Free Money
In January, Western Union quietly discontinued its 155-year-old telegram service. The decision hardly came as a surprise. The number of telegrams sent per year peaked in 1929, at 200 million, and had fallen nearly 100 percent since then. In 2005, the company sent just 20,000 messages. In an era of text messaging and e-mail, Western ...
In January, Western Union quietly discontinued its 155-year-old telegram service. The decision hardly came as a surprise. The number of telegrams sent per year peaked in 1929, at 200 million, and had fallen nearly 100 percent since then. In 2005, the company sent just 20,000 messages.
In January, Western Union quietly discontinued its 155-year-old telegram service. The decision hardly came as a surprise. The number of telegrams sent per year peaked in 1929, at 200 million, and had fallen nearly 100 percent since then. In 2005, the company sent just 20,000 messages.
In an era of text messaging and e-mail, Western Union is banking its future on international money transfers — remittances — sent by migrant workers. On the face of it, that makes sense. The remittance market is worth about $300 billion per year and the number of immigrants worldwide is expected to grow from around 183 million this year to 283 million in 2050.
Robust markets, however, can produce some surprises. What makes Western Union vulnerable to such surprises, experts say, are the fees it charges customers, at least 6 percent of the remittance amount. "As people see just how much money is in remittances, there’s going to be a lot more competition," says Ethan Zuckerman, a fellow at the Berkman Center for Internet & Society at Harvard Law School.
Much of that competition will likely come from alternative online methods of moving cash. Case in point: the in-kind remittance, pioneered by grocery companies such as Kenya’s Mama Mike’s and Jamaica’s Super Plus Foods. Both allow money-earners living in America or elsewhere to log onto their Web sites and purchase grocery vouchers for family members back home. There is no fee for the transaction; the groceries are simply paid for in advance. Which means technologies like these may soon make expensive money transfers seem as outdated as the telegram.
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