Western Union plans to broaden its mix of products in the Gulf as the US payment services company seeks a return to the "explosive" growth in the region that was present before the global financial crisis, its president and chief executive said. Expansion in the region would also depend on what happened in countries such as Qatar as well as the traditional growth engines of Dubai and Abu Dhabi, said Christina Gold.
"It's a region that has been growing pretty dramatically over the last decade, particularly from 2004 or so on. We've seen explosive growth," said Mrs Gold. Western Union's expansion, built around foreign labour capitals such as Dubai, started to slow last year from the high double-digit levels as the global financial crisis struck the region, with the UAE hard hit by the turmoil. Money transfers in the region declined due to a wave of redundancies and pay freezes. Workers within the Gulf's property sector suffered especially as a drop in construction projects meant there was less demand for low-skilled migrant labour, which accounts for a large percentage of those who use money transfer services.
With activity remaining sluggish in the construction sector, money transfer transactions from foreign breadwinners are expected to finish the year at a similar level to last year. Western Union experienced a moderate decline in transactions in the Gulf states in the second quarter of the year. India, Pakistan, the Philippines and Bangladesh are among the biggest destinations for remittances from the Gulf.
Outward flows are viewed as a crucial economic cushion to developing countries as official aid from western governments has been reduced in the wake of the financial crisis. The company often experiences a rise in remittance flows after natural disasters. Most recently it decided to waive transfer fees for Pakistani workers in Gulf states such as the UAE, Qatar, Bahrain, Kuwait and Oman, as well as the US and UK, sending money home to support families and friends affected by the floods in the country.
Mrs Gold has overseen the expansion of the company's global footprint into about 200 countries, with a global market share of 17 or 18 per cent. A decade ago 70 per cent of the company's business was in the US, with the international operations accounting for 30 per cent. Now, the international segment has grown to 70 per cent of the business. Mrs Gold is touring the region ahead of her retirement next month after four years in charge of the Colorado-based company.
Western Union has signed deals with the telecommunications operators Maxis in Malaysia, Vodafone and Kenya's Safaricom to enable customers to use mobile phone transactions in 50,000 locations by the end of the year. Last year it acquired Custom House, based in Canada, a provider of business-to-business international payment services for small and medium enterprises. "These services will come to the Middle East in due course," said Mrs Gold.
Nonetheless, physical transactions still represent by far the largest part of its business ahead of bank account, online and mobile phone transactions, which collectively account for only 2 per cent of its business. "Cash is cash and that's how the bulk of people want to transact," she said. tarnold@thenational.ae