Western Union’s Digital Surge Offsets In-Store Decline

The digital transformation of Western Union continues with the money-transfer company posting double-digit growth in global mobile and online transactions for the second quarter, despite headwinds from sanctions on Iraqi banks.

As CEO Devin McGranahan told the company’s earnings call, the digital growth was a major contributor to the period’s milestone of four straight quarters of double-digit transaction growth, which hasn’t been seen since 2018. That growth was adjusted due to sanctions placed on 14 Iraqi banks, which took revenue from that region alone from $118 million in Q2 2023 to just $30 million in 2024.

“We continue to believe that the consistent and sustainable transaction growth is the best indicator of the future health of our business,” McGranahan said.

The Iraqi headwinds and flat in-person retail transactions led to Western Union reporting an overall decrease in second-quarter revenue for 2024, totaling $1.07 billion, reflecting a 9% decline on a reported basis and a 7% decline on an adjusted basis. Despite this, the company saw a 4% increase in consumer money transfer (CMT) transactions, driven by a 13% growth in branded digital transactions. Consumer services revenue — which includes transaction fees from wire transfers as well as its other products like prepaid cards — also showed robust growth, increasing by 21% on a reported basis and 14% on an adjusted basis, lifted by strong performance in the retail money order business.

In terms of earnings, Western Union’s GAAP earnings per share (EPS) for the second quarter was $0.41, down from $0.47 in the same period last year, while adjusted EPS was $0.44, compared to $0.51 previously. The decrease in EPS was attributed to lower operating profit due to decreased revenue from Iraq, though this was somewhat offset by a reduced share count.

The GAAP operating margin for the quarter was 17.9%, down from 20.7% in the prior year, with the adjusted operating margin at 19%, compared to 21.8% previously. Branded digital revenue increased by 5% on a reported basis and 7% on an adjusted basis, with branded digital transactions contributing 24% of total CMT revenues and 31% of total CMT transactions.

Despite the challenges, McGranahan said that the company is beginning to see positive adjusted revenue growth, excluding Iraq, and is optimistic about achieving sustainable positive revenue growth in 2025 and beyond.

He pointed several times to a recent report from The World Bank, which found that “remittances to LMICs (low- to middle-income countries) are expected to grow at a faster rate of 2.3% in 2024, although this growth will be uneven across regions. Potential downside risks to these projections include weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.”

But the biggest part of the company’s Evolve 2025 strategy is to encourage digital growth. McGranahan told the call that over the past year it has been improving the effectiveness of digital marketing by cost effectively increasing top of funnel traffic in its digital properties around the globe. During June, he said Western Union saw visits to its U.S. websites up 20% year over year.

“In addition to driving traffic at the top of the funnel, we’ve also made meaningful progress in simplifying the customer journey and improving our funnel conversion rates,” he said.

“As part of that process, we have simplified the branded digital customer profile creation. We have reduced the steps required for a customer to complete a transaction and have modernized our user interface and moved from a multipage transaction funnel to a single page modular view.”

In addition to taking friction out of the process, the company is betting that its mobile apps will deliver in a similar fashion to Australia, where the first Western Union app was launched in 2022. Since that time digital transactions in the country have spiked 30%.