Digital Payments

How Western Union Is Taking Global P2P Omnichannel

It’s one of the rising ideals in this digital world of commerce and payments, a consumer expectation that doesn’t seem in danger of fading anytime soon: buy online and pickup — or otherwise fulfill that transaction — inside a brick-and-mortar store. That idea doesn’t just apply to products like clothes, consumer electronics or toys, but to money, as demonstrated by the launch of an exclusive partnership, announced on Tuesday (April 2), between Western Union and discount retail chain Dollar General.

As Odilon Almeida, Western Union’s president of global money transfer, told Karen Webster, the move — one of the biggest recent deals for Western Union, and no small thing for the retailer — represents the latest development in Western Union’s work to build a global peer-to-peer (P2P) network based around mobile technology.

“We’ve been talking [about this deal] for a while — generations, I would say,” Almeida said. After all, Dollar General is not only a retailer on the rise (it continues to expand aggressively, selling and focusing on new products, and holding its own in a retail world dominated by Amazon and Walmart), but operates 15,400 stores, which means a 30 percent increase in the Western Union footprint in the U.S.

Not only that, but, as Almeida pointed out, 75 percent of U.S. consumers “live within five miles” of a Dollar General location, with those locations set to gain more foot traffic and customer loyalty via the Western Union offering. For a retailer of Dollar General’s size (as opposed to, say, a mom-and-pop operation that also serves as a Western Union station), the foot traffic and incremental sales are more important than the commission earned by facilitating the money transfers.

“When people send and receive money, a good part of them will do something else in that store,” he said.

Service Details

The details of the service boil down to this: Consumers can initiate international and domestic money transfers digitally through the Western Union mobile app or website, then pay in person at Dollar General stores. They can also receive money transfers in Dollar General stores. Senders have 12 hours to settle their accounts at a Dollar General store, he said, adding that 99 percent of consumers do so within that time limit, which is governed by compliance issues.

The deal with Western Union follows another program, announced last month, that enables international Amazon customers to pay in their respective country’s currency. The Western Union service works in conjunction with Amazon’s cross-border payment option, Amazon PayCode. It automatically processes “foreign exchange, settlement and money movement requirements for international eCommerce transactions,” the company said.

Digital Expansion

Both deals promise to help Western Union increase its presence in the digital sphere, with the Dollar General deal, specifically, representing a “very important milestone in our journey to digitizing our services,” he said. According to the company’s latest financials, Western Union’s website is now available in more than 60 countries, 20 of which were added in the last year. Website revenues represented 12 percent of total C2C revenue in the fourth quarter of 2018. In addition, the company’s money transfer transactions increased by 25 percent during Q4.

Digital, in fact, serves to tie customers more strongly to Western Union, Almeida said, and that holds especially true for customers who use the company’s mobile app, as will be the case with the Dollar General deal. “Every time the retail customer goes to the mobile app, our retention goes up, and our transaction per customer goes up,” he told Webster. “Our customers become more loyal.” To further encourage that, Western Union tends to charge less for mobile app transactions than for other types, he added.

The deal with Dollar General stands as another way to build a better omnichannel commerce experience — and extend the Western Union brand into what Almeida called a “very competitive market. We need to fight in the retail space. We need to race in the digital world,” a statement that holds especially true, given that major players such as M-Pesa, Amazon and others are raising the stakes when it comes to digital payments and global networks.

P2P Race

As it stands now, consumers in about 70 countries can access Western Union’s mobile technology for what amounts to global P2P payments.

“We’re racing to get to 200 countries and territories in the next year,” Almeida said. That could be easier for Western Union than most other players in the general space, given its expertise with compliance issues and the handling of cash, as well as cash-to-digital and digital-to-cash transactions. “Moving cash is very complicated,” he noted, and cash continues to endure, even as the world goes ever-more digital with money and financial matters.

For now, the Western Union and Dollar General deal will shed more light on the utility and benefits of having money transfer services inside a seemingly ubiquitous retail chain — and will help indicate what’s next for the growth of global P2P payments.

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