Western Union: Disruptor or Disrupted?

Many bitcoin ventures are aiming at disrupting the remittance market. Remittances (or Home Remittances as they are officially known), are a particular type of repeat money-transfer between two countries.

Remittances are typically sent by the diaspora or foreign workers, sending family maintenance money back home. Gauging the size of the mark in the vicinity of US$ 600 Billion a year, remittances are touted as the low hanging fruit. Everyone wants a part of this pie.

Invariably, Western Union, MoneyGram and Ria are always cited as the incumbents who would be disrupted because of costs and complacency.

I wanted to find out how much truth there is to this statement. Is Western Union another Kodak or Blockbuster in the making? To find an answer I had to wiggle favors to get connected to someone senior in WU. After literally weeks of favor mongering, I did manage to connect with someone in Western Union whom I deem to be a solid source via proxy.

Note: I do not know the name of this person, or his designation. He was put on a call by a very near and dear friend, who is an SEVP in a Fortune 500 company and are technology vendors to WU. This was his Senior WU contact he had put on the phone. I suspect this person might be someone really high up in WU on the Technology side.

I wanted to ask the 8-10 questions I had prepared in advance, unfortunately, we only had time for four. Here were my four questions to them. Please note I have paraphrased the answers from my quick scribbles/notes. The telephone call was partially muffled so I could not hear certain aspects well.

Q1. In light of the activity we have seen in the Bitcoin arena, is Western Union going to be dethroned and eventually be cast out? Would WU become the next Kodak or Blockbuster?

A1. No! Western Union is well-aware of the advantages of Bitcoin and the promise that the Blockchain holds. We are also equally sensitive to market data that would suggest changes or shift in income for the 1000s of money remittance corridors we operate in. Without going into much detail, Western Union has been following the advances in value transfer over the Internet since early 2013. That ought to be an answer enough.

Q2. Have you seen Bitcoin based remittance make noticeable inroads or gain significant market share in any particular remittance corridor.

A2. No noticeable difference, though some players in the Bitcoin space would like you to believe otherwise. We have not lost any business. If a particular Bitcoin company has managed to pick up transactions, these are transactions we were not catering to in the first place. We have perhaps the world’s best data source on this (as do some of our larger competitors). There is a complete (complex) science of monetary relationship behavior that is at play here and we are very much on top of the game. Any subtle changes in remittance patterns, we can pick out even with the noise level on high. We have decades of data to match it with and run multiple models as how to best gain share in a corridor.

Q3. Do you see Bitcoin take off in remittances?

A3. Yes & No. Value transfer over Internet is here to stay. We are very actively working on it. WU can implement, if it so chooses, its own version of the Blockchain, and we might. There are other alternatives to Bitcoin as well*. Legitimacy of Bitcoin in all the major markets is what is stemming growth. Once legitimacy is granted, costs will spiral upwards. Bills have to be paid. Compliance & Regulators costs will come on the ledger. It is not going to be as libertarian as one is led to believe. Added oversight of liquidity and exchange providers will be a moot point for many. In many instances, Bitcoin remittances, since you asked specifically about them, will lose their charm if both ends of the sending and receiving markets are regulated. Remember nothing stops WU from turning on the heat (to the competition). The same is true for other large incumbents. The WU brand and the relationship we have with our customers is very strong. Our customers don’t care what technology we use on the backend to transfer money, as long as their trust and confidence in not misplaced, they will continue to be loyal customers.

*(I think the person was referring to the WU/Ripple story that came out).

Q4. 1000s of entities are after your business model, how does that make you feel? Being the bulls-eye all the time?

A4. It keeps us on our toes. We are not sitting ducks either. I suppose everyone has to hammer out and target someone.


Unfortunately the call quality was extremely poor and I wanted to talk more, but I knew I was pushing my luck. So this is all that I have on the WU front for now.

I’m trying to get a similar form of semblance from Ria and MoneyGram.



This page was last updated on June 17, 2015.

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