Unlocking Global Financial Connectivity: Western Union’s Most Important Services

1. Introduction

The Western Union is a major financial services provider offering a variety of important services. These services are primarily centered on global financial connectivity and attempting to make the financial industry accessible for everybody around the world. The first section of this report will look at all of the services which are available to individuals. Then the second section is going to have a look at these services from a company and personal standpoint, and what the true significance and advantages of the services are. This introduction will give a basic definition of what each service requires. A more thorough, step-by-step guide of how these services work will be provided in the upcoming sections. Lastly, the introduction will offer some insight about the idea of globalization and the way it has expanded to the financial sector specifically. It may also provide a little taste of the kinds of benefits that both individuals and businesses could expect to see from utilizing these services to pursue financial aims. For example, the ability to quickly transfer money between different currencies is a service which lends itself perfectly to people who might have to make international payments on a regular, potentially last-minute basis.

1.1. Overview of Western Union’s Services

The second type of service is the money transfer business. This service requires developing extensive relationships with other entities, establishing sophisticated computer and communication infrastructures, and complying with strict government regulations. Under the money transfer business services, Western Union provides the person paying the money with the option of remitting funds by a money transfer or for the receipt of funds to be sent to the beneficiary by another method specified in the relevant service message.

The first type of service provided by Western Union is person to person money transfer services. These services allow individuals located in various parts of the country, and in some cases, the world, to send money to each other. The services that Western Union provides are significantly important to the most remote customers according to Western Union. For example, in some countries, Western Union services are the only electronic passage to provide funds to people without a bank account to help them get food, clothes, and shelter.

1.2. Importance of Global Financial Connectivity

For developing and third-world countries in Asia and Africa, global financial connectivity is critical. This is because with global financial connectivity, these countries are able to access essential capital which is needed for development. In addition, countries are able to access finance that is offered by international financial markets. Therefore, with global financial connectivity, economic progress in various countries can be achieved. In addition, harsh scenarios such as economic recessions can be minimized through the idea of global financial connectivity. This is because with such connectivity, countries can provide each other with economic assistance. For instance, the most powerful economies in the world, the United States in collaboration with other developed countries in Europe were able to alleviate the world from great financial crisis in 2008 through global financial connectivity. Without global financial connectivity, the transfer of money from one country to another could be difficult. This is especially when the level of understanding between the two countries is low and where there is no cooperation among the financial service providers of the two countries. Such countries may lack the international accepted money transfer systems such as the Western Union services. These services are based on global financial connectivity and without connectivity, such money transfer services could not be in existence. According to ExpertGlobalization.com, global financial connectivity mainly focuses on business and economy. However, social aspects of global financial connectivity such as alliances and trade also provide significance on the aspect.

2. Section 1: Money Transfer Services

In this section, you will discover that Western Union offers a varied range of money transfer services. There are over 86,000 locations across the globe that offer money transfer services. This means that a consumer can easily send money to domestic locations such as banks, bill pay locations, grocery stores, and cheque cashing services. Many locations offer services that allow for cash pickup. For example, a sender can send money from a retail high street location to be picked up at a cash pick up location in the receiver’s location. Not to mention, the featured mobile app means a consumer can send the money from their phone, thus saving time. A new feature on the app for 2017 is that you can enter the transfer on your mobile app and prepay before going in-store. This allows for a quicker, streamlined service if you are a service user who finds the in-store payment processes tricky or a service user who doesn’t feel confident when filling in details on the in-store payment screens. If sending money overseas seems like a tricky operation, worry no more. This section tells us that Western Union, one of the world’s biggest and most versatile money transfer services, offers easy online and in-person international money transfer options. This gives the service user more flexibility in terms of how and when they want to make the money transfer. A 24/7, 365 days a year online support helps keep the service accessible to all. Text alert updates mean it’s simple to track where your money is too. The service allows the sender to sign up for text updates, and there are four easy steps to follow in the process of transferring the money. Preliminarily, (1) ‘Choose your service’, either ‘Send Online’ or ‘Send in Person’. There is an access code for the latter service, and using the app is the quickest and easiest way to send money. Plenty of tools go hand in hand with the app service. For example, you can check and confirm foreign exchange rates on any currency against the live rates. Also, the service boasts a fast, efficient three-step selection process to make the money transfer as fast as possible. (2) ‘Register or log in’ – the service user has to sign up and enter their details, including their payment details. (3) ‘Enter your receiver’s details’ – the service user can choose whether to send to a bank or one of the 500,000 locations worldwide that offer cash pickups. (4) Finally, ‘enter the amount you want to send’ and that’s it! Well, almost. By going to the nearest Western Union retail location, the service user needs to fill in one of the ‘To Send Money’ blue forms. However, if you’re using the in-store service, the staff are on hand to help with any questions. The section also makes a point of the fact that a consumer can use international money transfer currency exchange in near enough most global locations as well as online. The service uses a so-called ‘competitive exchange rate’. This means it’s a ‘rate that’s available in the worldwide market’ (Western Union), and the ‘foreign currency changes are not always available’.

