Western Union, Remitly Face Risks From 'Cartel Crackdown,' Short Seller Says

Shares of Western Union Co. WU and Remitly Global, Inc. RELY are on watch after a short seller on Friday claimed that a crackdown on cartels could hit the remittance companies' bottom lines.

The Details: Hunterbrook published a short report outlining what the firm sees as a triple threat of risks to the remittance companies:

More affordable alternatives like peer-to-peer payment apps, card-to-card transfers, and cryptocurrency platforms.
Intensified government oversight of international money transfers, particularly those potentially linked to cartel activities, following the U.S. designation of certain cartels as terrorist organizations in February.
Slowing growth in critical markets.

Benzinga reached out to Western Union and Remitly Global for comment.

Cheaper Alternatives: Western Union and Remitly face growing competition from more affordable options, including card-to-card programs like Visa Direct and peer-to-peer transfers like Venmo, Zelle and CashApp, Hunterbrook said. The report also listed cryptocurrency transfers in apps like Coinbase and Robinhood as formidable competitors, in their view, to the more traditional remittance companies.

Government Crackdown: Hunterbrook pointed to a comprehensive campaign initiated by the Trump administration to crack down on cartel activities, focusing on remittance companies. The report highlighted stricter mandatory reporting limits, which have been reduced from $10,000 to $200 in certain areas, and Secretary of State Marco Rubio's actions to limit remittances to Cuba.

Slower Growth: The remittance industry's growth has slowed from a 25.9% growth rate in 2021 to 2.3% in 2024, according to Hunterbrook. The report also pointed to Western Union's recently lowered guidance for the first quarter of 2025 due to “anxiety in the marketplace post-election" and comments from the CEO regarding a “slowdown in our Latin America business."

WU, RELY Price Action: According to data from Benzinga Pro, Western Union shares were up 1.57% at $10.71 and Remitly Global shares were up 0.1% at $19.79 amid a broad market rally on Friday.

Read Next: