Western Union (NYSE: WU) has long been the dominant player in the money transfer and remittances market. Since the 19th Century, when it became the leading telegraph company, until the 1990s, there was little competition to the extensive services that Western Union offers.
But the money transfer market has grown rapidly over the past 2 decades, with big firms as well as small startups essentially offering the same services. With increasing globalisation, Western Union’s far reach became far less exceptional.
Nonetheless, Western Union have remained dominant, with their quick transfer time and established reputation.
Now the smaller, newer companies are threatening to surpass the corporate giant, with technology that is better equipped to take advantage of the new avenues utilised by today’s consumers.
Western Union have been running substantial campaigns promoting their new products and services, but is it too little too late?
The extent of the competition
Despite companies like PayPal (NASDAQ: PYPL) and Xoom (NASDAQ: XOOM) gaining great momentum during the noughties, it’s the smaller upstarts that are providing the biggest challenge to Western Union.
TransferWise, founded only 2 years ago in the UK, is one of the most promising. Predictably, their tiny fees are their most attractive feature. Although sending to a minority of locations have a charge of over 1% of the sum transferred, most are in the range of 0.5 – 1%. They also promise no hidden fees – which generally take the form of unnecessarily inferior exchange rates.
But the major draw for young customers is the highly functional and efficient technology available. Their app is popular and highly rated, and they’re taking advantage of the increasing social aspects of the world of finance.
They’re also taking advantage of the perception that companies like Western Union overcharge and manipulate customers by attaching hidden fees. Their “stripping off” campaign drew attention to their claims that the big banks and corporations are ripping us off.
Western Union (NYSE: WU) is going social
However, Western Union is fighting back on the social front, and may soon reaffirm their foothold in the industry. On October 26, they published a press release announcing the launch of WU Connect, a mobile app that will integrate their service into social platforms.
“The WU Connect platform embeds Western Union’s robust global money transfer capability into third-party digital platforms to provide users with new ways to quickly and conveniently send money to friends and family. Consumers will be able to fund the money transfer utilizing a debit card, credit card or bank account and easily direct the funds to a Western Union retail agent location around the world, and to a mobile wallet or bank account where available” the company said.
The convenience of utilizing social platforms to transfer funds may just regain the momentum that Western Union has recently lost.
Social media has progressively become an aggregator of commercial information, entertainment, and news. Even investment is becoming social. Instead of “surfing the web,” individuals are now using social platforms for many of their needs. Integrating money transfers is likely to draw attention to Western Union, and enhance their accessibility.
More than keeping up?
While longevity can play a part in making a company seem antiquated, it is much more significant in retaining a reputation for being trustworthy. Western Union has that reputation, and are working hard to hang onto it.
Companies such as Transferwise, however, rely on their advantage in the technological sector, as well as lower fees, to maintain their challenge.
But, with growing digital awareness, Western Union (NYSE: WU) is taking back the advantage. If they manage to build momentum and shed their antiquated associations, they may just marginalize the newcomers. If they significantly lower their fees – or at least the perception that they overcharge – they’ll continue to dominate in the foreseeable future.
Author Bio: Razvan Nichitoiu is heavily invested in online marketing for more than 5 years, having experience in both the corporate and freelance environment. His latest post is this XM Forex Broker Review.