The Western Union Stock

The Western Union Company is a leader in cross-border, cross-currency money movement, payments, and digital financial services, empowering consumers, businesses, financial institutions, and governments with fast, reliable, and convenient ways to send money and make payments around the world.

The Western Union brand is globally recognized and represents speed, reliability, trust, and convenience. The company's Consumer Money Transfer service enables people to use its well-recognized brand to send money around the world, usually within minutes. As of December 31, 2023, the company's global network included agent locations in more than 200 countries and territories and many Western Union branded websites. Each location in the company's agent network is capable of facilitating a consumer's use of one or more of its services, with the substantial majority offering a Western Union branded service. As of December 31, 2023, approximately 400,000 of the company's agent locations had conducted money transfer activity in the previous 12 months.

As it continues to seek to meet the needs of the company's customers for fast, reliable, and convenient global money movement and payment services while focusing on regulatory compliance, it is also working to provide consumers and its business clients with access to an expanding portfolio of financial services and to increase the ways its services can be accessed, including through the launch of its digital wallet in certain countries.

Segments

The company operates through Consumer Money Transfer and Consumer Services segments.

Consumer Money Transfer segment

Money transfers from one consumer to another are the core of the company's business, representing 92% of its total consolidated revenues for 2023. A substantial majority of these transfers were cross-border transactions. The company's money transfer service is mainly conducted through its retail agent locations worldwide but also includes its money transfer transactions conducted and funded through websites and mobile applications marketed under its brands (Branded Digital). This segment includes five geographic regions whose functions are primarily related to generating, managing, and maintaining agent relationships and localized marketing activities. The company includes Branded Digital transactions in its regions. By means of common processes and systems, these regions, including Branded Digital, create one interconnected global network for consumer transactions, thereby constituting one Consumer Money Transfer business and one operating segment.

Operations

The company's revenues are primarily derived from consideration paid by customers to transfer money. These revenues vary by transaction based upon factors, such as channel, send and receive locations, the principal amount sent, and the difference between the exchange rate it sets to the customer and a rate available in the wholesale foreign exchange market, when the money transfer involves different send and receive currencies.

In a typical money transfer transaction, a consumer provides information, either at one of the company's agent or subagent locations or online, specifying, among other things, the name and other identifying information regarding the recipient and the principal amount of the transfer. The consumer also provides funds for the transaction, including fees. Certain of these processes are streamlined for consumers who participate in its loyalty programs or are registered Branded Digital customers. This information is entered into the company's money transfer system, and the funds are made available for pick-up by the recipient within its system, usually within minutes, in the country or territory specified by the consumer, or paid into the designated account of the recipient. In some jurisdictions, the principal and fees are not collected until after the presentation of its written disclosure that generally identifies the exchange rate and all fees and charges associated with the transaction and the consumer has agreed to the transaction, as described in the disclosure. Consumers then receive a unique identifying number assigned by the company's system, which the consumer must communicate to the recipient in order to obtain a payout in cash. In this situation, the recipient generally enters an agent location in the designated receiving country or territory, presents the unique identifying number and identification, where applicable, and is paid the transferred amount by the company's agent based on the information in its system.

In a retail transaction, the company generally pays its agents a commission based on a percentage of revenue. A commission is usually paid to both the agent that initiated the transaction, the send agent, and the agent that paid the transaction, the receive agent. For most agents, the costs of providing the physical infrastructure and staff are typically covered by the agent's primary business (e.g., postal services, banking, check cashing, travel, and retail businesses), making the economics of being a Western Union agent attractive. Western Union's global reach and large consumer base allow it to attract agents to be well-positioned to deliver its services. In a Branded Digital transaction, the company typically pays a credit card processor or bank a fee for collecting the principal, and it is also responsible for losses from chargebacks and fraud, in addition to commissions owed to the receive agent in the event of cash payout.

Services

The company offers money transfer services in more than 200 countries and territories, with a number of options for sending funds that provide consumers convenience and choice, through both its retail and digital money transfer channels.

Retail - The majority of the company's remittances constitute retail transactions in which payment is collected by one of its agents and is available for pick-up at another agent location, usually within minutes. The company offers a variety of methods for consumers to initiate transactions. In select markets, consumers may stage a transaction either online or using a mobile device and subsequently pay for the transaction at one of the company's agent locations. Additionally, in certain agent locations, consumers can enter a transaction at a self-service kiosk and subsequently pay for the transaction at the counter of the location.

Digital - In many countries and territories, consumers can initiate a money transfer from a Western Union branded website or mobile application or from sites and applications hosted by the company's third-party white label or co-branded digital partners.

Consumers can fund a transaction in a variety of ways, in addition to cash. For example, at certain of the company's agent locations, consumers can fund a transaction using a debit card, and, where available, consumers can fund a money transfer from an account and through an account using an automated teller machine (ATM). In digital channels, consumers can generally fund transactions using a credit card, debit card, electronic funds transfer processed through the automated clearing house (ACH) payment system or similar system outside the United States, online banking direct payment methods, or other bank account-based payment.

The company also provides several options for the receipt of funds. At its retail agent locations, consumers generally receive payments in cash. However, in certain countries, the company's retail agents may also issue a money order or check or provide payout through an ATM. Funds can also be directed to a bank account in many countries, by either the sender or receiver, and in more limited circumstances, can be paid into or directed to a mobile wallet, a stored-value card, or debit card.