2.1. Domestic Money Transfers

Available in nearly 180 countries, Western Union provides consumers with flexible, secure, and easy-to-use domestic money transfer services. With approximately 500,000 locations and a variety of monetary limits, transfer options, and a wide array of participating countries, our diverse and vibrant domestic money transfer services ensure that the money arrives where you need it, when you need it. For recipients in the U.S., all they need is a tracking number (MTCN) and a government-issued ID, such as a driver’s license or a military ID, to claim their cash. The tracking number, the amount of money sent, the recipient’s full name, and the full name of the sender are all required in order to process Western Union’s domestic transfer services. Recipients in various countries can opt to have the money deposited directly into their bank accounts. All senders need is a receiver’s first and last name, the sender’s full name, the amount to be sent, and a form of payment. Both senders and receivers have a variety of convenient options when it comes to transactions. For instance, senders can pay with a Visa or MasterCard credit card, and also have the additional option of setting up an online account in order to monitor the status of the transfer and access a record of it. By presenting the card used for the transaction at any Western Union location, and by providing a valid photo ID, the transfer can be completed in a few quick and easy steps. Card proceeds transactions, transactions where money is sent to bank accounts, expedited bill pay services and money transfer services, as well as online money transfers and promotions are all examples of the domestic money transfer options and services available to customers. No matter the specific service used, whether sending money in person or online, customers can trust that Western Union’s experienced and knowledgeable employees will ensure the successful and accurate transfer of funds.

2.2. International Money Transfers

In addition to moving money nationwide, Western Union also offers international money transfer services. According to the company, people complete 800,000 of these transactions every day through a combination of digital channels, cash at Western Union agent locations, and prepaid cards. These money transfer transactions can transfer money directly into a bank account or for a cash pickup. However, the company discloses that money sent to a mobile wallet may not be immediately available, which means that the recipient may have to wait for their funds. Also, the options a sender or a receiver has for how to send or receive the money can largely depend on the country of the money transfer destination. For example, there may be fewer receiving locations or different types of receiving options available for a money transfer destination outside the United States. The time it takes for a receiver to get access to the money sent can also depend on the destination, as well as the mode of sending. For example, for a cash pick-up, the money is typically ready for collection within minutes, while a money transfer to a bank account may take a few days. Western Union charges a foreign exchange rate fee every time that a consumer sends money abroad, although this fee is not clearly disclosed when a user begins the money transfer process through the company’s online or mobile application. Under the company’s section about fraud awareness and prevention, Western Union specifically explains that no one should ever send money to someone they have not met in person. Such a warning reflects the company’s long-standing struggles with fraud around money transfers. Trying to pour some of the profit from anti-consumer practices, particularly in the digital age, has led to various lawsuits around the world against Western Union.

