Western Union Opens New Front in Cash-Transfer War: Gas Stations

By Mike Cherney 

SYDNEY-- Western Union Co. is turning gas-station attendants in Australia into money-transfer agents, reaching out to customers like Uber Technologies Inc. drivers who fill up at all hours of the day.

A new partnership with BP PLC in Australia will allow customers at BP gas stations to use Western Union to send money overseas, with an attendant completing the transaction. Western Union's mobile app is already available around the clock in Australia for sending money using a credit card, but customers will now be able to set up a transaction using the app and then pay in cash at the gas stations.

The Englewood, Colo., company is facing competition from financial-technology startups such as TransferWise, which are eating into its core business by making it easier for consumers to transfer money internationally using mobile phones or home computers.

The service will be enabled in 302 BP stores--150 with a stand-alone kiosk; in the rest customers will use the app--as Western Union seeks to squeeze more growth out of its bricks-and-mortar retail network. The company says the kiosks are its first globally at gas stations, and if they are a hit, similar programs could be rolled out in other countries.

With a population of 24 million, Australia is a small market for Western Union, but international companies frequently test services or products here for developed markets.

The new service aims to increase convenience for customers who prefer to send money outside of normal business hours, said Simon Millard, Western Union's country director for Australia. Many of the company's retail agents in post offices, travel agencies or currency-exchanges outlets are closed at night and on weekends; many gas stations, by contrast, are open 24 hours a day. Potential customers being targeted include taxi and Uber drivers, many of whom are immigrants and often send money to family overseas.

Western Union has enhanced its retail presence elsewhere with kiosks at Walgreens stores in the U.S., WHSmith bookstores in the U.K. and Franprix supermarkets in France. It has also explored ways to boost its online-transfer business by partnering with messaging apps Viber and WeChat.

Hikmet Ersek, Western Union's chief executive, said in an interview in Sydney that a lot of growth will come from these digital offerings, which in the first quarter generated 26% more revenue than a year earlier but remain relatively small. Revenue from consumer-to-consumer transactions--which make up 78% of the company's total--were roughly flat in the first quarter.

Another potential challenge for Western Union is the pending acquisition of rival MoneyGram International Inc. by Alibaba Group Holding Ltd.'s Ant Financial. The deal would create a bigger international competitor with a significant footprint in China and the U.S., but the purchase still awaits approval from U.S. regulators.

Shares of Western Union--which has a market cap of $9 billion--have fallen more than 12% this year, even as the broader U.S. market recently hit record highs. They closed Friday at $19.09. Western Union will report second-quarter results on Aug. 3.

Write to Mike Cherney at [e-mail]

(END) Dow Jones Newswires

July 24, 2017 08:44 ET (12:44 GMT)

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