Distribution and Marketing Channels

The company offers its Consumer Money Transfer services around the world primarily through its global network of agents and subagents in most countries and territories, with approximately 90% of its agent locations being located outside the United States. The company's agents facilitate the global distribution and convenience associated with its brands, which in turn helps create demand for its services and helps it to recruit and retain agents. Western Union agents include large networks, such as post offices, banks and retailers, and other established organizations, as well as smaller independent retail locations, which typically provide other consumer products and services. Many of the company's agents have multiple locations. The company's agents know the markets they serve and leverage this local knowledge to develop business plans for their markets. In some regions, its agents contribute financial resources to, or otherwise support, the company's efforts to market its services. Many agents operate in locations that are open outside of traditional banking hours, for example on nights and weekends. The company's top 40 agents and partners globally have been with it for more than 20 years, on average, and in 2023, these long-standing relationships accounted for transactions that generated nearly 60% of its Consumer Money Transfer revenue.

The company provides its agents with access to its multi-currency, real-time money transfer processing systems, which are used to originate and pay money transfers. The company's systems and processes enable its agents to pay money transfers in over 130 currencies worldwide. Certain of the company's agents can pay in multiple currencies at a single location. The company's agents provide the point-of-sale presence and facilitate the interface with Western Union required to complete the transfers. Western Union provides central operating functions, such as transaction processing, settlement, marketing support, and consumer relationship management to its agents, as well as compliance training and related support. Some of the company's agents outside the United States manage subagents. The company refers to these agents as master agents. Although the subagents are under contract with these master agents (and not with Western Union directly), the subagent locations typically have access to similar technology and services as its other agent locations. The company's international agents often customize services as appropriate for their geographic markets. In some markets, individual agents are independently offering specific services, such as stored-value card or account payout options.

The company has recently started to expand the number of its owned and operated locations and its agent concept stores, in which it partners with agents who have demonstrated high-quality customer service and expertise in serving particular geographies or corridors.

While the company typically performs services under the Western Union brand, in certain geographic regions, it operates under other brands targeted to the local market, such as Vigo and Orlandi Valuta. The company markets its services to consumers in a number of ways, directly and indirectly through its agents and their subagents, leveraging promotional activities, grassroots, direct-to-consumer communications, digital advertising, and other incentives. The company cooperates with various partners around the world to offer a variety of branded, co-branded, and non-Western Union branded money transfer services, including services offered exclusively under the partners' brands. While the terms of these arrangements vary, these services are often marketed by the third-party partner and offered under the partner's license to provide money transfer services. As a result, the regulatory requirements applicable to the company under these arrangements may also vary.

Consumer Services segment

Consumer Services primarily consists of the company's bill payment services in Argentina and the United States and its money order services. Also included are the company's retail foreign exchange services, prepaid cards, lending partnerships, and the non-money transfer aspects of its consumer ecosystem, such as its digital wallet, which allows consumers in certain countries to load and spend funds. Consumer Services revenue is derived primarily from transaction fees paid by customers and billers and represented 7% of the company's total consolidated revenues for 2023. Consumer Services also includes certain corporate costs, such as costs related to strategic initiatives, including for the review and closing of mergers, acquisitions, and divestitures. Consumer Services segment includes the company's bill payment services, which facilitate payments for consumers, businesses, and other organizations, as well as its money order services, retail foreign exchange services, prepaid cards, lending partnerships, and digital wallets. The company manages its business around the consumers and businesses it serves and the types of services it offers.

The company's bill payment services provide fast and convenient options for consumers, businesses, and other organizations to make payments, including to utilities, auto finance companies, mortgage servicers, financial service providers, and government agencies. Generally, these bill payment services are initiated by consumers making a cash payment at an agent or a Company-operated location, or making a payment through westernunion.com. The company's business partners, who receive payments through its services, benefit from their relationship with Western Union, as it provides them with real-time or near real-time posting of their customers' payments. In many circumstances, the company's relationships with business partners also provide them with an additional source of income and reduce their expenses for handling of payments.

Consumers use the company's money orders for making purchases, paying bills, and as an alternative to checks. The company derives investment income from interest generated on its money order settlement assets, which are primarily held in United States tax-exempt state and municipal debt securities.

For non-money transfer aspects of its consumer ecosystem, the company derives income primarily from transaction fees and contractual relationships with partners, such as the issuing bank for Western Union-branded prepaid cards.

Dispositions

In 2021, the company entered into an agreement to sell its Business Solutions business to Goldfinch Partners LLC and The Baupost Group LLC (collectively, the Buyer), and the final closing occurred on July 1, 2023.

Intellectual Property

The Western Union trademarks and service marks and the company's Black & Yellow trade dress are used and/or registered worldwide and are material to it. The company offers money transfer services under the Western Union, Vigo, and Orlandi Valuta brands. The company also provides various payment and other services under many brands and product names, including Pago Fácil, Quick Collect, Quick Pay, Quick Cash, and Western Union Convenience Pay.

History

The Western Union Company was founded in 1851. The company was incorporated in Delaware in 2006.