Western Union’s Digital Money Transfer Business Now 24% of C2C Revenues

Western Union posted fourth-quarter results that showed continued momentum in digital transactions, up double-digit percentages year over year.

Consolidated top line for the period was $1.3 billion, up 2% year over year as measured on a constant currency basis.

Economic headwinds persist, however. Fourth-quarter revenue was driven by growth of digital money transfers and the Business Solutions segment, partially offset by a decline in retail money transfers, the company said in its release.

Supplemental materials released by the company show that consumer-to-consumer (C2C) revenues were flat on a constant currency basis, at $1.1 billion, while transactions were also flat during the quarter, at about 78.3 million transactions.

Digital money transfer revenues increased 13% on a reported basis, or 12% constant currency, and represented 24% and 37% of total C2C revenues and transactions, respectively. Digital money transactions were up 17% year over year.

Within the C2C segment, the company said principal per transaction was $341, up 14% year over year.

Westernunion.com revenue grew 9% on a reported and constant currency basis, including cross-border revenue growth of 12%. Additionally, Business Solutions revenues grew by 22% year over year to $109.2 million.

CEO Devin B. McGranahan — who took the helm of the company at the beginning of this year — said on the conference call with analysts that “the digital business has generated strong growth while our retail business declined due to uneven economic recovery negatively impacting our customers.”

He noted that “labor force participation is an important driver of our retail business. And while there have been small improve in labor force participation, we remain below pre-pandemic trend.”

Digital Growth to Slow on Tough Comps

But, as he said later on during the call, “We believe that demand for our core assets and capabilities will grow.”

Chief Financial Officer Raj Agrawal said on the conference call that Westernunion.com cross-border revenues were up 12% year over year.

With a nod to the Business Solutions segment, Agrawal said that revenue growth was driven by improvements in international trade, as well as increased activity in the education and financial institution verticals.

Agrawal said that looking forward, “we see growth being better in the second half” across retail and digital channels.  The first quarter of this year is likely to mark the lowest growth for digital, due in part to tough comps — and where the segment was up by more than 40% last year in the first quarter.

McGranahan said that “there is a powerful correlation I’m starting to see between our digital business and our retail business. … A high percentage of our transactions that start digitally end up as a cash-out somewhere in the world.”

The digital banking initiative in Europe and the multicurrency payments wallets represent significant digital opportunities, he added. As for digital’s potential, he noted that the segment was 24% of C2C revenues in the most recent quarter, up from the midteens a year ago.