Western Union Now Sees Itself Replacing C.O.D
Kuykendall, Lavonne, American Banker
Western Union Financial Services Inc. is pitching money transfers as a way for consumers to pay for retail goods and services, not just to send money to each other.
The First Data Corp. subsidiary has a network of 45,000 U.S. payment agents, through which millions of consumers pay utility bills and send money to recipients in foreign countries. But Joe Jackson, its president of commercial services, envisions credit-stressed consumers using the agent network to buy things like airline tickets and merchandise.
"We think this is a big category, but we don't know how big yet," Mr. Jackson said in an interview last week.
So far Western Union has signed up Continental Airlines, AeroMexico, and Eastbay, a catalogue and Web sportswear retailer owned by Foot Locker Inc., as part of its cash payments initiative. It sees the catalogue and airline ticket businesses as rich markets for Western Union to find customers who may not have checking accounts or credit cards.
The potential market would overlap with cash-on-delivery, also known as C.O.D., transactions -- a category that can be unfriendly to merchants, Mr. Jackson said. Retailers would benefit from using Western Union instead, since the payments are more reliable, he said.
Statistics about C.O.D.-type transactions are largely unavailable, Mr. Jackson said, but he has heard anecdotally that up to 40% of such orders are refused at the customer's door. "A significant portion of C.O.D. orders never materialize." As an alternative, "we can stage a transaction over the phone and facilitate customers going to Western
Union to make a payment in cash."
Retailers like the service, because they get their money faster and do not waste money shipping items that are refused, he said. "There is a value to the company doing the shipping to say, 'Here is another option: You can go to Western Union. …