Credit: Shutterstock photoMoney transfer company Western Union Co.WU and WeChat have collaborated to make international payments cheaper by using social media -- the platform most people use to interact on a daily basis.
The two companies have teamed up for the launch an international money transfer service for WeChat users via Western Union's platform called WU Connect. Per the agreement, cross-border money transfer to 200 countries and territories will be offered.
This looks like is a win-win deal for both parties. While Western Union will gain an enhanced presence in the digital money transfer space, WeChat will become the first social communication application to support the technology for person-to-person money transfer.
While the service has initially been rolled out in the U.S., further expansion to other countries is also planned.
The agreement with WeChat also gives Western Union the first-mover advantage on social media which is great for sharing pictures, messaging friends and following celebrities. Now, thanks to Western Union, social media can also be used to send cash around the world.
World Bank estimates that over 90% of the funds that are transferred between family members, include those who are also connected on social networking websites. This connection between senders and recipients gives social media a huge potential to grow in the money transfer market.
Other social networking sites and messaging apps such as Snapchat and Facebook Messenger provide peer-to-peer payments service but these are limited to payments within the boundaries of a country.
Western Union carries a Zacks Rank #3 (Hold). Some better-ranked players in the space are Fiserv, Inc. FISV , Heartland Payment Systems, Inc. HPY and Total System Services, Inc. TSS . Each of these stocks carries a Zacks Rank #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
