In an effort to expand its presence in Mexico,
Western Union Co.
)has launched Western Union global money-transfer services in
collaboration with Farmacias Guadalajara, a Mexican drugstore
chain. Through this facility, Western Union will provide its
money transfer services in 1,100 drugstores and retail locations
spread across Mexico.
The region accounts for around 4% of Western Union's revenue. It
is one of the major receive locations. Receive locations have
large inbound remittance markets. The company has been operating
in the Mexico corridor for more than a century. Although,
Mexico accounts for a significant amount of the company's annual
remittance volumes, the region has witnessed regulatory hurdles.
In fourth quarter 2013, Mexico-based revenue was flat, despite a
20% year-over-year increase in transactions owing to the
company's pricing initiatives in the region. Western Union lost
7,000 locations or approximately 40% of the Mexican network in
the third quarter of 2012 as certain Vigo-branded agents did not
comply with new requirements and system conversions.
In Jan 2014, Mexico remittances rose an impressive 8.0% year over
year, providing a strong start to the year. The U.S.-Mexico
corridor is one of the largest remittance corridors, which
accounts for approximately 12% of total transactions at Western
Union. Transaction volume grew to 5.50 million in Jan 2014, up
7.6% year over year, which was the eighth consecutive month of
yearly transaction growth.
We expect the recent improvements in Mexico remittances to
continue due to the improving U.S. economy. An improving economy
will attract more migrant workers, which will increase demand for
remittance. In order to reap benefit from the improving industry
environment in the region, Western Union signed approximately
10,000 new locations in Mexico during 2013, which are expected to
become active in the next 12 months and will more than double its
network in the country.
Another money transfer company
) has significant operations in Mexico. Mexico's vast remittance
market has also caught the attention of Western Union's close
Moneygram International, Inc.
). The company offers its services in the Mexican market in
Western Union currently retains a Zacks Rank #3 (Hold).
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