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Going down to the wire in the money transfer market

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Matthew Pierce

on 18 February 2014

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Transcript of Going down to the wire in the money transfer market

"Going down to the wire in the money transfer market"
Matthew Pierce
Darragh O'Connor
Stephen Bannable
Robert Squire

Western Union: History
Lawsuit example
considered fastest way to send money and dominate 80% of market

What happens in the case of little banking infrastructure?
- User does not need a bank account
- SMS technology used to send and receive money
- Receiver gets text with a reference code used to withdraw money
Reasons why M-Pesa worked
- The need for financial services
38% access to a form
19% access to fully regulated form
400 bank branches, 600 ATMS, 10m mobile users
therefore low penetration of banking sector
Low transaction costs - 1/3 western union charge
How it works
Competition from banks
Turkey, the migrant workers and
Western Union
Alternatives to Wire Transfer
Convenience - School fees, loan repayments
public transport, generally safer
History & Innovation
3) In 1982 Western Union together with EasyLink pioneered one of the first email systems for non government users
Currency Exchange
Western Union's transfer fees vary based on how much money is sent, how it is sent, and where it is going
Currency exchanges normally but at one rate and sell at another. The difference between the two is called the spread
In 1997 Western Union were hit with a lawsuit because it was offering its customers a lower exchange rate than the market
M-Pesa - 2007
Mat's gay
Dubai, Indian migrant workers
and Western Union tactics
Western Union was founded in 1851 in New York
Completed first transcontinental telegraph line in 1861 and launched its money transfer service in 1871
In the 1890's it began offering its telegram service to Europe, North Africa, Australia, and Asia
Innovation & Growth
In 1914 Western Union introduced its own charge card
In 1974 the first ever commercial satellite was launched by Western Union
This meant that in 1989 Western Union could start offering its money transfer service outside of North America
Today customers have many different option when it comes to the way they want to transfer money
The original way was via an agent where "Send Money" and "Receive Money" forms were needed
Today money can be transferred at an agent location; over the phone; online; or via the Western Union app
Exchanges can add their own fees to the spread
Western Union weren't telling their customers
Now Western Union receipts state they have their own exchange rate
The lawsuit was settled in 2000
1) PayPal
- Instant Transaction
- Transaction fee a percentage not actual amount
- CCF 2.5%
- Chargeback for up to 60 days.


- Both Parties must be accepting of payment
- Transaction fee 0.5%
- Bitcoin to Dollar rate - 1%
- Kipochi Wallet new technology to link with m-Pesa
- Volatile currency
- Option to sell at current exchange rate at a later time

Impact on international business
Facilitates long distance business deals

Outsourcing becomes increasingly viable

Remittance makes emergration much more feasible

Facilitates illicit dealings such as tax avoidance

profits are easily repatriated


Western Union has grown to be the largest money transfer service in the world
The money transfer market has a huge influence in globalization
“ We make 1% of the value of each transaction, but if we get one transaction
wrong it could cost us over $100m in lawyer fees and $1-2bn of lost business.”
(International money transfer – the new and the constant, roundtable discussion)
High risk, low cost money transfer alternative such as bitcoin
Rob is gay as fuck
Matt sucks dick
Full transcript