international cash mover Western Union is commonly a target for fintech companies, but the compact is teaming up with a startup to assist increase its presence in the world’s third-most lucrative remittance mart: the Philippines.
Coins, the Manila-based fintech startup that was recently acquired by $10 billion ride-hailing company Go-Jek, said today that it will integrate Western Union, which is valued at $8 billion on the NYSE, into its app to allow Philippines-based users to accumulate cash sent to them from overseas.
The Philippines is a tough country when it comes to cash transfers. There are some 10 million Philippine nationals based overseas and a recent World Bank report ranked the company the world’s third-most lucrative corridor with an estimated $34 billion sent home from overseas last year. (That’s the same as Mexico, with India and China in first and second place, respectively.)
The partnership means Coins users — the company claims five million downloads to date — who accumulate cash via Western Union won’t need to trudge out and wait in line to accumulate it. Instead, it can be remitted to the Coins app, from where it can be transferred on to other people (peer-to-peer transfers are free) or used on the Coins platform for other payments. cash in the app can be used to pay for utility bills, mobile top-up, public convey trips and at merchants that aid its payment service.
One thing the alliance doesn’t do, however, is remove Western Union fees, but Coins founder and CEO Ron Hose is optimistic that the deal brings value for both parties and consumers in the Philippines.
“Our quest is working with banks and financial service providers to bring services to people who don’t have access,” he told TechCrunch in an interview.
Hose declined to comment on Western Union payments — which are routinely seized upon by startups that look to offer more transparent and cheaper overseas transfers — but, in theory, moving cash digitally could pave the path for retail-based remitters, like Western Union, to reduce operational costs and potentially make their service cheaper for consumers in the future.
Western Union already operates its own apps, but, like a number of “old school” international cash platforms, its business is inherently a retail one rather than a tech one. That’s because it has a tough physical presence — with more than 500,000 venue worldwide and some 12,000 in the Philippines alone — which brings with it operational costs, while there is also KYC and other anti-laundering processes that increase expenditure.
It remains to be seen where the Coins-Western Union deal will head. Parent company Go-Jek is busily expanding into Vietnam, Thailand and Singapore while it has a tough base in its native Indonesia, so there could be potential for further alliances in the future.
The Philippines is part of the broad “Middle East, Africa, and South Asia” region in Western Union’s financial reporting. The company reported flat growth in the region last year, with it accounting for 15 percent of all revenue. It grossed $1.4 billion in sales in the final quarter, but that was down three percent year-on-year. On the positive side, Western Union said its online service grew to 12 percent of consumer sales in the quarter — deals like the Coins partnership are aimed at finding its digital future.