Western Union: Banking & Finance for the Poor
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- Опубліковано 13 чер 2024
- Banks make money by lending out the money that you deposit. The more cash you put in, the better you’re treated - transactions take priority, fees get waived, interest rates are higher, and a personal banker is assigned. On the flip side, the less money in your account, the more fees you pay, and the further back in the line you start from.
Banks chase affluent accounts who bring large balances and high cash flow. But it’s not just banks - every business aims for as many high spenders and wealthy as possible. Yet there are 2 companies - Western Union and MoneyGram, that have gone in the opposite direction in providing financial services in peer-to-peer money transfer (international & domestic) to a population that banks deem to be too poor and too low-value.
Migrant workers and the poor are left out of the global financial system for similar reasons: they have too little money, their employment is volatile, their earnings are inconsistent, there are significant language and cultural barriers, they lack documentation, etc. In this episode, we’ll cover the business of Western Union and MoneyGram, how these companies drive economic growth in developing countries, and how the market is pushing their evolution into a bank for the poor.
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0:00 Sending Money for Better
7:49 Distributed Systems
19:54 Banking the Unbanked
![How We Became the Loneliest Generation [Documentary]](/img/n.gif)
Western Union: The official payment service of the diaspora
Hey, they know their market well. Good for them.
I use MoneyGram now.
Helping to suck the West dry.
Moneygram is much cheaper now much more cheaper than WU
@@bruh-vn8woyes moneygram much more cheaper than WU
I have to admit, the idea of transforming into a global financial "bank" is genius. I would love to have an account that I can use anywhere in the world to pay or deposit money on without the complications of potentially not having a local address. And I know MANY students studying abroad who've had issues with opening a local account would also be very happy having this as an option.
it's called credit/debit card
Get a Wise card and you'll be set.
I HV a youtrip card which does the same thing, but it's tied to my Singapore citizenship. I think WU is in a great position to push this innovation.
@@narcissisticnarcissus4956 yeah I agree, it is basically just like wise and wu have to catch up to them but you gotta admit that wu has a much bigger brand recognition to compete with wise
@@weird-guy yeah n26 and revolut etc
Born and raised in a Texas/Mexico border town. These money transfer businesses are all over the place like every convenience store. In the town I went to college I would go to a laundry-mate and there was one there too built into the space. That was freaking genius because people would do their laundry and use the western union to transfer money or vice versa. It does add another revenue stream and customer traffic to that store location.
These businesses are all over Latino neighborhoods in California. Almost every liquor store has one.
My local laundromat had that here in Sacramento. They replaced it with a Bitcoin ATM. Says a lot to me about the nature of these services given that THIS was the logical leap they opted for to increase revenue.
The RGV, bro?
@@CiscoZero Del Rio
and do u know how western union and others like it maintain 10 to 50 times more branches and outlets than regular banks?regular banks might charge u 2 to 3 percent in fees and commissions and fees and pay u 0 percent interests which most people already scream highway robbery on.....western union easily charge their helpless customer base of which they have no mainstream alternatives to turn to,easily 10 to 15% of their transactions in fees and commisions and exchange rates.....which means every $1000 that u withdraw or transfer through western union, normally u would be losing $20 at a regular banks instead u would be paying upwards of $100+ in fees in done through western union......
As somebody who’s never used Western Union this was all fascinating!
For a second I thought this is a Western Union ad. I was both shocked and impressed that they'd say the quiet part out loud
I still remember when I was 11 years old excited from receiving the transferred money of my single father working abroad in the middle east (we are from the philippines and he may be working in saudi or quatar as a aircraft mechanic) and learning my first time entering a bank and the friendly clerk lady. I forgot which memory whether I did some writing some form other than giving my student ID and seeing how the cash is easily handed out once the amount requested that I showed is handed out, gave me a special memory... but moving in the US 9 years ago seeing no nearby WU other than my surprise 1 week ago when I gone to some small brand grocery market store or is it rite aid? (Ok I found it, it was inside a Safeway store) had a Western Union counter. its rare like a blast in the past for me while back in my homecountry was common in every side of the city street
A decade ago is a long time, the country changed significantly, its dependence to remittances have already dropped at a large margin because of the industrial and economic growth here.
Remittances are not a sign of nostalgia, but an example of economic stagnation that the country has now able to surpass, as it is now among the rapidly industrializing and economically growing nations in Asia.
@@herrkommandank675 It's still a struggling country. I came across news a few months ago that these remittances saved their country from hyperinflation. Nearly half of the revenue contributing to Philipine GDP is attributed to remittances.
my grandparents still send money to our family members in the philippines through either moneygram or western union despite immigrating to the US in 2009 (they are currently 71 and 72 years old so they are still kind of old fashioned). my grandpa also worked in saudi in the 80s and sent money to his family when he was an OFW, so it’s interesting how things haven’t changed so much now
@@broodywalsh7322 PH Merchandise Exports are at 79 USD Billion in 2022, with the addition of 41 USD Billion worth of Service Exports (120 USD Billion Total) and our 2022 Imports our at 137 USD Billion in 2022, thus the deficit is at 3% (16 USD Billion), common in other rapidly developing countries.
Remmitances make up less than 6% of the GDP, and majority of its sources of incomes are from merchandise, then service exports.
I don't know where you got that idea that Remmitances make up of 50% our revenue sources towards our GDP.
I remember when my mother and I would go to the local Western Union in our town to get money from our dad. She had a brain hemorrhage while we were visiting our home country. This made our already difficult financial situation close to dire. I highly doubt that we would have even lived there two more months without those transfers. And I am thankful that WU gave my dad the opportunity to help us.
That's wonderful 😢❤
The fact that you can have a savings account and be able to wire to anybody in almost anywhere in the world, as long as it has a WU account, is a very compelling reason to have an account with them from a convenience standpoint. Specially if it doesn't charge you any fees for it
Doesn't charge any fees?
Sometimes Indians don't realise how zero minimum balance free bank account has not only changed the way we deal with transactions but also how much that helps the economy and brings millions n millions of people in the banking system and part of the economy.
I had to use Western union once while on an exchange program in New Zealand when I was 16. The ATM swallowed my card so my family had to send me money since replacing the card would take a while.
The host family thought the amount of cash in the house would be excessive, so they made me open an NZ bank account.
So yeah, I probably still have an NZ bank account that has like 2 or 3 NZ-dollars in it 😂
Interest earned means that $3 would now be worth $100
Lol inactivity fee may have ate it, but you might have a decent credit rating lmao to get a loan if you go back
@@whatthepickhaving 3 dollars on your bank account gives you a good credit score in NZ???
@@jandolejsi8122 Just having a bank account with a positive balance over time builds a little history so yep.
@@whatthepickBank balances don't contribute to credit reports or ratings in the U.S. Do they in NZ?
Even I, that comes from a wealthy family in Africa, and studies in the U.S - we still use WU. It’s just so much more easier and faster than doing a SWIFT transaction that might take days to hit my account
...even weeks.
You can't do Wise?
Wise has limit
@@ChineseKiwi WISE, in the grand scheme of things, is relatively new and not available to everyone.
Guess it's not that _swift_ after all.
The way my in-laws gasped when I explained that didn't need to go to the grocery store anymore to send money to Cuba lol showed them the online wiring option, they were so grateful. Also, I always my Haitian neighbors line up on Fridays to cash out their paychecks and run to send funds home to family.
I absolutely LOVED this video! I always wondered why services like Western Union still exist considering companies such as Wise or Remitly offer significantly less expensive services. Knowing now that the purpose of cash to cash transfers are the driving force for WU to continue to charge such fees for the low-income nomads around the world makes so much sense. I absolutely don't agree with their exploitative practice of high fees since their main consumers are poorer migrant workers, but the option for them to have such a service available due to their receiving countries lack of high quality infrastructure is admirable. Such a difficult topic due to the huge difference in countries' economies and diaspora. Thank you for the video 👍
I wouldn't say the fees are all that high or exploitative when you take into consideration the difficulty they go through to maintain that network. I've looked into sending a couple bucks to overseas friends for their birthdays and whatnot, and the difficulty is pretty crazy even for someone that knows finance pretty well.
I've never clicked so fast! As a Filipino, this has always been extremely interesting to me!
Same, as a Nigerian!
same , also as a filipino ! always went with my grandma to western union basically every weekend as a kid , never really understood fully what was going on until recently .
Good morning sir, tank you por watching this bideo prom da pilipine
@@geznicks bitch what?
Remittances used to be prominent in the 90s, but thankfully it is no longer as it seems, as the economy continues to grow, where industrialization is present, more people are getting their revenues from the emerging industries, such as manufacturing here.
I work at a supermarket that offers western union, and this quarter our store was able to make our bonuses despite having 2 departments miss target entirely bc WU transactions made up the difference. If you get a reputation for being reliable (a lot of WU agents in our area lie to avoid transactions 🤷?) it's definitely a comfortable additional revenue stream. Interesting to note that you can process Amazon payments and refunds with WU, another way for the unbanked to access digital payment.
I always thought WU was kinda predatory with the insanely high cut they take from every transaction. Keeping poor people poor. Back in the day they really offered a service and convenience that nobody else could, but I'm sure young people nowadays can think of more cost-efficient ways to transfer money internationally.
I worked in thi s industry and the regulations are tough, but nothing that Silicon Valley can't figure out.
Agreed. I personally sticked to Xoom, as it was a better option for my destination, although Xoom isn't as widespread as WU.
Yeah nowadays is all crypto DAI usdt and usdc
Poor people keep poor people poor. Loser mindset
As far as I know, WU and MoneyGram have adjusted their conditions and they aren't that far off from Wise and Xoom. However, the Wise and Xoom require a bank account in the destination country and that is exactly what used to be important and might still be in some developing countries: not having access to a bank account
I take the thing that sets Western Union apart is not so much the ability to transfer but the completely open network. services like PayPal come and others, have been doing the transfers quicker, cheaper, and better for decades now, but the issue is you are limited to having to be in their network, which is how they get all the efficiency. If there was anyone who had both the scale and ease of use of Western union, and the global ability to transfer without any accounts I would be shocked if their fees in total ended up being much less (after all, it is the very usage of these fees by Western Union that incentivizes people to join their Network and allows this kind of open-ended transactions)
Where I live non-citizens can only withdraw a max of $250 from an ATM, and the fee is $7.50/transaction. Since I usually withdraw $1,000 it would cost $30 in fees. With WU it only costs a total of $4.
wow! Which city/country?
@@HarendraSingh-xw6hv I don't want to appear to disparage the country so I'll just say Central America.
That's insane
As you said, it's interesting to see a company I thought was not too unlike payday loans in my mind actually turn out to be what is likely an important tool for a lot of folks. Cool to see how the business might be switching away from hitting the customer hard with fees to being more central in their experience + recouping the lost fees by providing more value over the long term
I am listening
We use Western Union about once or twice most months. The wife has extended family who live overseas, and Western Union has outlets in most villages (and certainly in the larger towns and cities). In many parts of southeast Asia, Western Union can be accessed at the local government Post Office.
As a kid with immigrant parents, western union was almost a weekly visit sending money back home, crazy how time flies
I used to work with this guy from El Salvador, and after he quit and I was cleaning out his desk I came across a thick stack of Western Union receipts.
It will be very interesting to see how WU's digital banking venture pans out, would be nice to see a follow up video in a couple months reviewing this. Overall, very clear video on WU's business model. Thanks for providing such high quality content!
The business models WU is transitioning to can only be measured in years and perhaps decades (lifetime value, retention, customer orientation) - they are a 170 year old company transitioning to the future, this is not something that can be measured/assessed in months.
@@jaadotech That's fair, but some indication on its actual use can be reported in the first couple months. For example, are people even using the feature? What are they using it for? etc..
@@AgneyaKulkarni Considering WU has an established business relationship with many people they don't rely on hype to promote their new services, so they could realistically bounce back from poor initial adoption if they either fix the cause or the situation changes (e.g. e-commerce becoming more relevant in currently cash based local economies).
@@Kenionatus Sure but what if there is strong adoption? It would indicate that they have really found a gap in the market which they can allocate more resources to expand/develop the feature. Maybe providing insurance, or investment opportunities? Anyways, as you said, WU is a very established company, so they have time to record and process consumer adoption of their new features.
Another great case study, Mr MBA.
this makes a lot of sense for western union, the fintech moat is narrowing. I don't think their stock is worthwhile, but I'd love to see how this plays out for them.
they are not fintech competitors, the start of the video clearly differentiates them from fintech. And yes this has inspired my interest in WU :)
This is an insightful video. We learn so much from this channel. Keep up the good work.
the video literally just dropped.
Wouldn't surprise me if this is a bot
@@lesedidhlamini4893 Yet it wasn't wrong - this is a really good video
In Canada, physical/retail WU locations are rare. However, WU transfer features are built into the major bank network. Meaning you can send money to any recipient country from the sender's banking app or website! It's so simple!
How is this youtube channel only your side-gig? There's so much quality
Would love an episode about EZ Pass
I second this, EZ Pass would be a fascinating topic. Use it all the time during my travels and I’m curious about the economics of it.
This pivot is brilliant, and as someone from Venezuela I kind of wish it came a decade earlier. One of the biggest challenges with the country used to be the exchange rate locking that caused people to desire foreign bank accounts to get around the maximum amount of dollars that could be allocated per year, but getting those is difficult due to address and residency requirements. With this, you could easily open up a WU account somewhere else and store dollars rather than local currency and get more stability. I expect this will become very successful in two markets: Argentinians, who currently are experiencing a similar exchange rate manipulation to pre-dollarized economy Venezuelans, and anyone being a migrant worker in Japan as Japan doesn't allow you to open any bank accounts without a Japanese address...and how exactly are you, a new worker, going to get an address without a bank?
It fills in holes people outside of these situations don't even realize existed - if WU becomes capable of cashing checks into these accounts, they could start eating the payday loan industry's lunch.
Your videos are excellent, but I have one big criticism: your graph slides get confusing and it isn't clear what the narrator is talking about. When you say "In 2006 xyz and in 2023 xyz....", it's hard to both listen and figure out what the graph is saying for that year.
I would recommend adding arrows to graph if possible. :)
This was SO informative! I really enjoyed this video, great work!
I've had a negative connotation of the company since the increase of scams. Money orders are a big thing used to do scamming and so it gave me a bad vibe of the company providing them. This made me rethink and almost really appreciate what the business is doing.
I work in a Internet Cable company. There is people on Social medias "selling" our services. What they do is that they order the service online on the name of the person falling for the scam, then the person says "It's going to be 350 dollars for a year" and the victim wires the money through Western Union or MoneyGram to another country.
I’ve never used WU before but I’m having a hard time understanding how the partnership with small local retailers actually works cash wise. Like if I want to go get $5000 in cash there is no way some random small connivence store is keeping that much money on hand.
But I guess it is not a common case as $5000 is a lot of money for middle to low income people, WU can redirect the transfer to the nearest agent that have enough cash. In the worst scenario they can let the receiver withdraw from a WU in the capital of that country.
@@Nhan_nguyen271in my country, most western unions have a daily limit on what you can send. It's usually not a lot.
They will send you to a bigger store
I am deeply in LOVE with such content!!!!!!!! cheering for this channel.
I would like to point out that Poland is now a sender not a recipent.
My parents still use western union till this day for somethings. They are firmly middle class now but some habbits stay
It's also a business where scale is a big advantage due to the importance of having a trusted brand that people are confident isn't going to rip them off.
This is such an impressive video. So complete.
Great topic that really needs to be addressed
Hey, this is your best video yet!
awesome subject selection and video quality again. keep it up.
Based on the brief time I lived around and sympathized with the immigrant community that uses these banks, I'm telling you that whether or not companies feel good is the least of their worries. Unless something changed from 5 years ago, I dunno.
WU are targeting the migrants who transition into the destination's culture - they have a good grasp on who they are focusing on
For your videos, I wonder if you can discuss problems that the business has solved. For example, for WU, how were they able to avoid pilfering, misrepresentation of documentation, and fraud with so many nodes in so many countries.
What an incredible video super infomative and filled to brim with inisights. Im very happy i followed
I have used money orders in the past to pay my rent deposit. For some reason the landlord only excepting money orders. No cash no personal checks no cashiers check no Debit card. Just money order
3:14 in most poor countries it's hard to pick up more than $500 USD at any one time. Sometimes $100 goes uncollectable for day's waiting on someone to pay a bill or wire money out. The location simply doesn't have the cash available.
yeah in turkey I would go to banks if I needed to receive more than 200€ instead of local shops but now the banking apps allows you to cash the money directly and instantly to your account
I just ran across this channel a couple days ago...absolutely great content.
Favorite channel on UA-cam
great case study , thanks
An excellent report. Very informative.
Great video man.
Very well done and informative!
Thank you for your generosity and support juppy123!
I always stayed away from places of this sort ,but it’s always informative to see how these businesses thrive off the poor or people with less money
Enjoying the channel!
brilliant exposition of a clever business
This channel is prime quality over quantity
oh, didn't know about this. Good info 👍👍👍👍
This is pure gold❤
Great video!! very interesting.
this is such an informative video.
I've traveled to a few countries in Africa and the South Pacific, and seeing dedicated Western Union storefronts surprised me. All the WU locations that I know of in the US are just kiosks in larger grocery stores.
WU already looks like a good investment to me. The stock is trading at ~$11. Asset light business model with mouth watering operating margins.
Financials look strong to me. My only concern would be the debt load but they got options to pay it off. They can either suspend dividends, issue stock to raise capital or cash flow it from operations. This is a turnaround play not a long-term investment in my opinion.
Yes
Things aren't getting much better for low income earners, with increasing costs, crack downs on immigration and instability from across the world I wouldn't hedge my bet on the stock anytime soon.
+1 Banger from our boi Modern MBA
As always with Modern MBA, an amazing video, beautifully explained, beautifully edited and very interesting, I love this channel so so much, thank you for such good and informative videos.
The algorithm led me here. Good video!
I never used WU and they always seemed suspicious to me but it sounds like they provide a good solution that many people need. So probs to them!
And i mean thats what it's all about when making a business "providing a service that people need" this might explain most of the retention that some people in the commands express to WU.
My Surinam dad always sends money back home from here in the Netherlands as long as i can remember lol
Always great content from this channel as usual. Western Union just fills the unmet needs of a fragmented population. It’s rather genius. As long as there are marginalized people (which there always will be), Western Union will have a large customer base.
In part conventional bank branches may just be declining due to a lack of need for people to do business in-person very often so I'm not sure how meaningful the comparison is. Routine transactions like paying off a credit card or transferring money to another account are typically done online these days.
My issue is if WU starts coming online are more and more profitable, then they will face more competitive pressure. You can already go to 7-11 and almost any convenience store to deposit real cash into your cash app in the US. Not sure about overseas, but if WU keeps growing margins and profitability they will start to face new competition. It really isn't worth it for the effort of these bigger financial institutions, but it might be worth it for Square. WU is a commodity in a shrinking market, so there will be low margins also while lowering the total addressable market. If you buy WU stock you have to believe that the WU brand will carry them. If Square does the same thing and charges way less money to transfer across borders, then it is game over for WU.
Cash to cash. WU charges 25%. The exchange rate steals another 23% from the poor.
I live in the Philippines and have family working overseas and now this have convinced me to open a WU banking account...
Cant really hate on them, for charging "predatory fees" when they are literally the only option
I would love to see a video on the logistics of moving such a big amount of money between countries
this is probably a well regarded secret
@@quazar5017why it is a secret ? Not that it is like military intelligence
@@jigsaw2253 if international money transfer is a easy, transparent and standardized process explain it to me.
thank you!
never thought of wester union like that
but western union had big impact on my country's economy
the money the migrant workers send via western union changed our lives
If you had a different mic or mastered the audio with some light music mixed in, this would have a completely different vibe. Enjoyed the video though
The transfer network thing is very related even to our Internet networking world. Maybe this might be a very technical topic, but given that politics and finance also really affect these, you could probably talk about Carrier businesses, and the economics behind how our internet works. I'd for sure find that interesting.