2.3. Mobile Money Transfer Services

Finally, Western Union is embarked upon mobile money transfer services by incorporating mobile wallet providers and utilizing its M-PESA platform. M-PESA is a mobile phone-based money transfer and micro financing service which was designed for mobile phone users to deposit, withdraw, transfer money and pay for goods and services. This platform has made it possible to provide mobile money transfer services to millions of people worldwide through an association with over one hundred and fifty mobile network operators. For instance, Western Union has integrated and digitized its services through the M-PESA mobile platform in Kenya where clients who want to send or receive money can do so using their mobile wallets. In this service, a sender can either log into his/her profile online or visit the Western Union website or agent location, click send money and enter the destination and the amount then click continue. Then, the sender selects the option “In minutes”, enters the amount and selects the funded account. The consumer will need to remember to include the M-PESA account number in their profile. The sender receives a confirmation that the transaction has been received and immediately sends the receiver the M-PESA transfer SMS code which is a 10-digit code. The receiver of the money, let’s say in Kenya, shall receive an SMS notification from M-PESA indicating the amount sent, the sender’s name, the agent location information, and the 10-digit code number. The sender is supposed to send the code to the receiver then the monies can be accessed through the M-PESA mobile wallet. This shows that mobile money transfer services have significantly reduced the need for paper form/online form in sending and receiving cash from customers who use Western Union services to move money around the world. In fact, it can be noted that since the inception of the mobile money transfer service in 2011, there has been a progressive increase in the amount of cash preloaded onto M-PESA platforms. Such volume of transaction and financial impacts makes M-PESA a great opportunity for financing international business. In addition, what makes the M-PESA model viable is the subscription to money laundering laws, actively preventing fraud as well as ensuring that customers get protection from unauthorized transactions. Moreover, mobile money transfer customers who use Western Union services are restricted to a $5000 maximum aggregate amount of single transactions conducted on a daily basis. Such maximum amount sets an optimum level that can be traded off against the charges per transaction for a given acceptable error rate. As technology continues to change and consumer demands shift, mobile money transfer services will prove to be the future of global money transactions. With such emerging technologies and e-commerce platforms, Western Union’s focus on the provision of mobile money transfer services will ensure that money is continuously moved into integrated markets so as to create capital liquidity on a 24/7 basis for the global economy.

3. Section 2: Bill Payment Services

This section contains a description of the bill payments which are enabled through the Western Union system. These bills range from the payment of utility bills to mortgage and loan payments. In each of these sub-categories of bill payments, I have tried to describe the most important features and the ease with which one can transact such business through the Western Union system. The bills are payable in cash and that the cash is paid to the receiver. In all but credit card bill payments, the cash is generally made available to the receiver within two business days of the payment to the sender. This information gives the user confidence in the ability for the payment to reach the intended receiver in good time. Unlike in the case of utility bill payments, whereby the excess money paid to the bill can be communicated to the user through Western Union, that option is not available. However, the user is at liberty to use any of the Western Union’s locations to make the payment. When a payment is made through the credit card, I have indicated that the services of ‘quick collect’ can be utilized. This service gives one the freedom to send money days a week throughout the year. Also that through the same service, one can also track the status of the payment. It is a requirement that the money is to be channeled through the credit card company and that the payment is normally completed within fifteen minutes. These are important pieces of information that should be relayed to the receivers of the payments.

3.1. Utility Bill Payments

The utility bill payments service allows Western Union’s customers to pay gas, electric, water, and cable bills in the US through Western Union. Bills can be paid the same day or in advance. The process for making a payment is easy. A customer simply needs to find the appropriate biller and enter the account number. Once the biller is found, the customer enters the amount to be paid. When the payment is made, Western Union can track the payment and provide a confirmation number for the customer. If the biller is not in the system, the customer can still make a payment. However, if a payment is made to a biller that does not normally accept Western Union payments, it may take four or more business days for the biller to receive the payment. Each payment may be sent to one biller at a time. In some cases if an account type, such as a personal account, is chosen the biller may assess a service fee. Customers can pay the bills using the website, a mobile device, or in person at a participating agent location. When the payment is made on the website, Western Union offers a bill payment guarantee; that is, the customer’s bill will be paid accurately and on time. This guarantee service covers late fees and legal costs up to $500 that may result from a qualifying payment that is not made on time or is not credited correctly. Such services provide peace of mind, as the customer’s billing information, including bank account numbers, is stored in a secure location that is fully compliant with all state and federal laws as well as industry guidelines. These payment methods can also offer protection services, such as securing the payment and sending a payment confirmation notice each time. By helping customers make on-time and accurate payments, Western Union’s utility bill payment service helps customers avoid late fees and helps to shelter the customer’s credit rating from any negative marks flowing from tardy payments. In addition, some utility companies offer incentives for paying on time, meaning that the service may actually save customers money over time.

