Stewart A. Stockdale is President, Global Consumer Financial Services & EVP for The Western Union Company. He is a member of the company’s Executive Committee and Global Operating Committee.
Stockdale is responsible for approximately 90% of the company revenues consisting of five global regions (North America, Latin America & Caribbean, Europe & CIS, Middle East Africa, and Asia Pacific) including global consumer money transfer and the global consumer payments businesses.
Under his leadership he returned the U.S. Money Transfer business to growth after 12 quarters of secular decline. He was then given the Consumer Payments business and turned it in around in just one year after four years of steep declines. In addition, he launched Western Union’s Global Prepaid Card business in 2010 delivering almost one million cards-in-force in the U.S. alone. In 2011, he was promoted to his current role and also named one of the Top 25 CEOs of Tomorrow by Business Week.
Stockdale recently spoke with PaymentsJournal regarding Western Union’s current view on the market and future plans.
PJ: Western Union is uniquely positioned as a payments leader globally. What makes Western Union’s value proposition so compelling?
SS: Western Union is one of the most trusted global consumer financial services brands and we focus the brand in the middle of the consumer pyramid for a mass market approach. You look at traditional payment companies and most focus on the top-tier, the highly banked, the debit market and so forth, but we have a brand primarily focused-on that mass market globally.
We are a very trusted brand by consumers, especially when you talk about emergency access to cash, making payments or sending money to a loved one. On the Money Transfer side we serve well over 200 million customers globally and do business in 200 countries and territories. Western Union has phenomenal global brand recognition, including the U.S., which is where we are headquartered; we are also strong in markets like Mexico, Brazil, India, Russia South Africa, among others.
PJ: How has the brand evolved?
SS: The Western Union Company (WU) has been built on money movement with more than 500,000 points of distribution globally for cash-in and cash-out. However, the opportunity has been expanded to incorporate different forms of money movement from traditional cash to electronic and other product and services, such as payments.
We have seen the Western Union brand continually evolve from traditional retail-to-retail to a leading role in the cash market with new channels and distribution that include bank or account based-transactions (from a bank account, ATM, mobile).
Through Western Union’s brand you see ubiquitous money movement.
PJ: Partnerships have always been an accelerator for growth, can you speak to Western Union’s partnership strategy?
SS: Relationships are important to our overall strategy. If you look at Kroger, the French Post, China Post, India Post, and so on, we have developed working relationships worldwide for the distribution of our services and they are eager to expand those product and service offerings from us.
For example, Western Union has a big money transfer business through Kroger, but that has grown to also include a large payments and money order business.
I like to call this strategy fill-the-bucket. As you have one product, you can then offer two, three or more products, through our large network which gives you the distribution to sell even more products. This results in the customer having more products and now you have created that stickiness and the loyalty factor goes up. It’s a chain reaction and a recipe for a global play in the mass market for consumer financial services and to integrate a big part of the world that really has limited accesses to financial services.
PJ: You introduced strategic alliances with several major banks. How successful has this been and why do banks benefit from this offering?
SS: We started working with the banks three years ago. We did very little before that with banks in the U.S.
The banks are now leveraging the distribution network that Western Union has, bringing Western Union into their branch and account base. In essence, we give the banks access to the world. About 15% of our U.S. retail locations are now banks and there are about 8,000 banks globally offering our services and that includes U.S. banks such as U.S. Bank, Fifth Third Bank, Key Bank and Regions Bank.
These banks have figured out how to leverage our brand to attract new customers, open up new business opportunities and make fee-based transaction revenue.
Interesting enough, there is a misconception that most of our customers are unbanked. Actually between 70% and 80% of our U.S. customers are banked. Their use of Western Union is a testament to the wide reach and trust of the brand, coupled with the ability to send money in minutes and the ease of transacting. For example, if you did a traditional wire transaction, odds are that by the time the money arrives between one and five days have passed. The simplicity of transacting and same day capabilities makes Western Union a great choice for the banks.
PJ: Has there been challenges brining the brand into the banks?
SS: International banks have been Agents for a long time. I think the banks in the U.S. have been preoccupied, with the financial crisis and regulations. But as they reevaluate their strategies and seek new opportunities, it’s clear that Western Union is a good choice.
We now have over 7,500 branch locations in the U.S. and that account base is taking shape. They are seeing new way to generate additional revenue and in some cases create the stickiness to retain customers and acquire new ones. The banks, both retail and account base, are now a key part of our growth strategy.
PJ: Today’s payments environment is undergoing significant change with the rise of mobile and entrants from non-traditional entrants: Square, Amazon, Google, PayPal, etc. Can you comment on the marketplace shifts and Western Union’s role in this evolving environment?
SS: There is no doubt that everyone wants to get into the money movement or payment business and getting access to the money is something companies have been pursuing for many years. The key to Western Union’s success is that we have a great retail distribution that we augment with electronic delivery and we know the intricacies of the business. Electronic money movement is a great compliment to the Western Union retail business and consumers can choose one or the other.
You have to look at what others are trying to accomplish. What I am trying to say is that it’s easier said than done.
