Western Union Empire Moves Migrant Cash Home
WASHINGTON, Nov. 21 — To glimpse how migration is changing the world, consider Western Union, a fixture of American lore that went bankrupt selling telegrams at the dawn of the Internet age but now earns nearly $1 billion a year helping poor migrants across the globe send money home.
Migration is so central to Western Union that forecasts of border movements drive the company’s stock. Its researchers outpace the Census Bureau in tracking migrant locations. Long synonymous with Morse code, the company now advertises in Tagalog and Twi and runs promotions for holidays as obscure as Phagwa and Fiji Day. Its executives hail migrants as “heroes” and once tried to oust a congressman because of his push for tougher immigration laws.
“Global migration is the cornerstone of how we’ve grown,” said Christina A. Gold, Western Union’s chief executive.
With five times as many locations worldwide as McDonald’s, Starbucks, Burger King and Wal-Mart combined, Western Union is the lone behemoth among hundreds of money transfer companies. Little noticed by the public and seldom studied by scholars, these businesses form the infrastructure of global migration, a force remaking economics, politics and cultures across the world.
Last year migrants from poor countries sent home $300 billion, nearly three times the world’s foreign aid budgets combined.
Western Union’s dominance of the industry casts it in a host of unlikely new roles: as a force in development economics, a player in American immigration debates and a target of contrasting attacks.
Its unparalleled reach gives millions of migrants a safe way to transmit money, and may even increase the amounts sent. But critics have long complained about its fees, which can run from about 4 percent to 20 percent or more. And the company’s lobbying for immigrant-friendly laws has raised the ire of people who say it profits from, or even promotes, illegal immigration.
Western Union tracks migrants so closely that it has made pitches to illegal immigrants just released from detention camps. Its agent in Panama offered customers legal aid to keep them from being deported.
After settling a damaging lawsuit that accused it of hiding large fees, Western Union set out a few years ago to recast its image, portraying itself as the migrants’ trusted friend. It has spent more than $1 billion on marketing over the past four years, selectively cut prices and charged into American politics, donating to immigrants’ rights groups and advocating a path to legalization for illegal immigrants.
While some migrant groups still complain of predatory pricing, the company has won unlikely praise.
“Western Union has become a company that values and protects its customers,” said Matthew J. Piers, the Chicago lawyer who sued the company over its fees. “Nobody was more surprised at the change than me, because I was Western Union critic Numero Uno.”
Western Union’s zealous pursuit of migrants can be seen in a government office in Manila, where a half million Filipinos a year wait to have their papers processed before leaving for overseas jobs. Everything in the waiting room is labeled “Western Union”: the backs of the chairs, the tops of the desks, the bottom of the queue sign and the front of the menu in the adjacent cafeteria. The walls are even painted Western Union yellow.
The Philippines requires each outbound migrant to attend a predeparture seminar. Western Union paid to offer migrants instructions on sending money home. “We tell them about the services of Western Union,” said Steve Peregrino, the marketing director in the Philippines, “with the basic idea of seeking out Western Union when they go abroad.” In and around the waiting room, reviews are positive.
Ernald Vincent Mendoza, a restaurant supervisor in Saudi Arabia, dismissed his wife’s argument that the company’s pricing hurt the poor. Though banks are cheaper, the money can take a week to arrive, he said, while Western Union sends it instantly. “If they have good quality and service, you have to pay for that,” he said.
Emmanuel Ellorian, a waiter in Dubai, said Western Union agents came to the hotel where he worked and processed the transfers there. “If any of the Filipino clubs have an event,” he said, “one of the sponsors is Western Union.”
A Telegraph Giant Evolves
Western Union’s founders set out in 1851 to build the first telegraph giant. A decade later, they had linked the coasts, a feat celebrated in a Zane Grey novel and a Hollywood film, both called “Western Union.” Airmail and faxes left telegrams obsolete, and the company went bankrupt in 1992.
It emerged two years later with a focus on its money transfer service and was acquired in 1995 by the Colorado corporation First Data. Flush times followed. Fueled by the surge in migration, international money transfers were growing by 20 percent a year.
