Businessmodel of Western Union

Customer Segments

Western Union provides a range of money transfer and remittance services to customers around the world. The Company’s customers can be organised by its three business segments:

• Consumer-to-Consumer, which enables members of the general consumer population to make local and cross-border payments to one another;
• Consumers-to-Business, which enables consumers to make regular and one-time payment to various business and organisations, principally in relation to the payment of bills;
• Business Services, which provides services to small and medium size businesses, international enterprises, and other organisations across multiple business sectors. Western Union’s consumer-to-consumer operations account for the majority of the Company’s business, with general consumers comprising its principal customer base.

Western Union serves an international customer base spanning five core geographic regions: Europe and CIS, North America, Middle East and Africa, Asia Pacific, and Latin America and the Caribbean.

Value Propositions

Western Union provides value to its customers in the following ways:

• Its brand recognition and reputation, with the Company established as one of the most well-known and well-regarded companies of its kind in the world, having a track record for providing efficient and reliable services to its customer base;
• Its portfolio of services, with the Company providing a range of money transfer services, including local and cross-border payments, to individual and commercial customers, facilitating payments of all kinds;
• Its international reach, with the Company providing services to customers around the world, concentrated in five geographic regions, namely Europe and CIS, North America, Middle East and Africa, Asia Pacific, and Latin America and the Caribbean;
• Its accessibility and flexibility, with the Company’s services easily accessed by customers through the Company extensive international network of agents, as well as its through its various online service offerings; and
• Its safety and security, with the Company implementing high-level security systems to ensure the safety and reliability of its services. ### Channels

Western Union operates a website at www.westernunion.com, through which it provides information on its various services and operating locations. The Company’s website, as well as its various regional websites, double as online money transfer portals, which enable customers to make money transfers online by credit card, and bank transfer. The Company also provides a mobile app, which allows customers to make transfers on the go.

Western Union principally provides consumer-to-consumer services through its global network of third-party agents across its five geographic operating regions, with approximately 90% of its agent locations located outside of the US. These agents include large networks such as post offices, banks and retailers, and other established organisations, as well as smaller independent retail locations that provide other consumer products and services. Some of the Company’s agents outside the US manage subagents. These agents are known as superagents.

Western Union’s consumer-to-business and business solutions services are principally offered over the phone, through partner channels, and via online portals. Consumers can make payments to over 15,000 businesses through the Company’s consumer-to-business channels. Western Union markets its internet services through co-branding arrangements with its website partners as well as on its own websites.

Customer Relationships

Western Union provides much of its services to customers on a self-service basis, with its online portals and mobile applications allowing customers to arrange money transfers, manage account details, and track transfers without interacting with members of the Company’s sales and service teams.

Western Union’s principal services channel is its network of agents, through which the customers can receive a more personalised service. The Company’s service staff are able to provide in-person advice and guidance that is tailored to the needs of each customer. Business customers are provided additional care via specialist business services staff.

Western Union provides a range of support services to its customers, including FAQs, fraud awareness information, price estimation tools, and agent location details. The Company also provides tailored customers support through dedicated support personnel, who can be contacted over the phone, by email, or via an online contact form.

Additionally, customers are able to follow Western Union’s activities and interact with the Company directly through its social media accounts, including with Twitter, Facebook, and YouTube.

Key Activities

Western Union provides money movement and payment services. It organises its activities into three operating segments: Consumer-to-Consumer, which is engaged in individual money transfers from one consumer to another through agents or via online portals; Consumer-to-Business, which provides solutions that allow consumers to make one-time or recurring payments to various businesses and organisations, including utilities, auto finance companies, mortgage servicers, financial service providers, government agencies, and other businesses; and Business Solutions, which facilitates payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises.

The Company primarily serves its customer through a network of agent locations in approximately 200 countries and territories, spanning the Americas, Europe, Asia Pacific, the Middle East, and Africa.

Key Partners

Western Union works closely with a network of partner companies and organisations that support the Company’s money transfer operations. These partners can be categorised broadly as follows:

• Channel and Distribution Partners, comprising the Company’s extensive network of independent agents that provide a range of money transfer services to customers on the Company’s behalf;
• Technology Partners, comprising various technology, systems integration, and software and hardware providers, that provide systems and support that work to facilitate the Company’s money transfer processes;
• Affiliate and Marketing Partners, comprising websites and businesses that refer customers to Western Union, and drive traffic to the Company’s website, in return for commission and benefits;
• Rewards Partners, comprising various commercial operators that provide discounts and products to Western Union customers as part of its rewards program; and
• Strategic and Alliance Partners, comprising market leading companies across multiple sectors, with which the Company works on joint projects. Western Union partners with a number of technology companies, with a particular focus on money transfer services providers. This includes partnerships with Fiserv, Brightwell Payments, ChromeRiver, and MineralTree. The Company has also recently launched partnerships with WeChat, Walmart, and Sainsbury’s.

Key Resources

Western Union’s key resources are intellectual properties and technologies, its online portals and mobile app, its IT and communications infrastructure, its network of agents, its partnerships, and its personnel.

Western Union owns a number of patents and patent applications covering various aspects of its processes and services. Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Western Union’s name, including applications entitled ‘Money transfer system and method’, ‘Methods and systems for improving disclosure requirement compliance’ and ‘Cash payment for remote transactions’.

Western Union owns and or leases a number of physical properties across 50 countries, including more than 400 leased properties outside the US. This principally includes the Company’s operational, sales, and administrative offices, as well as dedicated customer service centres.

Cost Structure

Western Union incurs costs in relation to the development of its technologies and solutions, the development of its digital service channels, the maintenance of its IT and communications infrastructure, the management of its network of agents, the implementation of marketing and advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 Western Union recorded total operating expenses in the amount of $4.37 billion. This comprises cost of services totalling $3.20 billion and selling, general, and administrative costs totalling $1.17 billion.

Revenue Streams

Western Union generates revenue through the provision of money transfer and business transaction services. The Company’s revenue streams can be organised into two principal categories:

• Revenue derived from transaction fees charged to consumers to transfer money; and
• Revenue derived from foreign exchange revenues, based on the difference between the exchange rate set by the Company to the customer and the rate at which the Company is able to acquire currency. In 2015 Western Union generated annual revenue in the amount of $5.48 billion, down slightly on the $5.61 billion recorded by the Company in 2014. The majority of the Company’s revenue, around 79%, was attributed to the Company’s Consumer-to-Consumer segment. The Company’s Consumer-to-Business and Business Services segments accounted respectively for 12% and 7%.