Western Union 2013 Annual Report Download - page 140

2013 FORM 10-K
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If we are unable to maintain our agent, subagent or global business payments networks under terms consistent with those
currently in place, or if our agents or their subagents fail to comply with Western Union business and technology standards
and contract requirements, our business, financial condition and results of operations would be adversely affected.
Most of our Consumer-to-Consumer revenue is derived through our agent network. In addition, our international agents may
have subagent relationships in which we are not directly involved. If, due to competition or other reasons, agents or their subagents
decide to leave our network, or if we are unable to sign new agents or maintain our agent network under terms consistent with
those currently in place, or if our agents are unable to maintain relationships with or sign new subagents, our revenue and profits
may be adversely affected. Agent attrition might occur for a number of reasons, including a competitor engaging an agent, an
agent's dissatisfaction with its relationship with us or the revenue derived from that relationship, or an agent's or its subagents'
unwillingness or inability to comply with our standards or legal requirements, including those related to compliance with anti-
money laundering regulations, anti-fraud measures, or agent registration and monitoring requirements. For example, changes to
our compliance-related practices as a result of our agreement and settlement with the State of Arizona and changes to our business
model, primarily related to our Vigo and Orlandi Valuta brands, resulted in the loss of over 7,000 agent locations in Mexico in
2012. In addition, agents may generate fewer transactions or less revenue for various reasons, including increased competition,
political unrest, or changes in the economy, and the cost of maintaining agent or subagent locations may increase because of
increased compliance efforts. Because an agent is a third party that engages in a variety of activities in addition to providing our
services, it may encounter business difficulties unrelated to its provision of our services, which could cause the agent to reduce its
number of locations, hours of operation, or cease doing business altogether.
We rely on our agents' information systems and/or processes to obtain transaction data. If an agent or their subagent loses
information, if there is a significant disruption to the information systems of an agent or their subagent, or if an agent or their
subagent does not maintain the appropriate controls over their systems, we may experience reputational and other harm which
could result in losses to the Company.
We have relationships with over 15,000 consumer payments businesses to which our customers can make payments. These
relationships are a core component of our global payments services, and we derive a substantial portion of our Consumer-to-
Business revenue through these relationships. If we are unable to sign new relationships or maintain our current relationships under
terms consistent with those currently in place, our revenue and profit growth rates may be adversely affected.
For example, changes in laws regulating competition or in the interpretation of those laws could undermine our ability to enter
into or maintain our exclusive arrangements with our current and prospective agents, especially in certain inbound countries. See
risk factor "Regulatory initiatives and changes in laws, regulations and industry practices and standards affecting us, our agents
or their subagents could require changes in our business model and increase our costs of operations, which could adversely affect
our operations, results of operations, financial condition, and liquidity" below. In addition, certain of our agents and subagents
have refused to enter into exclusive arrangements. The inability to enter into exclusive arrangements or to maintain our exclusive
rights under our contracts could adversely affect our operations, revenue, and operating profit by, for example, allowing competitors
to benefit from the goodwill associated with the Western Union brand at our agent locations.
Our business, financial condition and results of operations could be harmed by adverse rating actions by credit rating agencies.
If our credit ratings are downgraded, or if they are placed under review or revised to have a negative outlook, our business,
financial condition and results of operations could be adversely affected and perceptions of our financial strength could be damaged,
which could adversely affect our relationships with our agents, particularly those agents that are financial institutions or post
offices, and our banking and other business relationships. In addition, an adverse credit rating by a rating agency, such as a
downgrade or negative outlook, could result in regulators imposing additional capital and other requirements on us, including
imposing restrictions on the ability of our regulated subsidiaries to pay dividends. Also, a downgrade below investment grade will
increase our interest expense under certain of our notes and any significant downgrade could increase our costs of borrowing
money more generally or adversely impact or eliminate our access to the commercial paper market, each of which could adversely
affect our business, financial condition and results of operations.