Western Union has launched a new business-to-business platform to help companies connect with and pay each other, taking on the likes of Amazon and Alibaba as the U.S. group's traditional money transfer business faces challenges from a number of start-ups. br>
The process of cross-border payments and procurement for businesses can be challenging and fragmented. Individual agreements with each supplier need to be struck and often these might be through traditional means rather than online. On top of that, foreign exchange rates can often sting a company. br>
Western Union Business Solutions, the company's B2B arm, hopes to fix that. The company launched an online platform called "Edge" Monday which lets businesses connect with each other on a central platform and set up invoicing and payments. br>
"To begin with, the thinking is we are essentially providing a platform that connects businesses already doing business with each other. It will connect buyers and sellers to integrate existing processes. Procurement is very fragmented," Kerry Agiasotis, president of Western Union Business Solutions, told CNBC in an interview ahead of the announcement which was made at Money 2020 fintech event in Copenhagen on Monday. br>
"The reason we have gone about it is because we are leveraging existing assets. We have 100,000 companies that make payments through us already, there is a large network untapped in many ways and connecting them has been the first focus, then really opening it up to far more ubiquitous." br>
Western Union Edge will launch on April 11 in 6 initial markets - Australia, Canada, New Zealand, Singapore, United Kingdom and United States. The platform will be available in other select markets in 2016. br>
Edge offers invoicing services in one platform, and allows "near real-time" service for 22 currencies at its launch. Within "a few months", it will support 49 currencies in near real-time. Often cross-border payments can take several days to clear. br>
Western Union's latest product pits it against the likes of Amazon and Alibaba. Chinese e-commerce giant Alibaba has a platform that allows wholesale buyers and sellers of items to find each other and facilitates payments. Amazon has a similar service called Amazon Business. Both offerings differ from Western Union's service as they offer actual products that can be bought, whereas Edge is mainly a platform for companies to settle transactions and connect. br>
Edge also faces challenges from a number of technology startups. Firms such as Tradeshift, an invoicing start-up, and Currency Cloud, a firm that facilitates international B2B payments, will both compete with Edge. br>
Western Union believes the fact it is not an e-commerce offering can give it an advantage while its expertise in international payments will make it an attractive offering. br>
"I think with each of those (Amazon and Alibaba) the frame is an e-commerce frame, that is not the frame we have taken. If you think of B2B in particular and the style of business in cross-border trades varies significantly, we believe that there is a nascent opportunity to connect businesses without having to sell online. That is a key departure from the Amazon and Alibabas of the world, Agiasotis said. br>
"Companies are navigating some of the challenges of doing business internationally - regulatory concerns, risk around foreign exchange - we can help them with that, when you combine that together with our service, that is different to what the e-commerce players are doing out there." br>
Western Union has switched its focus to its B2B arm as it's core international money transfer business faces challenges from upstarts. Companies such as London-based Tranferwise and remittances firm Worldremit claim to offer a cheaper and faster money transfer service than Western Union. br>
The company is betting that Business Solutions - which currently accounts for around 7 percent of revenues - will be Western Union's future growth driver. br>
"The division will continue to grow top line revenue at double digits and become a real growth engine for the business and the latest product is a catalyst for growth," Agiasotis told CNBC.
Source: http://www.cnbc.com
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