Roughly 60 percent of Western Union’s customers are now migrants sending money back to their home countries — and the shape of that remittance business isn’t necessarily what many payments-industry people assume.
“Our largest market is the U.S. outbound market, sending money. In the receiving market, the No. 1 country is India, then it’s Mexico, then Philippines, then China,” Western Union CEO Hikmet Ersek
told The Washington Post. Among other big sending countries, Saudi Arabia is second worldwide because of the large number of immigrant workers there, while France and the U.K. have the most money-senders in Europe.
But while a wide range of digital startups are trying to make a dent in Western Union’s remittance dominance, that may be harder than expected in most countries. “In the U.S., more and more customers want to send money digitally,” Ersek said. “People use their app while they go underground in New York and they get a phone call from Bangladesh, from their mom saying she wants $160, and they can use their app and send the money immediately.”
But on the receiving end, it’s a different story: “We don’t see our customers using mobile [to receive remittances] yet,” Ersek said. “The only country really is Kenya. But [in other countries] we don’t see a lot that people will get money on their mobile phones and then use that phone to go and shop for milk. So the use case on the mobile receive side is less.”
In practice, that means money receivers still have to cash out their remittances at a Western Union office or agency — something that remains an unchallenged strength for the company among money-sending upstarts that include SnapChat and Facebook, although Western Union has cut deals with some digital startups, including Hyperwallet.
Sending money across borders digitally is the easy part, according to Ersek. “It’s easy to send money from New York to San Francisco, but it’s not easy to send money from New York to Sri Lanka. Facebook and Google and others struggle with that,” he said. “We have a money-laundering database and we check every transaction against any crime activities. Our system double-checks everything. Let’s say you want to send money, you use your credit card online. Before we pay out the money, we double check: Is it the right person? Who is it on the receive side? There is a [code] that is issued only one time. The receiver has to know the details of the sender, plus this number.”