Western Union collaborates with Walmart, as detailed by the CEO of Western Union
Western Union, a leading player in the money transfer industry, has announced a new partnership with Walmart, the largest US retailer. This strategic move aims to offer money transfer services at Walmart's 4,700+ US stores.
The partnership places Western Union directly in competition with MoneyGram and Ria, the other major players in Walmart stores across the USA. In 2019, Walmart accounted for around 16% of MoneyGram's revenue and around 20% of Ria's, according to reports.
Hikmet Ersek, CEO of Western Union, argued that Western Union's services are faster than non-Walmart WU locations in the vicinity. He also anticipates that this deal could be significant for Western Union's US market. However, Ersek stated that they will not lower prices to lure customers away from rivals.
The continued expansion of partnerships could contribute to significant growth for Western Union. The company has already partnered with STC Pay and TD Bank, and this strategy is likely to continue.
The new fintech services developed by Walmart will operate separately from this offering and Walmart Financial Services. The focus on local customer needs indicates Western Union's adaptability to market trends. Cash remains significant in remittances, as reflected in Western Union's focus on providing options that best suit local customers.
The development comes at a time when these three players are battling over a likely $300-400m total revenue pot for 2021, with much depending on Covid's continued impact on in-store retail. The largest competitor of Western Union in Walmart stores in the USA is MoneyGram, which generated about $436 million in revenue from Walmart in 2019.
The news of the partnership led to a 10% drop in MoneyGram's market value. If Western Union can win a third of this business overall, it would add several percentage points of growth to its top-line revenue, making it a significant move for the company.
Walmart, as the largest US retailer, continues to prioritize putting the customer first. The company moved to a marketplace model in 2018, and this partnership with Western Union is another step in that direction.
The continued expansion of partnerships and focus on local customer needs indicates Western Union's long-term strategy to leverage its platform and grow its network and customer base.