In 1998, Mr. Piers sued the company, alleging that Western Union and a rival, MoneyGram, deceived customers with advertisements like “Send $300 to Mexico for $15,” since the companies typically made much more (in this case an additional $25) by setting foreign exchange rates to their advantage. While denying any wrongdoing, the companies paid millions to settle the case.
Western Union appeared “money oriented” and “cold,” warned an internal marketing document that called for a more empathetic image. The goal, as one plan put it, was to capture a “share of mind” and a “share of heart” to preserve a “share of wallet.”
Having once stressed efficiency (“the fastest way to send money”), Western Union now emphasizes the devotion the money represents. One poster pairs a Filipino nurse in London with her daughter back home in cap and gown, making Western Union an implicit partner in the family’s achievements. “Sending so much more than money” is a common tag line.
The company sponsors hundreds of ethnic festivals, concerts and sporting events, from cricket matches for Indians in Dubai to sack races for Jamaicans in Queens. Last year it paid a Filipino pop star, Jim Paredes, to record a Tagalog song urging migrants to send money home. It paid the producers of a Bollywood film, “Namastey London,” for a scene in which a Western Union wire transfer helps rescue the heroine.
The Western Union agent in Panama played the rescuer’s role himself. With many of his customers illegal immigrants — mostly from Colombia — he put three lawyers on retainer and started a radio show. The lawyers answered callers’ questions and scheduled free appointments to get them legalized.
“Every time an immigrant is forced outside the country, we lose a potential customer,” said the agent, Jaime Lacayo, who provided the legal services for two years and still runs the radio show. “We have participated in many marriages of foreigners marrying Panamanian ladies, because that is the best way to legalize your status.”
A Global Operation
Western Union boasts of 320,000 locations worldwide. Many agents are large organizations, like the Chinese postal system or grocery store chains. (About 60 percent of Western Union’s person-to-person transfers occur wholly outside the United States.) But companies also battle block by block for trusted local figures.
Among them is Michael Lee, 35, who owns an electronics store called World Top Communications in New York’s Chinatown. Sharing a building with a “lupus and tumor consultant,” on a block of East Broadway that smells of dried shrimp, he was told by Western Union to expect a few hundred transactions a month.
He now does 100,000 a year, he said. Mr. Lee, who earns about $2.50 per transaction, is so enthusiastic he persuaded his landlord to paint the building yellow, and the company donated $16,000 worth of paint.
Many of his customers are in the country illegally. Mr. Lee, who was once an illegal immigrant, said his business fell by about 40 percent last spring after a series of nationwide immigration raids. “A lot of people don’t have green cards — they are afraid,” he said.
Salo Eduardo Levy, Western Union’s Mexico director, echoed that theme at a September meeting of industry executives. “We have customers calling agents before they go: ‘Is it safe? Is La Migra around?’”
A 2006 survey by the Inter-American Development Bank found that illegal immigrants made up 41 percent of the Latin Americans in the United States who used money transfer companies.
Western Union says it does not know what share of its customers are illegal immigrants, but at times it has made pitches directly to them. As Central Americans surged across the Texas border in 1999, an overflowing federal detention center bused them to a homeless shelter in Brownsville, the Ozanam Center. Western Union sponsored a lunch there, dispensing T-shirts, bandannas and fliers in Spanish with the company’s toll-free telephone number.
Western Union also held marketing events around the same time for people deported from the United States to Honduras and El Salvador.
“They would arrive in a special holding area, and we would have an agent in there — a young lady in tight jeans, tight T-shirt” to promote Western Union products, said a former company official who spoke only on the condition of anonymity. “We knew that within a week they would be back on their way to the U.S.”
Fred Niehaus, a company vice president, said, “I can tell you that’s something the company would not do now.”
Immigration and Politics
Western Union’s views on immigration have brought conflicts with Tom Tancredo, the Republican congressman who represents the Denver suburb where the company has its headquarters, Three years ago, when Mr. Tancredo, a fierce critic of illegal immigration, proposed taxing the money that migrants send, First Data formed a political action committee to drive him from office.
“We’re tired of his antics,” Mr. Niehaus told The Rocky Mountain News. “We’re opting for change.”
