The Western Union Company reported its earnings for the 2017 fourth quarter on Tuesday that showed its strong digital growth.
The company announced 4 percent growth, generating $1.4 billion revenue which increased 5 percent as compared to the prior year. The company reported 41 cents per share compared to 47 cents last year.
CEO of Western Union, Hikmet Ersek said that the improvement in the revenue was a result of the company’s continued momentum in its consumer money transfer business.
The company delivered a 22 percent increase in revenue, representing 10 percent consumer-to-consumer business.
“Our consumer money transfer revenue growth accelerated in the fourth quarter, and our business continued to demonstrate resilience,” said CEO Hikmet Ersek. “Solid business performance was again led by our digital channel, as westernunion.com money transfer delivered a 22% revenue increase and represented 10% of our total consumer-to-consumer business in the quarter.”
Ersek told analysts in a conference call that the company is currently present in 40 countries and sends money to 200 countries via its digital money transfer service. However, the company wants to be fully established in the 200 countries.
Western Union saw an enhancement in money transfer business from Africa and amid oil-producing countries.
“In consumer money transfers, we continue to believe digital will be the growth driver”, said Ersek. He further said that the company will utilize investments to expand westernunion.com in other countries and continue growth into mobile transactions.
The management of the money transfer company said that the cross-border transactions would probably grow in 2018 while the domestic business might fall as rivals strive to dominate by offering free peer-to-peer services.
The company overall expects stable pricing this year.
Chief Financial Officer of Western Union said that revenues increased up to 3 percent while transactions gained1 percent in North America, which accounts for 37 percent of the consumer-to-consumer transaction. The business in the region was market at an impressive rate of outbound transactions to Latin America, the Caribbean and India.
Business in Europe was up 2 percent on the basis of constant currency, led by France, while, the overall transaction increase was 7 percent year after year.
Whereas, the internal transactions in India rebounded, with transactions gaining 7 percent following last year’s demonetization initiative by the Indian government.
Ersek also said that the domestic business is still marked by sending cash payouts, retail or cash-to-cash money transfers. While services like Zele and PayPal’s Venmo are invading the space by offering zero fees transactions are invading the space, he said.
The other important news announced by the CEO of Western Union was the company’s experimentation with Ripple blockchain technology to settle transactions. The company is already testing Ripple’s currency XRP, as confirmed by a spokesperson.
“As a financial institution, we do look at blockchain in general and we’ve been doing that for some time, I would say, and we are looking especially in the processing settlement and working capital optimization, also in the regulations part, on the compliance part on the blockchain,” said Ersek.
“It’s not something to report that we’re going to change the environment, our existing capability is very stable, as you can see from our performance, but that’s something that we are taking seriously and looking at and testing,” he said when asked about cryptocurrency and the Ripple testing. “On the cryptocurrency side, look, currency is currency. I think the big advantage we’re seeing globally is that we turn any currency to a use case,” he said later.
This tie-up between Ripple and Western Union comes just a month after Ripple partnered with Western Union’s rival MoneyGram for XRP-powered money transfer trials.
So, Western Union just adds up to the long list of banks and financial institutes that are test-driving Ripple for cross-border transactions.
“We’ve been testing different products with Western Union for a while. We’re excited about our work towards a pilot implementation of xRapid, which uses XRP in payment flows,” said a Ripple spokesperson.
Ripple has become the most active and operational blockchain participant lately with its continuing partnerships with some high profile names.
— Ripple (@Ripple) 14 February 2018
Just a day after Western Union’s announcement, Ripple announced on Wednesday, an agreement with the Saudi Arabian Monetary Authority (SAMA) to provide its cross-border payment technology to banks in the Kingdom of Saudi Arabia (KSA).
Ripple is offering a pilot program for KSA banks who will implement Ripple’s xCurrent payment solution to enable instant cross-border transactions with end-to-end tracking.
The pilot program launched by a central bank is the first of its kind.
SAMA will be supporting the banks in KSA with Program management, Sandbox and training.
“Central banks around the world are leaning into Blockchain technology in recognition of how it can transform cross-border payments, resulting in lower barriers to trade and commerce for both corporates [sic] and consumers,” said Dilip Rao Ripple’s global head of infrastructure innovation.
“SAMA is leading the charge as the first central bank to provide resources to domestic banks that want to enable instant payments using Ripple’s innovative blockchain solution,” he said further.