Oct 052011

By W.H.A.| SpeedyPay.info

Millions of people use Western Union every day to send money to relatives, friends, or business associates. I myself used to use Western Union almost on a daily basis. I owned an online matchmaking service, and I had customers all over the world. Of course I accepted payments by credit card, but I also accepted Western Union, so that customers overseas who didn’t have credit cards could sign up. Yes, it was kind of a hassle to drive up the hill every day to the Western Union agent, but hey, money is money, right?

My point is that Western Union is popular, especially among people who don’t have access to bank cards. But how often do Western Union customers consider investing in the company itself?

In fact Western Union is publicly traded. The stock symbol is WU and many financial analysts consider it to be a good investment at this time.

Western Union was founded in 1851 and was one of the original members of the Dow Jones Transportation Average in 1884. The company has survived all the economic rises and falls, and the introduction of every disruptive technology over the years.

Western Union stock chart

Analyst Martin Grossi argues that Western Union is well positioned for continuing success at this time, for several reasons:

Remittances: immigration to the developed world continues apace; people in countries like the USA, Europe, Australia or the UAE send remittances home to their families in the developing world. People in poorer nations often have no access to banking services. The only way for them to receive remittances is through a money transfer service like Western Union, MoneyGram, etc.

Size: Western Union’s large size creates an effective money-transfer network, and allows them to quickly expand into additional markets. Additionally, their size enables them to offer more affordable services than smaller operations.

Growth: ┬áthe opportunity for growth is tremendous, especially in the massive (and barely penetrated) markets of India and China, which together contain almost half the world’s population, and have huge expatriate populations living abroad.

Technology: Western Union is currently focused on exploiting emerging technologies such as online payments, mobile-to-mobile payments, prepaid card services and micro-lending services. This bodes well for future growth.

Western Union is the leader in a market that will only continue to grow. They generate good cash flow, while reinvestment needs are small (a new agent doesn’t have to do much more than hang a sign in the window). The company is expanding their agent network, and making effective use of new technologies.