Western Union 2006 Annual Report Download - page 37

35 Our Business
Years Ended December 31, 2006 2005 2004
International
(a) 74%
72% 71%
Domestic
(b) 16%
19% 21%
Mexico
(c) 10%
9% 8%
(a) Represents transactions between and within foreign countries (excluding Canada and Mexico), transactions originated in the United States or Canada destined for foreign countries
and foreign country transactions destined for the United States or Canada. Excludes all transactions between or within the United States and Canada and all transactions to and
from Mexico as reflected in (b) and (c) below.
(b) Represents all transactions between and within the United States and Canada.
(c) Represents all transactions to and from Mexico.
Our other businesses not included in these segments
include Western Union branded money orders available
through a network of third-party agents primarily in the
United States and Canada, and prepaid services. Prepaid
services include a Western Union branded prepaid card
sold through our agent network primarily in the United
States and the Internet, and top-up services for third parties
that allow consumers to pay in advance for mobile phone
and other services.
Consumer-to-Consumer Segment
Individual money transfers from one consumer to another
are the core of our business, representing 84% of our total
consolidated revenues for 2006. We offer consumers a
variety of ways to send money. Although most remittances
are sent in cash at one of our nearly 300,000 agent locations
worldwide, in some countries we also offer the ability to
send money over the Internet or the telephone, using a
credit or debit card. Some agent locations also accept debit
cards to initiate a transaction. We also offer consumers
several options to receive a money transfer. While the vast
majority of transfers are paid in cash at agent locations, in
some places we offer payments directly to the receiver’s
bank account or a stored-value card.
Operations
Our revenue is derived primarily from transaction fees
charged to consumers to transfer money. In certain
consumer money transfer transactions involving different
send and receive currencies, we generate revenue based
on the difference between the exchange rate set by us to
the consumer and the rate at which we or our agents are
able to acquire currency.
In a typical money transfer transaction, a consumer
goes to one of our agent locations, completes a form
specifying, among other things, the name and address of
the recipient, and delivers it, along with the principal amount
of the money transfer and the fee, to the agent. This sending
agent enters the transaction information into our data
processing system and the funds are made available
for payment, usually within minutes. The recipient enters
any agent location in the designated receiving area or
country, presents identification and is paid the transferred
amount. Recipients do not pay a fee (although in limited
circumstances, a tax may be imposed on the payment of
the remittance). We determine the fee paid by the sender,
which generally is based on the principal amount of the
transaction and the locations from and to which the funds
are to be transferred.
We maintain three separate multi-currency, real-time
money transfer processing systems through which a
consumer can transfer money from a location within that
system. Money transfer services are available under
the Western Union, Orlandi Valuta and Vigo brands, at
least one of which is available in each location in the
agent network.
Approximately 85% of our consumer-to-consumer
transactions involve at least one non-United States location.
No individual country outside the United States and Mexico
accounted for more than 10% of the segment’s revenue
for the years ended December 31, 2006, 2005, and 2004.
Mexico, shown separately in the table below, accounted
for the largest single source of foreign country revenue in
the segment. Certain of our agents facilitate a large number
of transactions; however, no individual agent accounted
for greater than 10% of the segment’s revenue during
these periods. The table below presents the geographic
components of consumer-to-consumer revenue for Western
Union, Orlandi Valuta and Vigo as a percentage of the total
segment revenue.
Seasonality
Consumer-to-consumer segment revenue typically increases
sequentially from the first quarter to the fourth quarter
each year and declines from the fourth quarter to the first
quarter of the following year. This seasonal fluctuation is
related to the holiday season in various countries during
the fourth quarter.
Services
We offer money transfer services worldwide. In 2006, over
90% of our consumer-to-consumer transactions were
traditional cash money transfers involving our walk-in
agent locations around the world. In order to enhance the
convenience of our services, we offer a number of options
for sending and receiving funds; however, historically,
demand for in-person, cash money transfers has been the
strongest. The different ways consumers can send or
receive money include the following: