The Western Union Co. WU has tied up with Linxo, a fintech company of France. The partnership will allow the latter to use the vast cross-border money transfer solution of the former to make payments locally or across the globe.
Linxo Group compiles information from financial data of customers stored in different accounts, which are then used for developing new products and services. The entity is also involved in payment initiation and personal finance management solutions.
The fintech player provides all the technologies needed to access bank data and initiate payments. The accumulated data is accessed only on customers’ approval and dealt with full security.
The recent deal with Linxo shows that Western Union is trying to monetize its vast cross-border payments interface by allowing it to be used as plug and play by the fintech entities.
Fintech organizations gain from this service as it allows them to offer their customers seamless, convenient, reliable and fast international money-transfer capabilities. Fintech companies’ customers can fund the transfers by withdrawing money from their linked bank accounts, wallets or cards. Recipients can collect funds from bank accounts, digital wallets, cards and more than half a million retail locations of Western Union.
The company has been serving its own branded customers through decades of innovation in technology. It is now offering this functionality under its Digital Partner technology solution. Through the same service, its cross-border payments interface is provided as a white-label arrangement, aimed at expanding the beyond-border connections for the broader financial sector.
This arrangement is a win-win situation for both Western Union and the fintech players. For the former, it creates a new revenue stream and incremental customers while for the latter, it breeds an inexpensive opportunity to scale up services for the clients.
The company envisions that opening its cross-border platform and global financial network to third parties will help it evolve into a diversified payments company.
Western Union literally defied the adage ‘Old habits die hard’ by demonstrating its ability to adopt digital changes despite having a long history of operating from its brick-and-mortar stores. This strategic move became imperative when other payment players like PayPal Holdings, Inc. PYPL and Square, Inc. SQ started elbowing the company in the same space.
As a result of this survival strategy, Western Union developed a broad fintech platform that helped it withstand the uncertainties stemming from the 2020 pandemic.
The company’s online business is raking in moolah fast. Overall, its digital money transfer revenues grew 38% in 2020, surpassing $850 million. For 2021, the company is looking to become a $1-billion worth digital business.
The currently Zacks Rank #3 (Hold) stock to keep in your portfolio owing to its clear growth trajectory and a consistent dividend track record. The company has hiked its dividend per share payment over time and should sustain the trend ahead, backed by its favorable cash flows.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Year to date, the stock has gained 7.2% compared with its industry’s growth of 0.9%. Another company in the same space is MoneyGram International Inc. MGI, which has surged 86.3% in the same time frame.
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MoneyGram International Inc. (MGI): Free Stock Analysis Report
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