World's leading money transfer company,
Western Union
(
WU
) has signed an agreement with Michigan-based Citizens Bank. Per
the agreement, Western Union will provide its global remittance
service to Citizens Bank customers via its 219 branches across
Ohio, Michigan and Wisconsin.
The service will be available to the customers after a few
months, required for the development of the processes. The
service is expected to be a success given Western Union's strong
brand awareness and good reputation.
The service will increase the speed and accuracy of both
domestic and international transactions.
Forging alliances with leading banks is integral to Western
Union's long-term strategy. It recently signed SunTrust Bank as an
agent in the U.S., adding to a list that includes the U.S. Bank,
KeyBank, Regions, Fifth Third and others. Banks as agents provide
an easy reach to a local customer base apart from reducing Western
Union's capital needs.
Revenue from account-based money transfer transactions increased
43% in first quarter 2012. The company now has an agent network
comprising nearly 90 banks signed for account-based money transfer,
with 44 active agents, including U.S. Bank and Regions Bank in the
U.S.
The company has traditionally focused on its physical agent
provider network. But, with increasing competitive threats from
electronic money transfer modes, it has been compelled to increase
its new-age technology channels - WesternUnion.com,
account-to-cash, mobile and pre-paid cards for money transfer.
Peer
MoneyGram International Inc.
(
MGI
) has also entered into agreements with banks to provide its money
transfer services.
In a separate development, Western Union announced an agreement
with IBInvestor Inc., a broker dealer and a business incubator. Per
the agreement, iMoneywire.com, a service offered by IBInvestor,
will be powered by Western Union's technology, enabling customers
to make expedited payments 24x7.
This online service will provide customers the option to
transact in any of the 135 currencies, monitor real time exchange
rate as well as access customer care support.
The service is currently available to customers making payments
from the United States. The service, however, will be made
available for use outside the U.S.in due course.
Western Union currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on its shares.
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