Between the possiblities for mobile payment on the Apple Watch and Facebook recently integrating payments into Messenger, mobile payment adoption continues to grow rapidly. By 2017, statistics portal Statista predicted that the market will reach $721.4 billion, more than double that of last year. What does this mean for older payment systems, like Western Union, that aren’t inherently deep in digital?
Mobile is Western Union’s fastest-growing channel, now accounting for more than 40 percent of its online transactions. But while most people know the payments service – it’s been around since the 1850s, when it primarily dealt in telegraphs – many associate it with bright yellow storefronts and grocery store counters. But the brand is working hard to change those perceptions, according to Bobby Fan, director of marketing for Western Union.
“People may know we have a website, but do they know it’s a transactional website?” says Fan, who adds that marketing and segmentation can be difficult for a brand with a presence in more than 200 countries. “The coolest thing is, you can reach in your pocket and from your mobile device, you can send money to your mom in Mexico, the Philippines or India, and she can pick that money up in minutes.”
However, marketing and segmentaion remain problematic for brands like Western Union, which has a presence in more than 200 countries and its chief rival, fellow money trasfer company, MoneyGram. With mobile payments on the rise, consumers are increasingly shifting to payment platforms like Paypal and Venmo, two digital native companies with large growth rates of their own.
While Venmo doesn’t share its numbers externally, Forbes did predict the platform will reach $90 billion in payments by 2017 – 12 percent of Statista’s total mobile payments projection. According to the statistics portal, Paypal had more than 156 million users as of Q1 of this year.
To remain competitive, Western Union has turned to contests to drive brand awareness, according to Fan. For example, in February, the brand launched a campaign where every time someone sends a qualifying transfer through the service’s website or app, they’re entered into The American Dream sweepstakes. Prizes include various amounts of money to be put toward rent, credit card bills, college tuition, or a home.
Andrew Van Noy, chief executive (CEO) of mobile commerce platform Warp 9, thinks The American Dream sweepstakes is a good strategy because Western Union will have better success educating existing customers, as opposed to new market acquisition.
“Western Union’s demographic of customer most likely won’t be using Apple Pay from their Apple Watch anytime soon, so why try and break into that niche? Vice Versa, I don’t think Apple or Paypal is attempting to really go after Western Union’s marketshare much,” he says. “My suggestion is stay an expert within your demographic, and then do everything you can to grow and exploit that.”
Van Noy believes that Western Union and MoneyGram, rather than trying to go after the more sophisticated digital payment platforms, should focus their energies in other countries that aren’t as technologically advanced. For his part, Joe Stanish, head of U.S. operations at mobile banking service Moven, believes strong, digitally-minded leadership will serve these companies well in any part of the world.
While companies can have inertia, it’s still possible for them to reinvent themselves in new spaces. For example, becoming the search engine YP, the Yellow Pages saved itself from obsolescence.
“I think that [it comes down to] leaders who are committed to change and are OK with change, leaders who ultimately anticipate where the world is going,” Stanish says. “It’s not going to be easy, but I think everyone has a fair shot.”
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