Western Union 2014 Annual Report Download - page 147

2014 FORM 10-K
9
Distribution and Marketing Channels
We offer our Consumer-to-Consumer service to consumers around the world primarily through our global network of third-
party agents in most countries and territories, with approximately 90% of our agent locations being located outside of the United
States. Our agents facilitate the global distribution and convenience associated with our brands, which in turn helps create demand
for our services and helps us to recruit and retain agents. Western Union agents include large networks such as post offices, banks
and retailers, and other established organizations and smaller independent retail locations that provide other consumer products
and services. Many of our agents have multiple locations. No individual agent accounted for greater than 10% of the segment's
revenue during all periods presented. Our agents know the markets they serve and work with our management to develop business
plans for their markets. Many of our agents contribute financial resources to, or otherwise support, our efforts to market the
business. Many agents operate in locations that are open outside of traditional banking hours, for example on nights and weekends.
Our top 40 agents globally have been with us an average of approximately 19 years and in 2014, these long-standing agents were
involved in transactions that generated approximately 60% of our Consumer-to-Consumer revenue.
We provide our third-party agents with access to our multi-currency, real-time money transfer processing systems used to
originate and pay money transfers. We continue to develop our network around the world to optimize send and receive corridors.
Our systems and processes enable our agents to pay money transfers in more than 130 currencies worldwide. Certain of our agents
can pay in multiple currencies at a single location. Our agents provide the physical infrastructure and staff required to complete
the transfers. Western Union provides central operating functions such as transaction processing, settlement, marketing support
and customer relationship management to our agents, as well as compliance training and related support.
Some of our agents outside the United States manage subagents. We refer to these agents as superagents. Although the subagents
are under contract with these superagents (and not with Western Union directly), the subagent locations typically have access to
similar technology and services as our other agent locations.
Our international agents often customize services as appropriate for their geographic markets. In some markets, individual
agents are independently offering specific services such as stored-value card payout options or Direct to Bank service. We market
our services to consumers in a number of ways, directly and indirectly through our agent partners, leveraging promotional activities,
grassroots and digital advertising, and loyalty programs. Our marketing benefits from feedback received from our agents and
consumers.
Our marketing strategy includes our customer programs, such as "My WUSM" and "Gold Card," which are available in many
countries and territories. These programs offer customers faster service at the point-of-sale. Additionally, in certain countries and
at westernunion.com, customers can earn points which can be redeemed for rewards, such as reduced transaction fees or cash
back; however, such redemption activity has been insignificant to the results of our operations.
Industry Trends
Trends in the cross-border money transfer business tend to correlate to migration trends, global economic opportunity and
related employment levels worldwide. Another significant trend impacting the money transfer industry is increasing regulation.
Regulations in the United States and elsewhere focus, in part, on anti-money laundering, anti-terrorist activities and consumer
protection. Regulations require money transfer providers, banks and other financial institutions to develop systems to prevent,
detect, monitor and report certain transactions. Such regulations increase the costs to provide money transfer services and can
make it more difficult or less desirable for consumers and others to use money transfer services, either of which could have an
adverse effect on money transfer providers' revenues and operating profits. For further discussion of the regulatory impact on our
business, see the "Regulation" discussion in this section, Part I, Item 1A, Risk Factors, and the "Enhanced Regulatory Compliance"
section in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Additionally,
our ability to enter into or maintain exclusive arrangements with our agents has been and may continue to be challenged by both
regulators and certain of our current and prospective agents, especially in certain inbound countries. Further, we are seeing increased
competition from, and increased market acceptance of, electronic, mobile, and Internet-based money transfer services as well as
digital currencies.