After winning re-election, Mr. Tancredo attacked Western Union for co-sponsoring a Spanish guide that he said promoted illegal immigration. The guide said that schools and clinics would not check migrants’ papers and advised them to “always carry the name and number of an attorney.”
Mr. Tancredo, who is running for president, said the company’s activities occupied “a gray area” between aggressive marketing and “aiding and abetting illegal immigration.”
“Western Union wants to encourage illegal immigration in order to expand the number of people in their market,” he said. “Believe me, if I were president, I would ask the Justice Department to look into it.”
In 2004, Charles T. Fote, then First Data’s chairman, gave a speech calling for “comprehensive” reform, a term used by supporters of legalization plans for illegal immigrants.
The company sponsored public forums to promote the idea and donated $100,000 to a group unsuccessfully fighting Proposition 200 in Arizona, which requires proof of citizenship from people seeking to vote or collect certain public benefits.
As the debate moved to Washington, Western Union gave money to many groups supporting legalization plans. The United States Chamber of Commerce received “in the high six figures,” a Chamber official said, while an Illinois group used some Western Union money to bring busloads of immigrants to Capitol Hill. When a bipartisan Senate bill emerged last spring, company officials flew to Washington to lobby directly, urging Senator Ken Salazar, a Colorado Democrat, to support the measure. He did, though it ultimately failed.
“Most companies are afraid to speak up,” said Frank Sharry, executive director of the National Immigration Forum, which has received $40,000 from Western Union in the past three years. “When it got hot, they stayed with it.”
But proponents of stricter border controls see commerce, not courage, at play. “Western Union has decided that its business model depends on a continuing flow of illegal immigrants,” said Mark Krikorian, director of the Center for Immigration Studies, which advocates low levels of immigration.
Western Union’s latest battle is with the Arizona attorney general, Terry Goddard, who in 2004 began seizing money transfers into Arizona that he suspected were meant to pay human smugglers. The effort led to hundreds of arrests but also froze legitimate transfers and scared away customers, costing Western Union millions.
After two years of cooperation, the company resisted in court last year when Mr. Goddard, a Democrat, expanded his request to cover transfers from across the United States to Sonora, Mexico. In September, an Arizona court ruled for Western Union.
The company’s resistance won plaudits from migrant groups but left Mr. Goddard angry. The company is “protecting an illegal enterprise in human smuggling,” he said. “It’s outrageous.”
The company spun off from First Data a year ago, and it has an estimated global market share of 14 percent, versus 3 percent for its closest competitor, MoneyGram. Though Western Union has responded to increased competition by cutting its charges, it typically remains the most expensive service.
An Oakland group, the Transnational Institute for Grassroots Research and Action, began a boycott campaign in September, demanding that Western Union lower its prices and increase its corporate giving. But it has gained little traction, in part because of the company’s recent courtship of migrant groups.
One critic who now gives Western Union grudging credit is Donald F. Terry, an official at the Inter-American Development Bank. He has spent years trying to get more migrants to use banks, so they could establish financial histories and qualify for loans.
But banks have not fully welcomed migrants, he said, while Western Union and other money transfer companies have more locations, better hours and agents who know their customers’ language and culture.
“You could say they were ripping people off, or you could also say they’re providing a service that poor people desperately needed and were willing to pay for,” Mr. Terry said. “Any consumer company in the world would like to have the customer loyalty they have. They’re doing something right.”
46 Kommentare:
Interesting. Western Union IS indeed widespread all over the country. However, in my family, we've never used this.
My sister, who works in New York, remits her money either through BPI or through depositing in my mother's HSBC account (which is an international account). I think the transmittal charges come out cheaper if you course it through banks.
This brings me back to my first real job in the Philippines. I was a new accounts clerk for Equitable PCI Bank and I processed international remittances. : ) There are a lot of interesting stories to tell about balikbayans and their remittances but bank secrecy prevents me from sharing my anecdotes. Hehe.
Ah, thanks for sharing this. You'll be my next top as expert on remittances, Janjan. My friends and I here have this- still vague- idea of doing some reseach on this. Can you help us out when this project will materialize?