WoW.......Nice Video
Very positive and good
A new Modern MBA video means a good day!
Another interesting analysis. I wondered about WU's viability considering the new digital players that seem to pop up every other month. But the key to their continued success will be the networks they've spent years creating.
Thank you for your generosity and support MrDirzel!
I think the big value they have over digital is really the cash aspect of it.
until there is no more cash ;) @@ChaosTherum
Very interesting video. Never thought about western union moving into digital banking. Seems like it could work out well for them.
To those that do like the idea of transferring money, I found Moneygram is far cheaper at a flat rate of $10 per transfer! I wasted so much money sending with WU! Keeping people I know fed and safe in my home country! It's a god send! >
I will add that Wise is probably a better option, though it wasn't an option for the country I was trying to send to.
very interesting.
Your video is out! It's early christmas again!
Hi, thanks for the interesting video, I think the naration that you have created around WU+ program in Poland and Romania is incorrect or at least missleading. In Poland (and it might be similar in Romania) banking is very modern, much more modern then in many western countries and I think this might be the reason why they are trying to start there and not because there is a big unbanked populations. In average, 18-44 years old Polish people have been using 2.1 banks and 57% have online bank according to my data. You can pay with card almost everywhere in Poland, most banks has been having modern mobile apps and multi-currency cards for many years now. Not a big mistake, but somewhat important for me, as I am from Poland and I am offten dissapionted with banking services abroad.
I did not get the impression from what he said that that's the narrative he wanted to paint.
@@asecmimosas4536 Sure, it is not explicity, however take a look at the "Banking the unbanked" section. First, he talks how many migrants are happy to get a card and any banking service, then he moved to talking about developing countries and he said "WU's vision fundametally hinges on whatever or not it can convince customers to trust what they see in their phones and not just what they have in their hands." and then, I the following sentence, he presents the new program in Poland in Romania to promote digital services. It seems that cash is king in Poland but it is not true, it is easier to pay with card in Poland than in Austria or Germany. As i said, not a big deal, but lack of proper context totally changes the startegy of the program.
Actually here in Romania, Revolut app is becoming quite popular with the younger people for instant money transfers
I was a bit curious about Poland. Sure in the past it had a large diaspora sending back remittances and a pretty shaky banking system, but not really anymore. Poland is considered a developed country nowadays and salaries have risen to the point where going abroad to do low paid agricultural work has been mostly handed off to romanians and other less wealthy eastern european nations, so remittances are much less common, and what is still there can be done through a regular account transfer.
As I gear up to go back to college (assuming I can get my financial aid sorted), I realized I'm going to likely have to write essays and such. I've been out of school for a long time, so my writing skills have gotten rusty. However, I watch a lot of long-form, scripted content like this. On an academic level, I hope I can be as eloquent and well-researched as you when it's time for me to begin my own assignments (I hope I don't have to do a thesis, lol! But...I'm mentally ready if I find that I do).
I should also probably take to reading adacemic papers to get a feel of what those should sound like (I've never been good with pretending to sound "white collar", but I need to up my writing skills and I think that can start with just being knowledgeable in various subjects overall). Anywho, this is just a roundabout way of saying that I really enjoy your content and its quality.
I come to respect these business. they're godsend for these people
Great video. Keep up the good work. Please try to post one video a week if possible ❤
if you exchange money in Argentina it's 1 USD to about 300 pesos. if you send via western union it's 1 to 500 pesos
It’s the original Zelle.
I remember we always had to use WU before there was a Zelle to send money to family who lived a few cities away.
Bank's in my country have WU inside
Interesting video.
Getting an ad for Western Union WUPOS while watching a Western Union related video hits different.
Could you please make a video about business strategy basic or framework and it's limitations.
2. Why it's difficult to gurentee business success. Pls explore it
This is your best video yet, and shows the good and bad of market pressures on helping the poor
got a western union ad on this video
I need to sign up for Patreon so I can contribute to this channel.
The Remittance industry is so huge that huge corporations like WU, MG dictate their fees together without real competition, in the future people will be able to self custody their money far from banks and be able to transfer it easily, instantly for a fraction of a penny in a permission-less system.