Western Union 2010 Annual Report Download - page 11

protection. Regulations require money transfer providers, banks and other financial institutions to develop systems
to detect, monitor and report certain transactions.
Competition
We face robust competition in the highly-fragmented consumer-to-consumer money transfer industry. We
compete with a variety of money transfer service providers, including:
•Global money transfer providers—Global money transfer providers allow consumers to send money to a wide
variety of locations, in both their home countries and abroad.
•Regional money transfer providers—Regional money transfer providers, or “niche” players, provide the same
services as global money transfer providers, but focus on a small group of corridors or services within one
region, such as North America to the Caribbean, Central or South America, or Western Europe to North
Africa.
•Banks and postbanks—Banks and postbanks of all sizes compete with us in a number of ways, including bank
wire services and card-based services. We believe that banks and postbanks offer consumers wire transfer
services and other money transfer methods as an incentive to those consumers to purchase other services and
products.
•Informal networks—Informal networks enable people to transfer funds without formal mechanisms and often
without compliance with government reporting requirements. We believe that such networks comprise a
significant share of the market.
•Electronic commerce—Online money transfer services allow consumers to send and receive money
electronically using the internet.
•Alternative channels—Alternative channels for sending and receiving money include mail and commercial
courier services, money transfers using mobile phones, and card-based options, such as ATM cards and
stored-value cards.
We believe the most significant competitive factors in consumer-to-consumer remittances relate to brand
recognition, trust and reliability, distribution network and channel options, consumer experience and price.
Global Business Payments Segment
In our global business payments segment, we provide fast and convenient options to make one-time or recurring
payments for consumers or businesses to other businesses. Our business payments services allow consumers to
make payments to a variety of organizations, including utilities, auto finance companies, mortgage servicers,
financial service providers, governmental agencies and other businesses. We also provide international
business-to-business cross-border, cross-currency payment services. We can process payments using the
customer’s credit card, debit card, bank account or cash depending on the service selected. We believe our
business customers who receive payments through our services benefit from their relationship with Western Union
as it provides them with real-time or near real-time posting of their customer payments. In certain circumstances,
our relationships with business customers also provide them with an additional source of income, as well as reduced
expenses for cash and check handling.
Operations
Our revenue in this segment is derived primarily from transaction fees paid by the customer. These fees are
typically less than the fees charged in our consumer-to-consumer segment. Consumers may make a cash payment at
an agent or owned location and businesses may remit a check, electronic or wire transfer in order to initiate a
transaction. In order to make an electronic payment, consumers or businesses initiate a transaction over the
telephone or the internet which we process through credit card, debit card, automated clearing house (“ACH”) or
wire transfer, depending on the service selected. Our internet services are provided through our own websites or, in
certain circumstances, in partnership with other websites for which we act as the service provider. In cross-border
transactions involving different currencies, we primarily generate revenue based on the difference between the
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