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Western Union

Page history last edited by PBworks 15 years, 8 months ago

 

Western Union

 

The Western Union Company (NYSE: WU) is a financial services and communications company based in the United States. Its North American headquarters are in Englewood, Colorado, and its international marketing and commercial services headquarters are in Montvale, New Jersey.

 

Western Union has a number of divisions, with products such as person-to-person money transfer, money orders, and commercial services. As of June 9, 2006, the company has 270,000 Western Union agent locations in over 200 countries and territories. Reported revenues top $3 billion annually.

 

The Western Union Company (NYSE: WU), along with its Orlandi Valuta, Vigo and Pago Facil affiliates, leads the global money transfer industry with a 17% market share. The company processed a total of 396 million money transfer transactions in 2006 – about 5 times as many transactions processed by its nearest competitor – Moneygram International (MGI).

 

History

 

Western Union was founded in Rochester, New York, in 1851 as The New York and Mississippi Valley Printing Telegraph Company.

 

After a series of acquisitions of competing companies by Hiram Sibley & Don Alonzo Watson the company changed its name to Western Union Telegraph Company in 1856 at the insistence of Ezra Cornell, one of the founders of Cornell University 1, to signify the joining of telegraph lines from coast to coast.

 

It introduced the first stock ticker in 1866, and a standardized time service in 1870. The next year, 1871, the company introduced its money transfer service, based on its extensive telegraph network. In 1879, Western Union left the telephone business, having lost a patent lawsuit with Bell. As the telephone replaced the telegraph, money transfer would become its primary business.

 

 

Due to declining profits and mounting debts, Western Union slowly began to divest itself of telecommunications-based assets starting in the early 1980s. Due to deregulation at the time, Western Union began sending money outside the country, re-inventing itself as "The fastest way to send money worldwide" and expanding its agent locations internationally.

 

Western Union was bought by First Financial Management Corporation in 1994, which a year later merged with First Data Corporation. On January 26, 2006, First Data Corporation announced plans to spin Western Union off as an independent, publicly traded company.

 

The spinoff was completed in December and Western Union is now an independent, publicly traded company.

 

 

 

Competition

 

Western Union faces competition from US banks and online money transfer companies. Advances in technology allow them to offer their services at much lower prices than Western Union. Banks facilitate money transfer through inter bank wire transfer or through ATM machines. Online money transfer companies also represent a growing source of competition.

 

Western Union already faces strong competition from billers or third party networks offering cash-based bill-payment services in their own names or in their “host’s” name. And recently, as consumers in the US and other countries grow more comfortable with other electronic means of payment, Western Union will face competition in electronically-based methods of payment such as the telephone and internet.

 

Western Union still faces much competition in the consumer to consumer segment from various smaller rivals. MoneyGram is its only real competitor. Ironically, Moneygram and other competitors offer money transfer transaction fees that are much lower than Western Union’s, and yet consumers tend to go for Western Union. Western Union has been forced to lower fees recently in hopes that growing transaction volumes will make up for the loss of revenue. Other competitors include regional money transfer providers, such as DolEx, GroupEx, Sigue and Ria Envia, that compete with Western Union in a small group of corridors within one region, such as Central America, South America, North America to the Caribbean, or Western Europe to North Africa.

 

Other forms of money transfer include those made through the mail, human carriers, cell phones, online money transfer services and card-based options, such as ATM and stored value cards. Online money transfer companies such as Moneygram’s Moneygram.com, Ikobo and Paypal all offer lower fees than Western Union. Paypal is a free money transferring service done via email offered to consumers with a bank account or a credit card, and is the prominent form of payment for online purchases.

 

In the consumer to business segment, competition has arisen from billers, financial institutions, or other third-party providers of services. Through their own or “hosted” walk-in cash-based payment locations, or through electronic services (via telephone, online, card-based options), these competitors pose a risk to Western Union’s money transferring business.

 

 

History

 

The Western Union Company was first launched in 1851 as a telegraph company and began trading on the New York Stock Exchange in 1865. It provided services in the business of telegrams until 2006.

 

First Data Corporation acquired WU in 1995, but spun-off WU in September 2006. Western Union is now an independently owned, publicly traded company headquartered in Englewood, Colorado. It is the leader in the money transfer industry and has experienced a steady rise in total consolidated revenue over the past few years while increasing its market share from 10% to 17% in just the past 3 years.

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