Western Union 2006 Annual Report Download - page 38

WESTERN UNION 2006 Annual Report 36
WALK-IN MONEY TR ANSFE R SERVICE. The majority of
Western Union, Orlandi Valuta and Vigo remittances
constitute transactions in which cash is collected by the
agent and payment (usually cash) is available for pick-up
at another agent location in the designated receive country,
usually within minutes.
Western Union continues to develop new services
that enhance consumer convenience and choice and are
customized to meet the needs of consumers in the regions
where these services are offered. In the United States,
consumers can use a debit card to send transactions from
many agent locations. In some United States outbound
corridors and in select international corridors, Western
Union provides Direct to Bank service, enabling a consumer
to send a transaction from an agent location directly to a
bank account in another country. In certain countries,
Western Union offers payout options through a debit or
stored-value card, or through a money order. In a number
of countries in Latin America and the Caribbean, Western
Union agents offer a bank deposit service, in which the
paying agent provides the receiver the option to direct
funds to a bank account or to a stored-value card. Vigo also
offers Direct to Bank and home delivery service in certain
receive countries.
Our “Next Day Delivery” option is a money transfer
that is available for payment 24 hours after it is sent. This
option is available in certain markets for domestic service
within the United States, and in select United States
outbound and international corridors, including Mexico.
The Next Day Delivery service gives our consumers a
lower-priced option for money transfers that do not need
to be received within minutes. The service still offers the
convenience, reliability and ease-of-use that the Western
Union brand represents.
Our “Money Transfer by Phone” service is available
in select Western Union agent locations in the United
States. In a Money Transfer by Phone transaction, the
consumer is able to use a telephone in the agent location
to speak to a Western Union representative in one
of several languages. Typically the sender provides the
information necessary to complete the transaction to
the Western Union operator on the phone and is given a
transaction number, which the sender takes to the agent’s
in-store representative to send the funds.
ONLINE MONEY TRANSFER SERVICE. Our Internet website,
westernunion.com, allows consumers to send funds
on-line, using a credit or debit card, for pay-out at Western
Union-branded agent locations around the world. Transaction
capability at westernunion.com was launched in the United
States in 2000 and in Canada in 2002. Since 2004, Western
Union has expanded the service to additional countries
outside the United States.
TELEPHONE MONEY TRANSFER SERVICE. Our Telephone
Money Transfer service allows Western Union consumers
to send funds by telephone without visiting an agent location.
Consumers call a toll-free number in the United States or
the United Kingdom and use a debit card or credit card to
initiate a transaction. The money transfer is then available
for pay-out at an agent location.
Distribution and Marketing Channels
We offer our consumer-to-consumer service through our
global network of third-party agents and the other initiation
and payment methods discussed above. Western Union
provides central operating functions such as transaction
processing, marketing support and customer relationship
management to our agents.
Some of our Western Union agents outside the United
States manage subagents. Although these subagents
are under contract with our primary agents (and not
with Western Union directly), the subagent locations have
access to the same technology and services that our agent
locations do.
Our international agents are able to customize services
as appropriate for their geographic markets. In some
markets individual agents are independently offering specific
services such as stored-value payout options and direct
to bank service. Our marketing relies on feedback from
our agents and consumers, and our agents also market
our services.
In February 2005, Western Union International Bank
began operations. We chartered the bank in order to adapt
to the challenges presented by the growing trend among
the member states of the European Union to regulate the
money transfer business. Western Union International
Bank holds a full credit institution license, allowing it to
offer a range of financial services throughout the 27 member
states of the European Union and the three additional
states of the European Economic Area. Today, the bank
offers retail service in over 20 locations in three countries
and online money transfer services in seven countries.
Industry Trends
We participate in a large and growing market for money
transfer. Growth in the money transfer business tends to
correlate to immigration and related employment rates
worldwide. Therefore, an indicator for future growth is the
size of the international migrant population, which to a
certain extent follows economic opportunity worldwide.
In 2006, the United Nations reported that there were
191 million people living outside their country of origin in
2005. We anticipate that demand for money transfer
services will continue to grow as individuals continue to
migrate to countries outside of their country of origin.
According to a 2005 United Nations report, during 2005 to
2050, the net number of international migrants moving to
more developed regions of the world is projected to increase
by 98 million or an average of 2.2 million annually.
Aite Group, LLC or “Aite,” an independent research
and advisory firm, estimated in a January 2005 report that
the total value of remittances sent by workers to developed
and emerging regions would be $269 billion in 2006 and
that this amount would grow to $289 billion in 2007. These
figures were estimated primarily by using balance of
payments data reported by the International Monetary
Fund, the Inter-American Development Bank, central banks
and money transmitters. They do not capture all of the
money transfers sent through informal channels and do
not measure the size of the intra-country market. The World
Bank estimates that unrecorded remittances are at least
half as large as recorded remittances.