Banking: The Fastest Way To Make Money

Mention Western Union to an American, and chances are he or she will think of telegrams and maybe that '60s frat-rock song of the same name. But in the rest of the world, Western Union means money. Having converted its wire traffic from text messages to cash, Western Union increasingly serves as a rough-and-ready bank for millions of migrant workers who send part of their pay to loved ones back home, whether from an Arizona broccoli field to a Mexican village or from a Saudi oil field to Bombay. As the pace of global migration quickens, so does the business of Western Union, which this year will add 20,000 cash-dispensing outlets to the 159,000 it operates in 195 countries and territories--nearly four times as many locations as McDonald's, Starbucks and Wal-Mart combined. Quietly, Western Union has become one of the world's most pervasive--and profitable--financial institutions.

Over the past decade, remittances of wages from migrant workers to their native countries have risen 44%, to an estimated $138 billion last year, and they are projected to grow an additional 28% over the next three years. According to the Nilson Report, which tracks payment services, Western Union controls nearly 80% of the electronic money-transfer market in the U.S., the world's biggest sender of remittances, which helped it pick up a nicely rounded $1 billion in profit last year from $3.2 billion in revenue. But several years of 30% profit margins have drawn complaints of price gouging--and a host of new competitors ranging from big U.S. banks (Bank of America, Citigroup, U.S. Bancorp, Wells Fargo) to credit unions to foreign niche players like Remit2India.com and FXRemit.com which caters to Filipinos. Western Union president Christina Gold, 55, a former Avon executive, is responding by giving her firm a makeover. Long billed as the "Fastest Way to Send Money," Western Union has just launched a $300 million global ad campaign using a new slogan, "Uniting People with Possibilities." The company is clearly trying to soften its image. But its executives are under no illusions: defending its lead is getting harder than ever, requiring big investments in new technology and new outlets, especially in the burgeoning markets of China and India.