Western Union Collaborates with Walmart: Insights from the Western Union CEO

In a strategic move, Western Union has partnered with retail giant Walmart to bring its money transfer services to over 4,700 Walmart stores across the United States. This partnership could potentially lead to more collaborations for Western Union, as Walmart moves towards a marketplace model, offering multiple brands to customers.

The development of Walmart's fintech is separate from this partnership. The new Walmart fintech will run separately from this offering and Walmart Financial Services.

Walmart accounted for around 20% of Ria's revenue in 2019, with Ria being part of larger parent Euronet. Similarly, Walmart accounted for around 16% of MoneyGram's revenue in the same year. With these partnerships, Walmart continues to prioritize its customers by providing a wide range of financial services.

Hikmet Ersek, CEO of Western Union, argued that Western Union's offerings will be quicker than other non-Walmart Western Union locations. He also stated that they will not lower prices to lure customers away from competitors. Instead, Western Union is expected to focus on providing options that best suit local customers, as cash remains significant in remittances.

This partnership places Western Union, MoneyGram, and Ria in direct competition for Walmart customers' business. The three players are battling over a likely $300-400m total revenue pot for 2021, with much depending on Covid's continued impact on in-store retail.

Hikmet Ersek expects a revenue size of approximately 10 billion dollars for the US market in 2021 if his company could capture one-third of the total remittance business from MoneyGram, Ria, and other competitors. Four or five percent more top-line growth for Western Union could be significant, and Walmart could contribute to this growth.

The ongoing strategy of Western Union involves leveraging its platform for growth. This strategy is evident in its partnerships with STC Pay and TD Bank, and it is expected to continue partnering with other money transfer players.

The partnership between Western Union and Walmart could be significant for Western Union's US market. However, MoneyGram's shareholders saw a 10% drop in market value upon the announcement of the news. It remains to be seen how this partnership will shape the remittance market in the coming years.