Western Union 2010 Annual Report Download - page 75
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Please find page 75 of the 2010 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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We are also exposed to credit risk related to receivable balances from agents in the money transfer, walk-in bill
payment and money order settlement process. In addition, we are exposed to credit risk directly from consumer
transactions particularly through our internet services and electronic channels, where transactions are originated
through means other than cash, and therefore are subject to “chargebacks,” insufficient funds or other collection
impediments, such as fraud. We perform a credit review before each agent signing and conduct periodic analyses.
Our losses associated with bad debts have been less than 1% of our revenues in all periods presented.
We are also exposed to credit risk relating to derivative financial instruments written by us to our customers in
our Business Solutions business. The duration of these derivative contracts is generally nine months or less. The
credit risk associated with our derivative contracts increases when foreign currency exchange rates move against our
customers, possibly impacting their ability to honor their obligations to deliver currency to us or to maintain
appropriate collateral with us. To mitigate risk, we perform credit reviews of the customer on an ongoing basis and
we may require certain customers to post collateral or increase collateral based on the fair value of the customer’s
contract and their risk profile. The credit risk arising from our spot foreign currency exchange contracts is largely
mitigated, as in most cases we require the receipt of funds from our customers before releasing the associated cross-
currency payment.
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