Western Union Profit Down 27% In Online War

Money transfer network Western Union has seen a 27% plunge in quarterly profit as it struggles to fend off online rivals.

The world's largest money-transfer company reported the decline after cutting prices and spending more on its online business.

Revenue fell 3% to $1.38bn (£900m) in the second quarter as the company earned less from remittances, by far the largest part of its business.

Western Union has been cutting prices to beat smaller rival MoneyGram International and investing heavily in its online and mobile business to compete with Boom Financial and Xoom.

Expatriat workers from emerging nations often send remittances back home

"(The) company has made a series of pricing investments to recapture market share," Macquarie Research analyst Kevin McVeigh said.

Net income fell to $198.6m (£130m) in the quarter ended June 30 from $271.2m (£176m), a year earlier.

Overall remittances worldwide rose 5.3% to $401bn (£260bn) in 2012.

Remittance flows are a key financial flow for expatriate workers from emerging nations.

The method is used as senders and recipients do not always have access to the internet or bank accounts.

A Western Union outpost in a Sri Lankan camp for ethnic Tamils

According to the World Bank, remittances are expected to grow at an average annual rate of 8.8% to reach about $515bn (£336bn) in 2015.

Colorado-based Western Union's transaction volumes rose 3% to more than 60 million in the three months - more than 27,000 an hour - although transaction fees fell 4% to $1.01bn (£650m).

Total expenses for Western Union rose 3% to $1.10bn.

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