Two and a half years ago, Western Union (NYSE:WU) entered the cross-border business payments sector by acquiring Victoria’s Custom House for US$370 million. The success of that acquisition convinced the global money transfer company to expand the business by acquiring one of the largest international payments providers in the world.
Yesterday, Colorado-headquartered Western Union closed its US$971 million acquisition of U.K.-based Travelex Global Business Payments, vastly expanding Western Union’s global B2B payments business.
Brian Harris, senior vice-president of product development for Western Union Business Solutions (WUBS), said the deal will provide greater job opportunities for its roughly 200 staff in B.C. and broaden its capacities for B.C. businesses that make cross-border payments.
In addition to increasing to 18 from 12 the number of countries it can provide cross-border payments to, Western Union can now trade in more than 140 currencies.
“Travelex was the number 1 player in the non-bank market, and Custom House was number 2,” said Harris. “Acquiring Travelex has brought together the two largest non-bank competitors.”
Over the past two years, unprecedented currency volatility has forced Canadian exporters to protect their cash flows and profits by entering into contracts to buy or sell a currency at a set price for a specified period of time in the future.
While some companies say it can be expensive to enter into such contracts, Harris notes the price certainty can be worth it.
“If you’re doing business across b
orders, you’re always susceptible to currency volatility,” he said. “But what you want more than anything is to have price assuredness. So what you’re paying for is knowing exactly what the cost is going to be at a certain point in time.”
More about the impact of currency spikes on B.C. exporters is in this week’s issue of Business in Vancouver.
Richard Chu
@RichardChu_BIV