Is Western Union Safe?

Company size:  

Western Union is the behemoth of the money transfer business. In spite of growing competition in the past 20 years and being challenged by completely new forms of technology, this household name prevailed in maintaining its leader status. It employs more than 7,000 people  across the globe and has a market cap of $9.1bn as of August, 2021 (up from $8.3bn in May 2019). The scariest figure of all? Western Union moves more than $80bn each year between customers.

Here are some  screenshots from their corporate website (athttps://ir.westernunion.com/investor-relations/default.aspx) with more interesting figures:

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Historically Western Union was established to provide telegraph services, and even back then it was an industry leader with a particular focus on innovation. Western Union had a significant role in bringing the world together as a telegraph company, and has a similar role in shaping the future of the remittances sector

Western Union was the first company ever to send a transcontinental telegraph, and is one of a few remittance providers in some of the world’s least connected regions. It boasts more than 50,000 agents (with hundreds/thousands of branches each) and 100,000 ATM’s in 200 countries. Numbers no one can compete with.

Regulated By: 

Numerous regulatory agencies around the world, including: FCA (UK), Financial Market Authority (Austria), FSRA (Ireland). USA: State by State Authorization.

Conclusion: 

Western Union has got everything going for it in terms of size. It has been running for so long (since 1851) and moving such immense volumes they are not even comparable to any other competitor in the field. Transferwise is one online money transfer competitor growing at a staggering pace and reporting more than £4bn in transactions monthly but that’s still less in comparison to WU’s annual volume of $80Bn.

Being the largest in the field also exposes Western Union to criticism. There are thousands of client reviews online which are predominantly highly negative, as well as media articles (like this one on the Economist) which portray Western Union as extortionate  with its fees.

Additionally, Western Union is one of the most abused platforms by scammers. A large portion of the money transfer scams across the globe are made through its platform, and it has received an enormous fine from the regulator for not preventing more. This was not Western Union’s only fine, as the firm has also paid $60m in regulator fines for a lack of compliance with AML laws.

Western Union Customer Reviews

Research:

There are dozens of online websites where you can find Western Union client reviews. Western Union and even its online service WU.com is as big as all of its competitors combined. Nothing in the world says an international money transfer more than Western Union.

That’s why we expected to find huge quantities of reviews, as well as plenty of complaints. What we didn’t expect was how many of its reviews would be complaints.

We have chosen to have a comprehensive look at all the platforms and aggregate scores. It is not automatically processed, and that means this date will be true for August, 2021:

Although the figures aren’t that bad and convey that 82% of the clients are ultimately happy with the service, it is also not a good figure. In comparison to our top money transfer providers Western Union as a lot more complaints to positive review ratio, and if you look at the sheer numbers you’ll come to realise that there are hundreds of complaints about the firm.

Another thing that really pops out of this analysis is that one particular platform has 17% in complaints, while others have over 90% complaints. Of course, the TrustPilot UK/USA is one of the largest platforms, but it is still suspicious in a way that the rating there is so different from all the other platforms. When you take a look at all of the review platforms, all of those left most recently appear to be complaints.

Conclusion:

Western Union has thousands of complaints to be found online about almost every aspect of its services. Some are just within the normal range of complaints (people who were not successful at using the service and the like), and others are making pretty bold accusations of the company missing out on deadlines and providing horrible service.

On the other hand, there are thousands of happy customers that left their positive feedback on one particular platform (TrustPilot).

The bottom line is that it’s impossible to clearly say one way or another, but what we can certainly say is that regardless of anything else, the percentage of complaints to positive reviews Western Union has with its direct competitor Wise (Transferwise) is around five-fold (21% vs 4%).

Western Union Exchange Rates & Fees

Global Policy:

In terms of payment fees, Western Union has clearly started to respond to competition in the market, which is great news for all as it’s driving the total cost of sending money abroad down.

In the UK for example, Western Union no longer charges payment fees if you settle transfers via a bank transfer. The settlement method which attracts a charge is debit cards. When you pay via debit card a £1.90 fee is applied and this seems fairly consistent no matter the payment amount, destination country or method of collection (i.e. cash pick-up or bank-to-bank).

There are also no fees for customers paying via credit with the online lender Klarna.

The biggest issue with Western Union however, is the exchange rate spread, this is where most of the “hidden costs” are taken – more on this below.

Exchange Rates:

Our research, backed by statistics from data from the World Bank demonstrates that Western Union’s fees and exchange rates are more expensive for the end-client than with competitors. On most currency routes that competitors like Transferwise or Azimo are able to handle, Western Union is more expensive. On its online platform you can see that the differences are sometimes quite small, while on WU branches, it is normally a lot more expensive.

As an example, at 13:53 UK time on 06/08/21 the inter-bank rate for the Pound-Dollar was 1.3904 and Western Union was charging a rate of 1.3716 on a transfer of £20,000, equating to a rate of 1.3%. That’s an OK rate but 1.3% of £20,000 equates to £260, you can easily slash this cost in half (and even more) by using a currency brokerage or a remittance provider like Wise.

Limits:

Recently increased to £50,000 for individuals transferring to major destinations such as Europe and the US. Transfer limits to more remote destinations vary but are around the £4,000 mark.

No minimum transfer specified online.

Conclusion:

Western Union money transfer is notorious for relatively high margins on their branches. Exchange markups in the form of 8% or 10% can happen especially when there’s a cash pickup and it’s a country in which Western Union or Moneygram, its biggest rival, are the services offering money transfers. There is more information about this topic on the WorldBank remittances website and it would be more current than what you can find on this Western Union money transfer review.

When it comes to WU.com bank to bank transfes, the rates improve drastically and Western Union is somewhat competitive, but on any of the corridors tested by the WorldBank or us, it is far from being the cheapest. In more competitive routes such as the GBP-USD mentioned previously, a margin of 1.3% can easily beat a big bank but would still be approximately three times more expensive than user online competitor Wise or (if it’s a large trade) using a currency broker.

Western Union Global Reach & Service

Research:

• Dedicated Dealer: No. Perhaps it is offered to business clients but definitely not to private clients.
• Offices: UK & US for core staff, with thousands of branches/agents around the world.
• Ways to approach: Email, Telephone, Multiple branches and online system.
• Translations: Yes.
• Accepts clients: Worldwide.
• Currencies Handled: 153, more than anyone else.
• Client reviews: 79% satisfaction.

Conclusion:

On one hand, Western Union is the most global company we tested. More currencies, more agents, more locations than anyone else (the only company that comes near is Moneygram and rapidly growing on them WorldRemit). On the other hand, the type of service provider by Western Union is only apt for small remittance transfers, while some of its startup competitors are able to handle both smaller and larger transfers.

Additional Functionalities

Hedging for business clients: Western Union offers forward contracts, spot contracts, and perhaps others (it’s very hard to tell from their web copy) –  these are generally made available only to business clients.

App: Western Union’s currency transfer app may be its brightest facet. While it’s still expensive to use, the experience is supposedly very smooth. Their online reviews on Play Store are glowing.