I'll try... it's been 6 years since I did that work. But will help you guys any way I can. :)
Thanks, Jan! Can you PM me your e-mail addy?
Western Union is all over India and seems to have been as long as Zahoor remembers. I flatly refuse to have anything at all to do with a company that charges a percentage. A fee is fair, but the work is the same whether I send 100 or 10000 euro. Dixi!
On one hand, that's true, Ulla. On the other, however, the weight of responsibility of transmitting 100 Euros is different to that of, say, 100,000 Euros! That said, this coming company is raking a hell lot of money from hard earned dollars of migrant workers from India to Mexico.
Maybe its really time to think about putting up a globalized migrant bank.
Ambisyoso?, if we can start piece by piece how?.. can be.
well, some of our friends are toying with that idea, Tina! Wish them luck!
I'm convinced that banks who charge a fee have already included their expenses for insurance or whatever they need in it. Don't give me that greedy-company crap.
:-) Oooops, you're probably right, Ulla! But how did I find myself defending Western Union? Well, I find in general that principle okey. It's the same with paying taxes. The more you have the more you should pay tax. And that's fair. Isn't it?
My brother in London does not use Western Union in sending money home. His reason is convenience since he maintains a Pound account in BPI and transfers some to our BPI account in the Phils..
My sister in Sri Lanka tried sending money to her kids through Western Union, but the fee is really high.. But because of the civil war and other economic restrictions there, sending money through WU has become very very difficult.
You know I still have to check how WU is charging here in Germany. I never saw any of their office in my area. Maybe they're in big cities like Frankfurt, Berlin or Hamburg. Many Filipinas I met here transfer their money through a Land Bank affiliate. And the charge is 6 Euros per transaction- more or less the same amount what WU charges based on this NYT article.
It's not the same. Taxes are used for the benefit of society, i.e. the tax payers themselves. At the very least, you'll benefit potentially - you don't know whether you'll one day need welfare or psychiatric treatment. The percentage demanded by Western Union goes into already stinkingly rich share-holders' pockets.
Besides, you don't necessarily have more because you send more - but it's likely that you send more because the receiver has less. So, as long as there are poor people in the third world, rich people will shovel in money at their expense. Fair?
I agree with your point here. But I'm wondering why people still patronize them if they are that expensive. Like what Danny below is saying there are banks which are as reliable as WU. And cheaper too...
i did one time in Postbank/post office. The lowest charge is €20.
Some Pinays choose Reisen Centrum in Train Stations, charging €10 the least.Ive never tried this. Actually its noticeable dev. before they just money changer for travellers. now you can make even payments for abroad through them.,
PNB and PCI have thight rules( alot of paper works) before transacting to them, ahh well its apart of German beurocracy.And its taking days before the money is transferred.
Because the receiver hasn't got a bank account? And trying to get one results in harassment because the person is poor, ignorant, and perhaps illiterate? Could be some of the reasons in India.
Secondly, WU is used by tourists who need a little extra money - they obviously don't have bank accounts in the country they visit. And things used by Westerners are good, right?
Although I have a dollar account with BPI, I did not transfer any funds for our nephew going to college. Recently we started using WU because it is convenient. I was just thinking recently that we just pay everything in full and forget about fees altogether. I'm not sure if my wife would go along with that. She probably has reasons to do it piece meal by piece meal.
its not true that our own homegrown banks are not making money off overseas workers. in fact, they do and they rake lots of profits through high charges. do you know that banks here have been growing at double digit rates in the last five years?! talking about "local" banks squeezing money off the blood and tears of pinoy expats.
so its good that other players are coming in the market and offering serious competition. in fact, the more players the better.
Who said they weren't? All banks make money - much more than they deserve. But when I transfer money through my Danish bank, it costs about 12 euro regardless of the amount. For the amount I usually have transferred, Western Union would, at their lowest percentage (4), charge me 60 euro. Five times more. To a Dane, that's simply immoral!
There was no WU in Denmark when I left; it probably wasn't allowed in because of this.
the only way you could check these high charges is through competition. and i guess, WU provides that competition and its fine with me. in fact, we should introduce more competition in the financial system if only to prevent possible "abuse." here where i am, one could now send money overseas through a text messages and i guess its one innovative service that should benefit overseas Filipinos.
