Western Union 2009 Annual Report Download - page 64

Transaction fees and foreign exchange revenue
2009 compared to 2008
Consumer-to-consumer money transfer revenue declined 4% on transaction growth of 4% for the year
ended December 31, 2009 over 2008. The revenue decline was attributable to the weak global economy and
slowing transaction growth, and to a lesser extent, geographic mix, product mix including a higher percentage
of revenue earned from intra-country activity, which has lower revenue per transaction than cross-border
transactions, and price decreases. Also impacting the revenue decline was the strengthening of the United
States dollar compared to most other foreign currencies for the majority of the year, which adversely impacted
revenue by approximately 2%, as discussed below. Our international consumer-to-consumer business
experienced a revenue decline of 1% on transaction growth of 8% for the year ended December 31, 2009. Our
international business represents all transactions other than transactions between and within the United States
and Canada and transactions to and from Mexico. Our international consumer-to-consumer business outside of
the United States also experienced revenue declines on transaction increases for the year ended December 31,
2009 as a result of the same factors described above.
Revenue in our EMEASA region declined 1% during the year ended December 31, 2009 compared to the
same period in 2008 due to most of the same factors discussed above. Our largest European markets
experienced revenue declines during most of the year ended December 31, 2009 as compared to the same
period in 2008. Our money transfer business to India for the year ended December 31, 2009 versus the same
period in 2008 continued to grow with transaction growth of 22% and revenue growth of 11%. Revenue and
transaction growth for both India and the Gulf States slowed throughout the year ended December 31, 2009
compared to 2008. Due to the economic conditions in the Gulf States, transaction growth rates declined to
single digits in the fourth quarter and we expect slowing transaction growth to impact 2010.
Americas revenue and transactions declined for the year ended December 31, 2009 compared to the same
period in 2008. Contributing to the overall decline in the Americas region was the domestic business
(transactions between and within the United States and Canada) which experienced a revenue decline of 14%
on a transaction decline of 5% for the year ended December 31, 2009. The repositioning of the domestic
business, including pricing reductions taken in the United States in the fourth quarter of 2009, improved our
Americas and domestic transaction volumes, but contributed to the decline in revenue. Our Mexico business
also contributed to the overall decline in the Americas region with a revenue decline of 15% on a transaction
decline of 12% for the year ended December 31, 2009. Our United States domestic and Mexico business
revenue declined due to the weak economy in the United States. Our Mexico revenues were also impacted by
our closure of certain Vigo branded agents, substantially all of which were small retailers, due to credit
concerns. However, the decline in revenue for our United States outbound business moderated in the fourth
quarter of 2009 compared to the previous nine months of 2009 as a result of transaction growth experienced in
the fourth quarter of 2009.
Our APAC revenue increased 5% on transaction growth of 18% for the year ended December 31, 2009
compared to the same period in 2008. The APAC region’s revenues have been impacted by translating foreign
currency denominated revenues into the United States dollar, as further described below, as well as moderating
transaction growth. China revenue grew 1% on 4% transaction growth for the year ended December 31, 2009.
Foreign exchange revenue decreased for the year ended December 31, 2009 over the corresponding
previous period at a rate relatively consistent with the decrease in our revenue from our international
consumer-to-consumer business outside of the United States.
Fluctuations in the exchange rate between the United States dollar and currencies other than the United
States dollar have resulted in a reduction to transaction fee and foreign exchange revenue for the year ended
December 31, 2009 of $101.3 million over the same period in the previous year, net of foreign currency
hedges, that would not have occurred had there been constant currency rates. The majority of our exposure is
related to the EMEASA region.
We have historically implemented and will likely implement future strategic fee reductions and actions to
reduce foreign exchange spreads, where appropriate, taking into account growth opportunities and competitive
50