Earlier this week, Western Union Co. (WU), the world’s largest money-transfer company, announced the launch of its new payment network “Western Union Small Business Payments.” The network will facilitate nationwide payments for the small and medium enterprises (SMEs).
Western Union Small Business Payments is an online payment acceptance and accounts receivable service, offering payment processing, automated invoicing, recurring billing, customer management and reporting, in one integrated payment suite for small-to-medium business owners.
Western Union Small Business Payments joins Western Union’s other existing payments services including Business Solution, Payments, Pago Facil, Speedpay and Equity Accelerator.
The new service has been developed keeping in mind the special needs of SMEs. The service is user-friendly, enabling owners to enroll for the service effortlessly. The service will make it easier for SME owners to make payments online or via phone from their bank accounts or credit cards nationwide.
Western Union is specially bent on serving the SME sector, as it constitutes the major part of the U.S. market and contributes significantly to the national income. A recent study by the U.S. Small Business Administration’s Office of Advocacy counted 26.8 million such businesses in the country.
The company sees the SME market as an attractive growth opportunity. It expects a sizeable growth in the number of SMEs in the future, aided by the U.S. Government’s impetus to promote their establishment, to secure wealth creation and employment opportunities.
Western Union is also looking to serve SMEs outside the U.S. This is validated by the recent acquisition of London-based Travelex, which provides business payments primarily to SMEs and its distribution partners.
The company recently announced the launch of Online FX and Online FX for Mobile services in France, Germany, Ireland and Italy, thus making it simple for the SMEs in these regions to make payments to their suppliers anywhere anytime.
Earlier in the year, Western Union signed a five-year agreement with Emirates International Exchange to provide cross-border business payments services and foreign-exchange solutions to SMEs in the Middle East.
Western Union foresees a huge opportunity in the global SME market, which is comparable in size with that of the cross-border remittance market, worth $24 billion.
The company competes closely with Moneygram International Inc. (MGI). Western Union currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. However, based on its strong fundamentals, we are maintaining our long-term Outperform recommendation on the shares.
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