Something In the Water? Western Union and Travelex Ensure The (Corporate) Marriage Season Continues
6 July 2011
Is it something in the water? It's been an incredible few weeks for corporate marriages. From Fundtech and S1 to Fiserv and CashEdge, from Visa and Fundamo to now Western Union and Travelex Global Business Payments. An estimated $24bn B2B cross-border payments market is growing rapidly, driven by both the demand side, such as growth in international trade, and also by the supply side. In the past, small-to-medium-sized businesses (SMEs) had to rely mostly on their local banks to execute international payments - often, a slow and costly proposition. However, over the last few years companies such as Western Union, Travelex, Earthport and others started offering a viable cheaper and quicker alternative. With this deal, Western Union significantly strengthens its position as a cross-border payments player. An acquisition of Custom House in 2009 added B2B payments capabilities to Western Union's consumer remittances franchise. This acquisition scales up that capability, both in terms of market coverage and customer base. With GEO, Travelex's "next generation" payments solution announced in Sibos last year, Western Union gets a payments platform that can be offered to Financial Institutions as well as SMEs. Travelex has recently been divesting some of its assets, presumably those that don't quite fit with the future vision of its Private Equity owners. The company announced a sale of its prepaid Card Program Management (CPM) operations to MasterCard for £290 (US $458) million in cash in December 2010. This week's deal is worth £606 (US $ 976) million in cash. In December 2010, GEO was crowned as "Innovation of the Year" by Financial-i, an industry publication, and had to beat the major global banks and top-tier software providers to receive that award. By acquiring it, Western Union confirms its intentions to be a formidable player in a fast growing segment of a payments market. So, who do you think is next in line to get married?