Western Union 2011 Annual Report Download - page 18

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•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, and 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. We 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 business-to-business payment services,
primarily for cross-border, cross-currency transactions. 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. The consumer
payments 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 phone 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 exchange rate set by us to the business or consumer and the rate at which we are able to
acquire currency. In addition, we generate revenue from upfront enrollment fees received for our Equity
Accelerator®service, and we earn investment income on funds received from services sold in advance of
settlement with payment recipients.
While we continue to pursue further international expansion of our offerings in this segment, the majority of
the segment’s revenue was generated in the United States during all periods presented. However, international
expansion, including the TGBP acquisition, and other key strategic initiatives have resulted in international
revenue continuing to increase in this segment.
Services
Our global business payments services are available through a variety of products which give customers
choices as to the payment channel and method of payment, and include the following:
Western Union Business Solutions (“Business Solutions”). Business Solutions offers business-to-business
payment solutions, primarily for cross-border, cross-currency transactions. This business also includes TGBP.
These payment transactions are conducted through various channels including the phone and Internet. Business
Solutions serves as the service provider for other partner websites and also operates its own website. Payments
are made predominately through wire transfers and ACH, but in some situations, checks are remitted. The
majority of Business Solutions’ business relates to exchanges of currency at the spot rate which enables
customers to make cross-currency payments. In addition, in certain countries, we write foreign currency forward
and option contracts for customers to facilitate future payments.
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