Cross-border payments company Western Union is re-examining its business strategy and costs amid pressure on profit margins due largely to lower immigration to the U.S. as a result of Trump Administration policies.
In reporting disappointing second-quarter earnings, Western Union’s chief executive, Devin McGranahan, said the company would seek to cut 20% of discretionary operational spending to right the business. It’s also pursuing a strategic plan to improve its customer services experience, while also potentially reducing discount incentives.
“Our financial results in this quarter came in below our expectations for the second quarter in a row,” McGranahan said on a Thursday webcast with analysts who follow the company. “This is not acceptable, and we are not satisfied with the current operating performance, and will be implementing significant changes as a result.”
The global money transfer company reported second-quarter net income dropped 37% to $76.7 million, compared to the year-ago results, as revenue slipped 1% to $1.01 billion, according to the earnings release issued Thursday.
"Remittances in the Americas have faced meaningful pressure that began in late 2024, driven by the changes in immigration policy," McGranahan said.
“In the second quarter, we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions, and the continued acceleration of our digital payout to account business,” McGranahan said during the call.
Part of Western Union’s challenge is that rising use of its digital payment services, which yield lower fees than cash transactions, is reducing income. Separately, the company is also losing market share in the Middle East.
“We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next generation digital initiatives, while simultaneously significantly lowering our ongoing operating costs,” the CEO said.
The company is aiming to reduce its operating cost run rate by $50 million by the end of the year, according to McGranahan’s comments on the webcast. To that end, it’s shuttering some businesses, including some digital wallet services in Europe that the CEO said would save $6 million to $8 million on a run rate basis.
“As a 175-year-old company, we have a lot in the garage,” the CEO said, referring to the mushrooming of operations over the decades. “Organizations build up over time, and what were once new ideas or areas of investment are now ongoing operating costs with limited or no contribution.”
