Western Union, the global funds remittance giant is considering going paperless this year. In an interview with Reuters Plus, Odilon Almeida, Western Union President, said the company has been exploring ways to include cryptocurrencies in its services. The global funds transfer giant has also considered employing blockchain technology in its operations as a way of adding value to its services.
Consumers do not have to own cryptocurrencies or digital wallets to access this service as the company plans to offer conversions to fiat currencies. According to Almeida, Western Union is set to work with any currency. He said the company is already operation with 130 currencies and if at any point it finds introduction of cryptocurrencies strategic, it will just view it as another currency.
But the plan to add cryptos in its services will only take off if the company secures global support. Issues of volatility, compliance, and governance have been hindering digital currencies from going mainstream. However, Western Union, already ran trials back in June of 2018 using blockchain. The company tested cost-saving measures on cross-border transactions via Ripple.
It did so with 10 XRP token transactions but the process did not produce the expected results as it was only a smidgen of millions of transactions recorded on Western Union monthly. But Almeida remains optimistic and plans to leverage XRP in future. He holds that the entire process has been a learning experience on how best to integrate cryptocurrencies while instituting cost-saving measures.
Blockchain technology has many well-suited operational features that can make Western Union more efficient, if the market is able to sustain it. Even so, considering crypto market limitations and unsecure border transactions, the company does not plan to offer this service in the immediate future. Until regulations on cryptocurrency cross-border payment mechanisms are enabled, Western Union will not be ready to leap into this fast flowing yet choppy stream.
Seemingly, Western Union equates digital transfer of money to crypto payments, but these are not necessarily the same. As it is, one is consumer-based, while the other is investor-based. Individuals and companies hold digital wallets respectively, enabling them to conduct transactions and withdraw like in a traditional bank. Western Union would only be facilitating the transfer of monies between individuals and other receiving parties.
What This Means
The market is still struggling with obstacles associated with traditional financing methods, so every caution will need to be taken before the company takes the leap. Despite criticism from many quarters including Twitter, Western Union's decision to integrate cryptocurrencies into its system is a positive one.
Michael Hull, Chief Editor at FamilyOffices.Today says, "If Western Union actualizes its decision to add cryptocurrencies to its services, it will build the confidence of investors and other players in the industry. This is likely to catalyze adoption of cryptocurrencies by the masses in the foreseeable future."
The issue of crypto volatility has been addressed with the use of stablecoins by crypto startups. Once hang ups surrounding compliance and governance have been addressed, the market will be more receptive to cryptocurrencies. For a company like Western Union to start using cryptocurrencies, it signals a shift in the digital-asset space, one that would be greatly received by both corporations and individuals at all level.
Joseph Oreste, founder of Qupon says, "Integrating old and new systems is a good way of exposing the retail public to this new currency. Perhaps it may be cheaper to send a cryptocurrency rather than money orders. It seems that blockchain has resolved much of the need for services like Western Union."
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.