TBO.com - TBO is Tampa Bay Online

Western Union Has Hold On Transferring Remittances

ADVERTISEMENT

By JASON DePARLE, The New York Times

Published: November 23, 2007

WASHINGTON - 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 around 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 Rep. Tom Tancredo, R-Colo., 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 around the world.

Last year, migrants from poor countries sent home $300 billion, more than 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 U.S. immigration debates and a target of contrasting attacks.

Its unparalleled reach gives millions of migrants a safe way to transmit money, and may 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.

It Tracks And Pursues
Western Union tracks migrants so closely that it has made pitches to illegal immigrants just released from detention camps.

After settling a lawsuit that accused it of hiding large fees, Western Union set out to recast its image, portraying itself as the migrants' trusted friend.

Over the past four years, it has spent more than $1 billion on marketing, 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 remain wary, 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. "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.

Instructions On Transfers

The Philippines requires each outbound migrant to attend a predeparture seminar. Western Union, for an extra fee, gets something even more valuable than yellow walls: a chance to offer instructions on sending money home.

The sessions are conducted with "the basic idea of seeking out Western Union when they go abroad," said Steve Peregrino, the company's marketing director in the Philippines. In and around the waiting room, reviews are positive.

Ernald Vincent Mendoza, a restaurant supervisor in Saudi Arabia, dismissed the argument that the company's pricing took advantage of 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.

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 Hollywood film, both called "Western Union." Airmail and faxes left telegrams obsolete, and the company went bankrupt in 1992.

It emerged two years later as a money transfer company - it had been sending cash since 1871 - 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.
Western Union boasts of 320,000 locations worldwide. Many agents are large organizations, such as the Chinese postal system or grocery store chains. About 60 percent of Western Union's transfers occur outside the United States.

A 2006 survey by the Inter-American Development Bank found that illegal immigrants made up about 40 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.
Western Union sponsored a lunch there, dispensing T-shirts, bandannas and fliers in Spanish with the company's toll-free telephone number.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT