Western Union 2014 Annual Report Download - page 169

2014 FORM 10-K
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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. See risk factor "Regulatory initiatives and changes
in laws, regulations and industry practices and standards affecting us, our agents or their subagents, or the banks with which
we or our agents maintain bank accounts needed to provide our services 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 in agent contracts in certain situations could adversely
affect our business, financial condition or results of operations by, for example, allowing competitors to benefit from the goodwill
associated with the Western Union brand at our agent locations.
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.
In our Consumer-to-Business segment, we provide services for making one-time or recurring payments from consumers to
businesses and other organizations, including utilities, auto finance companies, mortgage servicers, financial service providers,
government agencies and other businesses. For example, 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 payments services, and we derive
a substantial portion of our Consumer-to-Business revenue through these relationships. In Business Solutions, we facilitate
payment and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size
enterprises and other organizations and individuals, and we have relationships with more than 100,000 customers with respect
to our payment solutions. Increased regulation and compliance requirements are impacting these businesses by making it more
costly for us to provide our services or by making it more cumbersome for businesses or consumers to do business with us. We
have also had difficulty establishing or maintaining banking relationships needed to conduct our services due to banks’ policies.
If we are unable to maintain our current business or banking relationships or establish new relationships under terms consistent
with those currently in place, our ability to continue to offer our services may be adversely impacted, which could have an
adverse effect on our business, financial condition, and results of operations.
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. Although our credit ratings have been
downgraded in the past, we still maintain an investment grade rating. 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.
We receive services from third-party vendors that would be difficult to replace if those vendors ceased providing such services
adequately or at all. Cessation of or defects in various services provided to us by third-party vendors could cause temporary
disruption to our business.
Some services relating to our business, such as software application support, the development, hosting and maintenance of
our operating systems, check clearing, and processing of returned checks are outsourced to third-party vendors, which would
be difficult to replace quickly. If our third-party vendors were unwilling or unable to provide us with these services in the future,
our business and operations could be adversely affected.