Western Union 2007 Annual Report Download - page 18

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WESTERN UNION 2007 Annual Report
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Our Segments
We manage our business around the consumers we serve and
the type of services we offer. Each segment addresses a dif-
ferent combination of consumer needs, distribution networks
and services.
|| CONSUMER-TO-CONSUMER — money transfer services between
consumers, primarily through a global network of third-party
agents using our multi-currency, real-time money transfer
processing systems.
|| CONSUMER-TO-BUSINESS — the processing of payments from
consumers to billers through our networks of third-party
agents and various electronic channels. The segment’s rev-
enue was primarily generated in the United States for all
periods presented.
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 MasterCard® card sold through select agents
in the United States and the internet, a Western Union branded
prepaid Visa® card sold on the internet, and top-up services for
third parties that allow consumers to pay in advance for mobile
phone and other services.
Also included in “other” are recruiting and relocation expenses
associated with hiring senior management positions new to our
company, and consulting costs used to develop ongoing pro-
cesses in connection with completing the spin-off; and expenses
incurred in connection with the development of certain new
service offerings, including costs to develop mobile money
transfer and micro-lending services.
The table below presents the components of our consolidated revenue:
Year Ended December 31, 2007 2006 2005
International(a) 65% 62% 59%
Domestic(b) 11% 14% 16%
Mexico(c) 7% 8% 7%
Total consumer-to-consumer 83% 84% 82%
Consumer-to-business 15% 14% 15%
Other 2% 2% 3%
100% 100% 100%
(a) Represents transactions between and within foreign countries (excluding Canada and Mexico), transactions originated in the United States or Canada and paid elsewhere, and
transactions originated outside the Untied States or Canada and paid in the United States or Canada. Excludes all transactions between or within the United States and Canada and
all transactions to and from Mexico as refl ected 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.
Consumer-to-Consumer Segment
Individual money transfers from one consumer to another are
the core of our business, representing 83% of our total consoli-
dated revenues for 2007. We offer consumers a variety of ways
to send money. Although most remittances are sent in cash at
one of our more than 335,000 agent locations worldwide, in
some countries we offer the ability to send money over the internet
or the telephone, using a credit or debit card. Some agent loca-
tions 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 on a stored-value card.
Operations
Our revenue is derived primarily from transaction fees charged
to consumers to transfer money, and in certain money transfer
transactions involving different send and receive currencies, we
generate revenue based on the difference between the exchange
rate set by Western Union 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 infor-
mation 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 identifi cation 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 to
and from which the funds are sent and are to be transferred.