Michael Hafer, Senior Vice President of Global Prepaid at Western Union, said the addition of MasterCard brings the number of prepaid program providers that utilize the money transfer specialist's 10-year-old reload network to 170. "It's all about providing ubiquity," Hafer said. "Western Union just happens to be one of the physical networks that actually provides that final mile."
The "final mile" consists of the physical location where cardholders can reload prepaid accounts, the breadth of services consumers can access at those locations, and the customer experience when accessing those services, according to Hafer. He characterized the Western Union reload network as offering more than just the ability to "top up" GPR cards.
It's about "adding any kind of value to a stored-value account," he said. "It could be an online account. It could be a reloadable prepaid card account. It could be a prepaid wireless account. It could be anything where you basically prepaid for something up front and then you draw down on that value over time."
Hafer said the customer experience at a Western Union agent location is a one-step process. For example, to load $100 on a card, a cardholder hands $100 plus the convenience (transaction) fee to an attendant, and the card is swiped at the POS to load $100 on the cardholder's account. The transaction takes roughly 30 seconds to complete, and the funds are available for use immediately, Hafer said. "It's a very simple, very quick and convenient transaction," he added.
Hafer compared Western Union's reload process to the two-step process used by competitors, by which a cardholder has to take the intermediary step of purchasing a reload pack and then dialing in or going online to input a code or PIN to add value to the account. "It's a little bit more work for the consumer," he said.
Western Union and MasterCard announced their global financial inclusion initiative in November 2011. The companies estimated that 2.5 billion people worldwide lack access to traditional banking services. Even in the United States, more than a quarter of the adult population are excluded from the financial mainstream, the companies stated. The goal of the Western Union-MasterCard pact is therefore to enable financial inclusion globally via prepaid.
Hafer believes Western Union is one of only a handful of companies that have the capacity to achieve that goal. Millions of consumers at 510,000 agent locations in 200 countries use Western Union everyday, he said, with $81 billion in 130 different currencies circulating annually through Western Union's global network. With the physical distribution infrastructure already in place and underserved customers accustomed to Western Union's core money transfer services, the addition of prepaid capabilities seemed the next logical step, he said.
Outside the United States, Western Union has reload networks in Argentina, Peru and Panama. And it has expanded its GPR card programs to nine countries worldwide, including El Salvador, Germany and the Philippines. "The opportunity for growth is abundant worldwide," Hafer said.
Another feature of Western Union's reload network is Cash Access. It is a program that allows customers to withdraw cash from their prepaid accounts via the POS. The service is being rolled out in markets where ATMs are not prevalent.
"Think of the outer islands of the Philippines as a good example," Hafer said. "Pretty hard to find an ATM out there. Pretty hard to actually use Visa or MasterCard on those islands, unless it's some of the major hotels or major restaurants. But most places take cash."
What is present on those islands? Western Union. "So if I can go to one of those locations and say can I get 500 filipino pesos off of my card, that's a very valuable service for those customers," Hafer said.
It seems alternative financial services companies are looking more and more like traditional banks. "In fact, you can almost use the analogy that our agent locations are almost acting like a bank branch," Hafer added. "Making deposits – that's a reload; cash out – that's a withdrawal. Pretty cool, isn't it? 510,000 bank branches around the world, basically."
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