Western Union 2015 Annual Report Download - page 134

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If we are unable to maintain our agent, subagent or global business relationships under terms consistent with those currently
in place, including due to increased costs or loss of business as a result of increased compliance requirements or difficulty
for us, our agents or their subagents in establishing or maintaining relationships with banks needed to conduct our services,
or if our agents or their subagents fail to comply with Western Union business and technology standards and contract
requirements, our business, financial condition, results of operations, and cash flows would be adversely affected.
Most of our Consumer-to-Consumer revenue is derived through our agent network. Some of our international agents 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, 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 or increased costs or loss
of business as a result of difficulty for us, our agents or their subagents in establishing or maintaining relationships with banks
needed to conduct our services. For example, changes to our compliance-related practices as a result of our settlement agreement
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 has increased and may continue to increase because of enhanced 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.
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 financial condition, results of operations, 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, consumers can make payments to over 15,000 businesses through our
Consumer-to-Business services. 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, results of operations, and cash flows.
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