments will provide it with opportunities to win, serve, and retain customers through more efficient, secure and engaging commerce experiences.

To expand its business reach, Western Union has been making several tie ups and partnership with banks, retailers, post office across the globe.

These tie ups and partnerships are in line with the company's efforts to grow its market share amid rising competition from many fintech companies such as PayPal Holdings, Inc. PYPL and Square Inc SQ that have entered the payments space in recent years and are fast eating into incumbents market share by dint of their low cost and efficient services.  

Western Union has also streamlined its business operations by recent sale of three of its businesses – Speedpay U.S. domestic bill pay business; Walletron, a provider of mobile bill presentment solutions and Paymap mortgage payments services.

Part of the funds generated from the above businesses will be used for sharebuyback and debt payoff, which will aid the company’s bottom line and reduce its leverage.

The company's revenues have been under pressure. High compliance costs and foreign exchange volatility have further weighed on its profitability.
Nevertheless, investors are encouraged about the company’s initiatives to move away from its brick-and-mortar payments model to a digital platform.

This also led to a 36% rise in the stock in the first nine months of 2019 compared with the industry’s growth of 37%. This rise in the stock price is impressive, given the fact that in 2018, the stock witnessed a decline of 10.3%, compared with its industry’s growth of 5.5%, due to investors’ pessimism over its subdued performance.

 

Another company in the same space, MoneyGram International Inc. MGI, gained 99% in the first nine months of 2019, due to a number of initiatives undertaken, which are boosting growth.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.6% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>
 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
 
Square, Inc. (SQ) : Free Stock Analysis Report
 
MoneyGram International Inc. (MGI) : Free Stock Analysis Report
 
The Western Union Company (WU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research