Bitcoin and the other cryptocurrencies might not be the slayers of traditional money transfer methods as initially expected… at least not yet.
At its introduction, Bitcoin was supposed to revolutionize money transfers. The biggest advantage of the new electronic currency and payment system was the ability for fast and seamless payments and currency transfers across international borders.
However, slower-than-anticipated adoption rates for cryptocurrencies have allowed traditional money transfer companies to adjust their business models and minimize the advantage of cryptocurrencies. One such company is Western Union (NYSE:WU), which is growing and thriving in the changing environment of the money transfer business.
A company like Western Union that has been in existence since 1851 is adept at adjusting to changing business environments. The company has been working with the GSM Association to introduce and refine its own mobile money transfer service since 2007. After nearly a decade of expanding and perfecting its service, Western Union’s mobile money network extends across more than 200 countries and conducts transactions in more than 130 currencies, but does not allow cryptocurrency transactions.
Fortune magazine reported in November 2017 that Western Union’s network channels handle approximately $150 billion of money transactions annually, which is more than 25% of the total market capitalization for all the cryptocurrencies combined, according to Cryptocurrency Market Capitalizations website on Jan. 19. Additionally, transactions originating on mobile devices account for 60% of Western Union’s digital money traffic. Currently, Western Union is leveraging its 550,000 physical retail locations with its digital technology to drive its business, which reported a 13% year-over-year rise in earnings per share for the third quarter 2017.
For now, Western Union is holding its ground against cryptocurrencies. In an interview posted on the company’s corporate blog, David Thompson, its chief technology officer, said, “For us to move into cryptocurrency, we would have to cooperate with regulators or be a part of the regulation structure over cryptocurrency. I do think we, as a company, would not be operating in cryptocurrency until it became regulated, and there would be a need for regulation over cross-border movement or a cross-border compliance structure.”
It would not be out of character for Western Union to change its business model and adopt cryptocurrencies or any other new technology under the right circumstances or to advance its financial position. After all, the company has been in existence for 167 years, which is older than many of the countries where the company currently conducts business.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.