3.2. Credit Card Bill Payments

A further example of technological innovation in the provision of bill payment services is the facility for customers to pay their credit card bills at a Western Union location. A customer may visit a local Western Union office and provide the details for their card account and the amount that they wish to pay to the Western Union agent. The agent will then input the details to the Western Union system and process the bill payment transaction. It is possible for the customer to provide a credit card sized customer loyalty card which may be swiped through the bill payment system. This means that the details of the customer’s preferred bill payment location, the customer’s bill pay code and their payment card number are stored on the magnetic stripe of the card. By swiping the card through the reader and entering a pin number that is specific to the card, the bill payment system is able to link this card with the customer’s details. The card also allows the bill payment agent to determine whether the customer has made any previous bill payments and it will store a record of the payment instructions for that card. Once the system has validated the payment card, the customer can use the system to facilitate the bill payment transaction. This involves card validation which confirms that the payment card is not presently blocked, the customer details are correct and that the correct payment amount has been entered onto the system. The system will then transmit end to end data encryption from the payment card to the local issuing authority for the bank or building society that issued the payment card. This allows the system to automatically verify that the customer’s card and issuing authority accept real time electronic approvals.

3.3. Mortgage and Loan Payments

The next important category of bill payment services is mortgage and loan payments. A mortgage is a loan used to buy real estate, such as residential property. Like mortgages, the word “loan” typically refers to a type of credit to purchase something specific, such as a car or an education. There are two main types of mortgage and loan payments: automatic and manual. With the automatic option, this is for people who have a mortgage or a loan, and a linked Western Union agent is the company which actually has the ability to send the payment requests. The customers or borrowers generally need to fill out a form which will authorize the company to relieve the necessary funds and the company then will send a request for the payment on the borrowers’ behalf, usually a group of payments all at once, known as a batch file. This authorization then lets the lenders know that the customer has given permission for the company to communicate with the bureaus to look at their different accounts and examine the risk and the changes in credit before deciding whether the customer will be eligible for the finance agreement. On the other hand, the manual option is usually done when a person makes irregular or unplanned payments, and it’s actually referred to as a bank to bank transfer. To pay it manually, customers need to fill out an in-store form and the company will take a request for the payment in the same way, and again a group of payments will be sent at once by a batch file. However, in this case, the request will only be sent if the customer goes in-store to ask otherwise it will not be completed. These transactions occur in real time and the payment amount will usually be received by the payee on the same day or the next day.

3.4. Insurance Premium Payments

Another of the financial products that can be paid to different US insurance companies through Western Union is the monthly premium of the insurance. A premium in terms of insurance is a certain amount of money in the form of an installable periodical form of payment for an insurance policy. The benefits and coverage provided by the policy term shall stay valid and active. With these facilities, those that can be called clients and a contract between the policy holder and the insurance company, there is also a rise in possible fraudulent activities on the same and that is why FBI and FTC are running awareness programs (Flaget-Greener, 2012). By working together with Western Union, most of the clients are assured of their premium payments, be it healthcare or life insurance premium, and the advantages of sending payments through such facilities are so big. For instance, many companies have had an increased number of customers because these facilities have provided a simplified documentation for insurance covers as the clients can now be able to provide order affidavits as well as proof of the direct payment through the digital site of the company and Western Union. This has boosted the rise of newer online insurance companies as the government policies on healthcare require every US citizen to have an insurance policy whether it is private or public. The big insurance providers traditionally have been recording the largest shares in the market. Every step in Western Union is simplified and the first thing one does is to ensure that no receiver shall access the applicants’ money, and that means the right details and info of the Western Union are obtained and that one gets a copy of the customer’s e-sign consent from the provider. After filling in and downloading this e-sign form, an applicant shall go in person to the provider’s office and the premium method of money shall be handed in to the provider.

4. Section 3: Prepaid Services

One of Western Union’s most important services is its prepaid services. Western Union offers three types of prepaid services in over 20 countries: prepaid card loading, prepaid mobile phone recharges, and prepaid gift cards. As with Western Union’s money transfer service, when a consumer wants to utilize a prepaid service, he or she first has to go to a Western Union location offering that service. Through its prepaid services, Western Union is able to facilitate the delivery of phone services and other products, as well as drive profit through fees and repeat sales. Western Union’s prepaid services ultimately provide convenience, choice, and more access to the company’s products for the customer. This will enable Western Union to drive customer loyalty, repeat business, revenue growth, and market expansion. This will help to lead to increasing growth in the prepaid services market, particularly for under-banked or unbanked populations. This could also result in Western Union expanding their prepaid services to other countries, which in turn will lead to greater advantages for customers and an increase in Western Union’s market presence around the world. By offering mobile prepaid services, Western Union is mapping the national and global networks of its customers, or in other words, their access to specific locations and regions for mobile services and remittances. This data helps to inform where Western Union chooses to market and expand mobile prepaid services, particularly where they are linked to remittance payments. For example, in rural areas with very little mobile coverage or higher charges for mobile use, the ability to offer prepaid phone services and links to international remittance payments through Western Union will give a competitive leverage in attracting remittance customers over other mobile service providers.

