Western Union: Banking & Finance for the Poor

Banks make money by lending out the money that you deposit. The more cash you put in, the better you’re treated - transactions take priority, fees get waived, interest rates are higher, and a personal banker is assigned. On the flip side, the less money in your account, the more fees you pay, and the further back in the line you start from.

Banks chase affluent accounts who bring large balances and high cash flow. But it’s not just banks - every business aims for as many high spenders and wealthy as possible. Yet there are 2 companies - Western Union and MoneyGram, that have gone in the opposite direction in providing financial services in peer-to-peer money transfer (international & domestic) to a population that banks deem to be too poor and too low-value.

Migrant workers and the poor are left out of the global financial system for similar reasons: they have too little money, their employment is volatile, their earnings are inconsistent, there are significant language and cultural barriers, they lack documentation, etc. In this episode, we’ll cover the business of Western Union and MoneyGram, how these companies drive economic growth in developing countries, and how the market is pushing their evolution into a bank for the poor.

0:00 Sending Money for Better
7:49 Distributed Systems
19:54 Banking the Unbanked

[Mr--_--M]

Western Union: The official payment service of the diaspora

[methos-eynf]

As somebody who’s never used Western Union this was all fascinating!

[elevul]

I have to admit, the idea of transforming into a global financial "bank" is genius. I would love to have an account that I can use anywhere in the world to pay or deposit money on without the complications of potentially not having a local address. And I know MANY students studying abroad who've had issues with opening a local account would also be very happy having this as an option.

[JuanDavid-kexq]

Born and raised in a Texas/Mexico border town. These money transfer businesses are all over the place like every convenience store. In the town I went to college I would go to a laundry-mate and there was one there too built into the space. That was freaking genius because people would do their laundry and use the western union to transfer money or vice versa. It does add another revenue stream and customer traffic to that store location.

[mrivera]

For a second I thought this is a Western Union ad. I was both shocked and impressed that they'd say the quiet part out loud

[matthewwynne]

I used to work with this guy from El Salvador, and after he quit and I was cleaning out his desk I came across a thick stack of Western Union receipts.

[LeMassiveNoob]

I remember when my mother and I would go to the local Western Union in our town to get money from our dad. She had a brain hemorrhage while we were visiting our home country. This made our already difficult financial situation close to dire. I highly doubt that we would have even lived there two more months without those transfers. And I am thankful that WU gave my dad the opportunity to help us.

[YESITSWILL]

Where I live non-citizens can only withdraw a max of $250 from an ATM, and the fee is $7.50/transaction. Since I usually withdraw $1, 000 it would cost $30 in fees. With WU it only costs a total of $4.

[nicholasdove]

I absolutely LOVED this video! I always wondered why services like Western Union still exist considering companies such as Wise or Remitly offer significantly less expensive services. Knowing now that the purpose of cash to cash transfers are the driving force for WU to continue to charge such fees for the low-income nomads around the world makes so much sense. I absolutely don't agree with their exploitative practice of high fees since their main consumers are poorer migrant workers, but the option for them to have such a service available due to their receiving countries lack of high quality infrastructure is admirable. Such a difficult topic due to the huge difference in countries' economies and diaspora. Thank you for the video 👍

[miteshwaghela]

Sometimes Indians don't realise how zero minimum balance free bank account has not only changed the way we deal with transactions but also how much that helps the economy and brings millions n millions of people in the banking system and part of the economy.

[amp]

The fact that you can have a savings account and be able to wire to anybody in almost anywhere in the world, as long as it has a WU account, is a very compelling reason to have an account with them from a convenience standpoint. Specially if it doesn't charge you any fees for it

[AmabossReally]

Even I, that comes from a wealthy family in Africa, and studies in the U.S - we still use WU. It’s just so much more easier and faster than doing a SWIFT transaction that might take days to hit my account

[Azryu]

As you said, it's interesting to see a company I thought was not too unlike payday loans in my mind actually turn out to be what is likely an important tool for a lot of folks. Cool to see how the business might be switching away from hitting the customer hard with fees to being more central in their experience + recouping the lost fees by providing more value over the long term

[disunityholychaos]

I still remember when I was 11 years old excited from receiving the transferred money of my single father working abroad in the middle east (we are from the philippines and he may be working in saudi or quatar as a aircraft mechanic) and learning my first time entering a bank and the friendly clerk lady. I forgot which memory whether I did some writing some form other than giving my student ID and seeing how the cash is easily handed out once the amount requested that I showed is handed out, gave me a special memory... but moving in the US 9 years ago seeing no nearby WU other than my surprise 1 week ago when I gone to some small brand grocery market store or is it rite aid? (Ok I found it, it was inside a Safeway store) had a Western Union counter. its rare like a blast in the past for me while back in my homecountry was common in every side of the city street

[propergander]

I had to use Western union once while on an exchange program in New Zealand when I was 16. The ATM swallowed my card so my family had to send me money since replacing the card would take a while.
The host family thought the amount of cash in the house would be excessive, so they made me open an NZ bank account.
So yeah, I probably still have an NZ bank account that has like 2 or 3 NZ-dollars in it 😂

[immortan-valkyrie]

The way my in-laws gasped when I explained that didn't need to go to the grocery store anymore to send money to Cuba lol showed them the online wiring option, they were so grateful. Also, I always my Haitian neighbors line up on Fridays to cash out their paychecks and run to send funds home to family.

[kyler]

I've never clicked so fast! As a Filipino, this has always been extremely interesting to me!

[TheTurtlesrockz]

As a kid with immigrant parents, western union was almost a weekly visit sending money back home, crazy how time flies

[AgneyaKulkarni]

It will be very interesting to see how WU's digital banking venture pans out, would be nice to see a follow up video in a couple months reviewing this. Overall, very clear video on WU's business model. Thanks for providing such high quality content!

[kenc]

We use Western Union about once or twice most months. The wife has extended family who live overseas, and Western Union has outlets in most villages (and certainly in the larger towns and cities). In many parts of southeast Asia, Western Union can be accessed at the local government Post Office.