There is a lot of noise in the payments landscape and because we are one of the leading players in the money movement category everyone is looking to compete with us. But we have signed many mobile operators, we have ATMs in our network, we have banks, post offices, retailers and check cashers as Agents, and our bank Agents have a retail and online account base. We are in a solid position.
As new technologies and new channels emerge brining about new players, our first objective is to make sure we are serving customers’ needs.
PJ: What shift and or trends in the payments industry do you think will have the biggest impact on Western Union’s future?
SS: You have more players getting into the category of money movement and exchange, so as channels emerge we have to be part of it.
There is a convergence of multi products occurring. Prepaid is a good example. A prepaid card can be linked to money transfer because you can load and send money to a card. We call it card-to-retail or retail-to-card. So when approaching the whole idea of convergence of consumer financial payments as a broader category, you have to decide if you want to be part of that specific value chain and provide our services to those players.
We are constantly evaluating which of these products we should be offering.
PJ: Are you currently focused on a specific initiative?
SS: A big focus for us is expanding our electronic channels, but also bringing electronic to retail. And when I speak of retail, I’m talking about the POS to make transactions easier, faster, and more convenient. I call it POS merchandising. It’s not going to be just how it looks, but it’s going to be the technology the customer envisions.
So you use to go to the airport, show an I.D. and you get a ticket. Now you go and sometimes you arrive with a ticket you printed, sometimes it’s a screen you populate yourself or a barcode on a phone you use to board. So I’m looking at other industries and trying to bring some of that to the POS. We are going to start testing new POS-based technology in a few cities this year.
PJ: What trends are you noticing in the mobile money/payments/commerce space and what’s Western Union’s mobile strategy?
SS: We are not a mobile operator, but we connect to devices and entities that have m-wallet capabilities. There is a lot of discussion on m-wallets and we are right there in all those discussions and working closely with the mobile operators. For example, in Kenya we are connected with M-Pesa, and we are conducting transactions to those m-wallets from others parts of the world, such as the U.K. We also have a relationship with mobile providers in the Philippines, we do not see a lot of volume on it because it really revolves around them marketing and promoting it. But when it takes off like in Kenya we are there.
The point is, as those capabilities start popping up and the carriers elect to get into the money transfer business, more often than not they want to go with a player that has a successful track record with cross border payments and the compliance capabilities to execute those transactions. As those needs grow we will be the right solution to enable and support those transactions.
Look at the U.S., there’s been a lot of talk but not a lot of action as it relates to mobile money movement, but we will be there when it does take off. We also have our own apps on mobile and we will participate on the banks apps as they take theirs to mobile.
We can debate the role of cash in the next 30 to 40 years. But even though there will be more technology in play for moving money, there are still a lot of elements of cash in and cash out. The Prepaid business is a classic example. Prepaid needs a mechanism to load cash onto the cards. The same happens with mobile. We are a great compliment between the cash and electronic. The electronic will compliment the cash and the cash will fuel the electronic. Even look at the WesternUnion.com business, most of those transaction are getting paid out with cash transactions.
PJ: Western Union has launched a number of new prepaid offerings, how big of a business do you see this becoming?
SS: We ramped up the North America prepaid program for Western Union. Today we have over a million cards in our portfolio. The program scaled really quickly. We have retail locations, a reload network and capabilities that will allow us to be successful in prepaid both short and long term.
Prepaid is a logical extension for Western Union. Our general purpose reloadable (GPR) card is linked closely to our money transfer business and is not a standalone business.
The real prepaid opportunity for Western Union is global. When payments evolved the world was populated by credit cards and we now have of some 330 million U.S. citizens, 50 million or so that are credit qualified. You go to Mexico and it’s a much smaller number of 110 million Mexicans a much smaller percentage is credit qualified. This creates the opportunity for a global prepaid program.
We continue to look at prepaid across our business, including the top-up business, which we have in the U.S. and Argentina. There are other players in prepaid across different markets but we are well positioned to be a leading global prepaid player.
PJ: Are you concerned about the shifting regulatory environment surrounding prepaid?
SS: Issuers should better define the value proposition to be more consumer friendly. There are cases where companies are charging a significant upfront fee, plus additional fees on a product where people are giving them their money in advance so they can have access to it later. If you look at the credit market there are some, but not many credit cards that charge an annual fee. We saw what happened to the banks when they tried to tie fees to debit accounts.
So charging large upfront fees for the underserved population paying in advance calls for some concerns. These types of fee structures have challenged the growth of the GPR category and consumers don’t trust many programs so the category hasn’t really scaled.
Western Union does not charge a monthly maintenance fees or an annual fee. We have inactivity and cash load fees and we ride the interchange, but what we offer is a very customer friendly product.
About Stewart StockdalePrior to joining Western Union in June 2008, Stockdale served as President of Simon Brand Ventures (SBV) and as Chief Marketing Officer of Simon Property Group (SPG). Stockdale’s work history also includes positions with MasterCard, American Express, and Procter & Gamble.
He is a graduate of the University of Denver with a BSBA degree and has completed The Executive Program at the University of Virginia – Darden School of Business.
Stockdale’s personal interests outside his role as a business leader includes spending time with his wife and six children.Click here to read about Western Union’s recent prepaid reload partnership with MasterCard.