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The Western Union that few people know

Allan Tan with Fintech Innovation spoke to Svend Janssen, head of Asia at Western Union Business Solutions, to better understand this business-to-business segment of the brand.

What is the business of Western Union Business Solutions (WUBS)?

Western Union, indeed, 90% of the revenue, and what most people would associate most with Western Union is indeed consumer to consumer remittance, usually in credit and cash funds but increasingly online and through bank accounts, but what we [WUBS] are doing is purely B2B, so we are serving all types of companies, but also organizations such as NGOs, financial institutions, education institutions and the likes. No C2C on this side of the business.

What do your customers like in terms of the industry?

If you think of companies who are involved in international trade and activities, almost anybody there is a key target [customer]. Traditionally, shipping plays a major role. For instance, in Singapore, it is a major vertical, we’ve got on some 20 shipping lines for whom we do payroll, so they need to pay on the 25th of the month, they need to pay the salary, in exactly the right amount, exactly in the right moment and we ensure that this is happening.

One thing that is important point to know – we operate in 2 areas of the market. On one hand, foreign exchange (FX) services, the business that is all about the market, market rate, currency, and volatility. For companies, no matter how small or large, the question is how I deal with that.

If I am importing from Europe to Hong Kong, and over the past year the Euro has been increasing 18%, but my profit margin is only in the area of 5%, I would have serious problems, if I didn’t look for a risk mitigation strategy.

That whole area we consider as FX services are very much related to rates and volatility, currency developments, and how to work with this and for the benefit of the company. We call it hedging.

Another area is primarily focusing on payments in the form of payroll, pension payments, and annuities. Salary needs to be paid on the 25th of the month otherwise people get worried, and it needs to be the right amount. That in international and cross-border payments is not normal because you’ve got different banks involved, intermediary banks, correspondent banks, everybody is talking the share here, share there. The more people are involved, the easier the payment can get lost somewhere in the network.

Read the entire article at Fintech Innovation