The Fastest Way To Make Money

Men

tion 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.

For thousands of tiny villages around the globe, Western Union serves as the main link to the global economy. About 100 miles south of Mexico City, in a valley framed by towering pre-Columbian ruins, sits Coatetelco, population 15,000, which has a beauty parlor but no bank. A few people grow maize, chilies and fruit, but remittances — mostly from agricultural or construction workers in Georgia and the Carolinas — account for a staggering 90% of the villagers' incomes. Patricio, 49, who stopped working in the U.S. three years ago, says sending money to Coatetelco has become more convenient and less expensive since his return. At the end of each month, he gets a call from his two sons, who are working illegally in Georgia. They give him a code number, and he drives or rides his horse four miles to the nearest Western Union, located in a government telegraph office, to pick up the $600 they spent $40 to wire to him. Less expensive remittance services are available at the nearby Banamex bank in Mazatepec, but so far, Patricio and his neighbors aren't willing to travel the eight miles to get there. Besides, he says, "we do not trust the banks, and they make everything more difficult."

Since its founding as a telegraph company in 1851, Western Union has pioneered the stock ticker (1867), the electronic money transfer (1871), the credit card (1914), the singing telegram (1933) and intercity facsimile service (1935). But since 1995, when it became a division of the Denver-based First Data Corp., the world's biggest credit-card processor, Western Union has focused on electronic payments. Western Union processed nearly a billion checks and money orders in 2001 and is the biggest mortgage-payment processor in the U.S. It has also become a leader in the gift-card market, with clients including Blockbuster and Toys "R" Us.

But money transfers are Western Union's bread and butter, last year accounting for 80% of the division's revenues, which in turn make up some 40% of First Data's. "It's a sleeping giant," Gold says of her company, "in the sense that many people still think of us as an old telegraph company and don't really recognize how connected we are to the populations of the world." Appointed president in May 2002, Gold, a Montreal native, is working to update the company's image, which was one of her specialties when she ran Avon Products' North America division. Gold for several years served as CEO of the Dallas-based Excel Communications, which uses Avon-style direct-selling methods to market long distance, wireless and other phone services. Since she arrived at Western Union, she has focused on giving the brand a unified look and feel. "At one point, we had 87 different logos around the globe," she says.