Western Union Extends Pact with DHL - Analyst Blog

In a bid to enhance its presence in Europe, global money transfer leader Western Union Co. (WU) yesterday announced that it is extending the pre-existing agreement with DHL Express to provide international business services to its customers located in Europe.  
 
The existing agreement between DHL and Western Union pertains to the latter offering money-transfer services via the former in Latin America and the Caribbean and to 5000 locations in Europe.
 
The scope of the pact is now being widened by offering business services through Western Union to DHL customers in Europe. Western Union will offer this overseas business service such as exchanging foreign currency, making cross border payments through its subsidiary Custom House, which it acquired in September 2009.
 
Earlier during June 2010, Western Union entered into an agreement with OMV, one of the largest integrated oil and gas groups in Central Europe, to provide money transfer services in the European region.
 
Western Union is aggressively trying to expand its presence in Europe, which it eyes as a significant market opportunity. The attractiveness comes from the implementation of the European Union Payment Services Directive (PSD) in November 2009. The PSD, a regulatory initiative by the European Commission, aims to increase pan-European competition and participation in the payments industry (also from non-banks) by removing barriers to access by payment service providers to any European Union country.
 
From the point of view of DHL, the widening of the terms of contract will allow it to offer enhanced value-added services to its established European customers.
 
After suffering for the past year during the recessionary phase, Western Union has recently benefited from strong transaction growth in the Americas and improving international trends. Gradual improvement in revenue and pricing trends has also been witnessed. The organizational changes announced recently will make the company operationally more efficient, by eliminating excess costs and aligning the management structure towards efficient decision making. The company's strong brand name, network expertise and financial strength also augur well for long term growth.