Is there a future without Western Union?

I remember the scene at the end of Back to the Future II where, just after watching Doc Brown getting blown up by lighting, Marty McFly stands there in the rain, not knowing what to do next. A car pulls up and a strange man gets out to deliver a telegram from 1885 to Marty in 1955. Of course, that scene was brought to us by the Western Union man. What an incredible point of branding that was in 1989 when the movie was shot, by inferring that your messages will get delivered even if it needs to be 60 years in the future.
Now of course, I curse the graves of the founders of Western Union anytime I need to pay someone for work who lives in Africa. With their telegram operations shelved 162 years after they were founded, 17 years after that scene in Back to the Future II was shot, and some 10 years after widespread adoption of the internet and email, one wonders how many more years before they shutter completely? Given the rate of contraction, I’m thinking maybe four years or so. Because it’s really money transfers that are keeping that company alive now and I don’t know what the exact statistics are, but it seems like the bulk of them are to Africa.
Don’t get me wrong, I’m thrilled that there is actually some sort of mechanism that allow me to transfer money around the world in mere minutes to pay someone, but the prices they charge are ludicrous. I’m sure everyone has their own story, but I just spent $8 to send $25. That’s a 30% surcharge. It’s an impressive way to make money (although SMS charges still beat it) but it simply can’t last forever.
I was reading about launch of Zap International by Zain mobile. They’re just one more player in what’s bound to be a very crowded field soon of transferring money via the mobile phone. On a certain level, it’s pretty impressive to have this kind of flexibility. On another, it terrifies me to a large extent that at some point in the very near future, if not now, your communications network will also be holding your money. I don’t like that. It’s too much wrapped up in to one entity and from where I’m sitting, there is a large “black hole” element to the operation that isn’t transparent. While I despise the charges from Western Union, at least I know what they are and they’re not a bank. But then again, their charges and inflexibility are part of the reason why so many people are gladly turning to mobile payments.
I honestly don’t see the future being in mobile payments completely. It will definitely grow and be an aspect to our daily lives around the world and a mobile operator with have to offer mobile payments if they want to maintain their customer base. I see it as a feature set that is tied in more to regular old banks than to the mobile operator. They and their phones work more like a credit card terminal than anything else. And that’s the real solution, having proper banks that are accountable to a great number of countries and regulatory bodies handling our money. Africa definitely needs more of this. How does Western Union fit in to that? I don’t think they do.
Is there a future without Western Union?

2 Replies to “Is there a future without Western Union?”

  1. No, but they have been backed into a corner
    – At a local level in Kenya, western union has been wiped off the mobile companies (Safaricom and zain) who capture ~90% of intra-country transfers. Phone transfers are limited to 35,000 shillings (~$460), for larger transfers, people will use the banking system
    – western union should focus on international transfers; they were testing with Safaricom to allow remittances from the UK to be sent to local mobile phones (but now zap has also challenged that loop) WU’s niche will be to extend US/UK and other country transfers to Kenya at a cost effective rate (maybe by shutting down some other branch/bank outlets)

  2. Well that’s the thing in that countries such as Kenya where there is a stable banking system, you have the option of bank to bank transfers. WU is able to cling on in places like Mali or Congo DRC where there are no banks that anyone can use and so they are the only option. I think it’s these countries that are really going to prove tricky as once mobile payments open up on a wide scale, the problem of your mobile provider also being your bank will be a serious issue as obviously WU will die off quite fast.

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