Competition is not the ONLY way, Dave. Legislation is another, or a supplementary one. Like there are laws against usury.
you pay double to what I pay by bank transfer here in Germany, Ulla. I do my money transfer- like so many other Filipinas here I know of do it- through an affiliate of our government-owned Land bank. Be that as it may, I still find the 6 Euro it charges high, considering that our government is enormously benefitting from all these foreign transfers. And if WU is charging a much higher rate, no wonder I haven't seen any shadow of it here in our area (they're probably only operating in big cities like Frankfurt or Berlin). So, competition as what Dave says, in this particular example, seems working. To demand for a legislation to control bank charges for remittances is day dreaming, isn't it?
I haven't tried WU, so in what sense it is more convenient, Mark? I mean with Landbank I do the transfer per internet. I send the money online to the Landbank account here in Germany and they send the money to my mother's Landbank account in the Phils. for a flatrate fee of 6 Euro. I one day or two the money I send is already in my Mom's account.
This is very interesting, Ulla! And I wonder if this also applies in the Philippines. What's your opinion, Dave, Danny, and Janjan?
You try Landbank, Tina. My experience with them is good. Ok, I don't really send so much money to my family back home (only on sp. occasions like b-day and Xmas. Instead of sending Balikbayan boxes I send cash gifts!) like you. But other Filipinas here vouch for their reliability even for big sum of money for, say, building their houses there, etc.
I agree, Dave! For Filipinas I know here who can only afford a monthly 'padala' of 100 Euro to their family back home, a 6 Euro charge for every transaction is already very high. Okey, I know some here who have regular income do send money back home on a quarterly basis to save on charges. But still that's a hefty 24 Euro a year-- enough to buy more than a sack of rice back home!
I don't know about other countries but in the Philippines, a lot of poor people have savings accounts. This fact is encouraged when our law allows the opening of rural banks and thrift banks. In one particular rural bank here in Cebu, City Savings Bank, all you need to deposit is P100 and you can have your own ATM savings account. In American terms, that's the equivalent of opening a bank account with only 2 dollars as an opening balance.
The proliferation of WU in the Philippines, I believe, is primarily because of convenience (there's a WU branch available around every corner), good service (probably has a variety of transactions and services, not just money remittance), and because of the very Filipino trait of brand loyalty... or as we Cebuanos call it, "kay mao na may na andan."
It's the very same reason why there are still so many Filipinos that choose to file PAL even though there are so many better international airlines that offer so much better service and food for a much cheaper cost than PAL. But who do so many Filipinos stick to PAL? Because they're just used to the company.
Other companies with commendable online banking services: BPI, Equitable PCI (now owned by Banco de Oro of Henry Sy), Unionbank and Chinabank. My accountant friend who pays most of his bills online recommends Chinabank as having the best online services.
For those who are complaining about the paper work requirements of PCI, might I suggest that you avail of their Moneygram service? :) That's one of the tie-in products of PCI that I used to process and it has better service, and I believe, cheaper rates.
While it is good that Philippine banks operate in major cities where OFWs abound (Metrobank, BPI, PNB..) it is also a hard truth that many recipients back home have no accounts to withdraw the remitted funds, hence agencies like WU are the best option. For a while, this may sound okay, but in the long run, it won't, because Ulla is right, the owners become richer while the hapless OFW's and its recipients are robbed of precious currencies.. But I would not deny the fact that agencies like WU do help. There are more equitable options, however, like the Smart Padala or the Globe feature, as Dave said.... This would work and it is cheaper and waaaay faster. And these are Philippine companies, ergo, they pay taxes here. The downside is the security - since the recipient has to have the phone and the text message bearing the details of the padala. If the phone gets lost, then the sender sends it to another phone unless the one who stole the previous phone hasn't produced the necessary IDs yet to go along with the info on the stolen phone.. And then someone said, a Cooperative bank co-owned by OFWs is actually not a bad idea. But it would be difficult to establish and would take long to gestate and for its services to be brought offshore..
Aha, you just gave me an idea, Janjan! It is true that openning a bank account is not complicated in the Philippines. But how about the OFW host countries. I remember how Banks here in Germany asked me a hell lot of requirements before I could open an account with them. And that was even before 9/11. It could be true to other countries as well. If that's the case, then WU is, indeed, for many of those who doesn't have access to Banks is the only option available, no matter how high their charge maybe.
Well things have a way of evening out. Whatever laxity in bureaucratic red tape Filipino private firms possess, the Filipino government makes up for in SPADES.
But that's another topic and thread altogether. : )
As Janjan pointed out, Danny, it is probably not the case. Isn't it so that the POEA makes the opening of a bank account one of the requirments for our OFW's?
Hahahaha.... yes, we're talking serious business here, Janjan :-)
I meant some of the OFWs' families in the Philippines have no bank accounts. I don't know about the others but it was not required for my brother. (Maybe because he knew all of us had accounts na.) He was sending his remittance to my EPCIB account from his local (diff) bank in London, which was costly. Then he learned that BPI had a better offer (and their tellers are nice and polite and a branch was near his home), so he opened a BPI account and he let us open BPI accounts here in the Philippines..
Actually, I think Danny makes a very valid point. I was thinking more along the lines of the urban poor, who have access to a lot of banking facilities.
The rural poor have different problems altogether... the big banks are uncommon in the far-flung areas. True, they have access to rural banks and thrift banks, but these do not have the same complicated banking facilities that most big banks have... ATM's would be unheard of there, how much more for international remittances.
But Western Union is easier to access, however.
Same thing for my sister in New York. As an alternative, there's also Hongkong Shanghai Bank (HSBC), which you can find around the world, with (I think) reasonable financing charges. Citibank has the same global presence as HSBC, however it tends to discriminate towards the privileged and wealthy with its humongous maintaining balances.
Yes, that's true! Hmmm, I'm learning a lot from you, buddies. But got to go now and cook lunch for the kiddies :-)
Of course they become rich,,,they charge too much money!! I never use Western Union, regular bank is better,,,or you know what,,Paypal is great to me!!!
What's Paypal, Naomy?
I believe that, but I can't use some Indian facility even if there is one - which I strongly doubt. And I don't live in Europe where I could check things out. Well, never mind that.
When you have a 6 euro option, there's so much less reason for supporting WU in any way.
I don't think legislation for bank fees is day dreaming. If you buy half a kilo tea in India, the box has printed on it: "maximum retail price: xx rupees". If the vendor try to charge more, we can report him to the police. That's legislation regulating prices on many daily goods. So why not bank fees?
Oy, Maybank has a branch here in Cebu! :) Better check.. they might also have a branch in Leyte, which will mean it'll be cheaper for you to send money there.
hahahaha the last time i was in leyte (north part) was march 2007 and so far, no sign of maybank. maybe in the future. it's the national bank of malaysia, and i am using its online banking facility all the time for many transactions.
thanks, Greg! you people let me think beyond the 'box' I'm used to.
What Greg says is the same in India. Inside the country, money is usually sent by "money order", which is a postal service. Say the husband works in Delhi and the wife lives in a village in Bihar. She can go to the local post office and get her money even without ID (although she'll have some kind of marriage document); she only needs someone to witness her identity as the sender's wife. But she'd never get a bank account.
I just recently used WU to send money back home to my other bros and sister all over..well yeah its quite convenient although its also expensive. I usually send $300 every month and i pay $16 everytime i send if you go over $500 the fee goes higher..like $22 i think..am not sure the exact amount but its really expensive..for me i have no choice since the filipino courier that i used to go to is very far from me..WU otherwise is practically every corner where i work, thats why i send it to them.
I do use WU .if you really take a look at it--the charges are high. But still most common people use the services because it's very accessible.There are lots of branches even in a very remote town elsewhere.Holidays, weekends --they are open.receiver can get the money so quickly provided you have the transaction number and 2 valid id's. handphones also played great role for this. You just text the transaction number to the receiver once you're done with the transaction.
I Also use landbank but during holidays and weekends--WU or LBC can be a great help.
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