Until recently Western Union practically remained the monopoly of international transfers
This service doesn’t need an introduction. Its black-and-yellow logo is familiar to millions of people from every corner of the world. The financial giant has been building its global empire since the late nineteenth century. Having started with telegrams, they could adapt to technological progress and find a more profitable sphere. Until recently it practically remained the monopoly of international transfers. Can this old-timer compete with the fintech daredevils who are close at WU’s heels? Let’s see…
How Western Union works
Quick cross-border money transfers are made using an extensive computer network, the center of which is located in the United States. It operates in 200 countries of the world having around 500,000 agent locations worldwide. The digital service network is much smaller, covering only about 60 countries. The most recent online expansion took place in the Middle East and Asia.
The majority of WU transactions come through the partner network of various organizations such as banks, retailers, and foreign exchange bureaus. In the last couple of years, Western Union has also made partnerships with multiple mobile network operators and mobile wallet companies to make mobile money transfer hassle-free.
The remittance amount plus the fee incurred is charged from your debit/credit card or your bank account. This money is transferred to a Western Union account. The latter is usually located in the sender’s country. At this point, your money transfer is deposited. The Western Union branch in the receiver’s country is informed and the money transfer is ready for delivery. If requested, money transfer is further redirected to a sender’s bank account. The whole process may take from a few minutes to 4-5 business days.
The transfer fee is the full responsibility of the sender. There’s no single binding receipt address – the recipient may contact any point of the Western Union system in the receiving country.
You can send money from:
- bank account
- debit card
- credit card
- via wire transfer
- agent location (cash transfers)
It can be done:
- in mobile app
- by phone by calling the Telephone Money Transfer hotline
- in person
- Pay-in-store option allows a combination. You start transaction online (in the app) and pay in cash at a physical location.
The recipient’s options are:
- cash pick-up
- bank account deposit
- mobile money transfer
Western Union fees
As with many similar services, fees vary greatly depending on the transfer type. Typically, the fixed transaction fees are cheaper when you send money online. Furthermore, paying with your debit or credit card is much more expensive than from a bank account.
To know the exact price of a transaction, you should use price estimator online.
While transfers from a bank to a bank account can be as cheap as 0.99 USD or even free of charge, sending money with a debit or credit card for a cash pick-up may bring an additional 70 USD. In general, the fees depend on the location. The fiercer competition on the remittance market the lower the transfer fees. Moreover, costs have been falling not only as a result of healthier competition but also due to the pressure from the G20 and the UN, who are targeting an average remittance cost to the consumer of 3-5%.
The FX markup ranges from 0,5% to 5-8%. The tendency of lower fees at more competitive markets applies to exchange rates as well. Among countries, the top remittance recipients in 2018 were India with $79 billion, followed by China ($67 billion), Mexico ($36 billion), the Philippines ($34 billion), and Egypt ($29 billion). European markets also tend to show lower fees since the emergence of digital-only EU-based remittance startups.
Pros & Cons
➕ The most widespread network of cash-in locations.
➕ Over 100 years of business experience.
➕ Robust multichannel system.
➕ Good opportunities for unbanked citizens.
➕ Operates in 200 countries and deals with 130 different national currencies.
➖ The digital experiences are still not as convenient as cash options, accounting for only 6% of all transactions.
➖ Some fees are higher than among their competitors.
➖ Mobile money transfers are available in limited regions.
1856 – Western Union Telegraph Company was created by the merger
1861 – it opened the first transcontinental telegraph
1871 – the company introduced its money transfer service, based on the extensive telegraph network
1980s – Western Union began sending money outside the country and expanding its agent locations internationally
2006 – Western Union became an independent, publicly-traded company. It completely stopped providing all telegram and commercial messaging services, concentrating on money transfers
2015 – The company introduced a new product, cross-border peer-to-peer payment solution called WU Connect, which integrated with social media and messaging services (WeChat, Viber) to transfer money worldwide. As of 31 March 2019, the service option to send money on Viber via Western Union was discontinued.
2019 – Western Union announced a new strategic partnership agreement with Visa. The company will implement Visa Direct, a real-time push payments platform that can bring speed and transparency to remittance transactions. It will increase the safety of transactions, backed by Visa’s leading payment security. Technically, such real-time transfers may be loaded to nearly any debit, reloadable prepaid or credit card, mobile wallets, and even physical cash-out locations.