4.1. Prepaid Cards

Government advisory bodies, such as the U.S. Securities and Exchange Commission (SEC), define a prepaid card as a “card that you can use to pay for purchases, ATM withdrawals or bill payments.” In Western Union’s case, a prepaid card is designed to explicitly cater to the organization’s most significant customer base. The primary function of the card is to enable users to receive direct deposits from employers and to benefit from the added flexibility and control over their finances that direct deposits to a card can offer. The prepaid card is also a key facilitator in enabling users to avoid check cashing fees, to send money to themselves in alternate colors, and for greater ease of use when paying bills online. As the intended user is someone who is expected to live in one of 180 countries linked to the Western Union network, the company is able to offer the ability to send and receive money legally and to load money onto the card at one of 50,000 of the most convenient locations in the United States alone. The associated providers who offer support for prepaid card services are largely involved in operations and support for similar functions and are based in a variety of countries including the United States, Canada, Germany, and the United Kingdom. The maximum card balance that can be held by a customer is $10,000. This has been proposed by New York state authorities as a means to reduce exposure to fraud and has become a legal requirement in the state from July 1st, 2016. The amount of service providers used by Western Union for the prepaid card, in particular, is relatively small for a company of its size. By relying on services from MetaBank, Western Union is able to offer a prepaid card that can be used for both sending and receiving money – thus creating an ongoing feedback loop to increase customer retention. Crucially for Western Union, MetaBank has a high success rate for people applying for a card regardless of their banking history, so a company that specializes in “Meeting Everyone’s Needs in the Financial World” is a good provider choice.

4.2. Prepaid Mobile Recharge

With the mobile payment market gaining traction on a global basis, it has become increasingly common for customers to use their smartphones to pay for goods and services. A significant number of people across the globe do not have access to traditional banking services but do own a mobile phone. In 2018, Retail Dive – an international leading publisher in the retail industry – reported that digital wallets and mobile payment technology are rapidly changing the future of payments. Furthermore, Western Union’s decision to enter the prepaid mobile recharge market shows evidence of the significance of mobile payments across the world. When customers step into a Western Union Agent location overseas to recharge their phone, they are being offered a simple, convenient and reliable way to top up credit – it can take less than a minute for people to add credit to the phone and stay connected with friends and family. Often, the process required to recharge a mobile phone in a foreign land can be a complicated and tedious process with a variety of different methods and methods of communications required to be mastered. Customers first need to find a local store or newsagents that sells credit, with opening hours to be taken into account. This type of purchase is usually paid in cash, which means customers need to make sure they have enough money on them at the time and that the notes are in good condition as some retailers may refuse damaged notes. However, staff may require certain information or submission of certain documents for the recharge to take place. All of these requirements lead to a significant amount of time and energy consumed in finding a provider, completing the purchase and then sending the credit. Western Union’s prepaid mobile recharge service is able to alleviate all of these complications. By allowing credits to be sent overseas in a fast, simple and effective manner, Western Union provides a valuable and practical service for those who are in need of staying connected with others in an efficient manner.

4.3. Prepaid Gift Cards

Prepaid gift cards are popular as a present, used as a way of gifting something without knowing exactly what the gift receiver might want. Western Union coordinates with many separate businesses to be the provider for these types of gift cards. The information first explains the way that the gift card system works and then the common features of a money gift card. Also, the advantages of using the gift card as well as the precautions that someone would need to take if they found out that their card was either lost or stolen are covered. The gift card information is valid through 2014 and it is not uncommon for prepaid card systems like recently. The important point is that Western Union is the provider for this service for their customers. Although Western does direct the customer to look on the back of the gift card for any potential fees, there are no service fees as such that are applied to the purchase of the card itself. The information explains the way that these types of money gift cards differ from a standard credit or debit card in terms of the amount of protection that is available for each type of card. Every card is known to have a unique serial number created by a specific algorithm, which is a very important security feature. This is because it means that the company that makes the card will have a number of details on record that can be matched to the gift card that has been purchased.