Legacy remittance firm Western Union reported its Q4 2018 results, with revenue on Westernunion.com, the digital segment of Western Union’s consumer-to-consumer (C2C) segment, growing 22% annually on a constant currency basis — outperforming the firm’s 1% overall C2C growth.
Digital revenue represented 12% of total C2C revenue during the quarter, and the C2C segment accounted for 80% of the firm’s overall revenue, which is consistent with Q3 2018.
Digital offerings will be the driving force for remittance firms in attracting new customers, increasing engagement, and accelerating growth.
- Western Union’s results reflect an industry-wide trend in which digital growth outpaces overall revenue growth. For context, Westernunion.com grew 20% in Q3 2018, while the firm’s overall C2C revenue grew 2% annually. And competing legacy remittance giant MoneyGram has seen an even bigger gap between digital growth and overall growth, as its digital revenue grew 3% annually in Q3 2018, while its overall revenue declined by 12%, for instance. And because all remittance players are targeting the same customer segment, it’s especially important for Western Union to differentiate itself through enhanced digital capabilities.
- Pursuing digital remittances further will allow Western Union to maintain its leading position in the industry amid crowding. Global remittances reached a record high of $613 billion in 2017, but that only reflected a 7% YoY increase. The inherent opportunity lies in digital remittances: Business Insider Intelligence expectsdigital remittances to grow at an 11.5% compound annual growth rate (CAGR) from $225 billion in 2018 to $387 billion in 2023. Pursuing digital offerings can also allow Western Union to ward off any threats posed by digital-first startups that are competing for the same customer segment and have an advantage in offering lower-priced digital services.
Western Union made several strategic partnerships to expand its reach during Q4 — and continuing to do so with an emphasis on digital can allow the firm to accelerate overall growth. In October 2018, Western Union launched a high-value digital transfer capability from the UK, enabling consumers to send transfers of up to £50,000 ($65,000) from the Western Union app or website to markets around the world.
And Western Union partnered with Amazon to become a payment option on Amazon’s checkout page, enabling international shoppers to pay for purchases in-person through Western Union’s services. The integration can open Western Union up to cross-border e-commerce volume, which is set to account for 20% of e-commerce in 2022 to reach $627 billion, according to Forrester.
Expanding digital capabilities, while extending global reach and accessibility, could prove to be an effective strategy for Western Union going forward.
Source: Business insider