Stodgy Western Union Embraces Stablecoins for Payment Expansion

The Evolution of Western Union: From Telegraph to Global Financial Services

The story of Western Union began with a simple phrase: "What hath God wrought?" This biblical quote, taken from the Book of Numbers, was transmitted on May 24, 1844, as the first official Morse Code message in the United States. It marked the opening of the Baltimore–Washington telegraph line and heralded the start of a new technological era.

Seven years later, a group of telegraph companies came together to form what would become an iconic business—Western Union. Initially known for its role in sending telegrams, the company became a staple in popular culture, often used as a dramatic device in movies, TV shows, and songs to convey bad news. For example, the Capris’ 1959 song “Baby, Come Home to Me” was delivered via telegram, while the Five Americans’ 1967 hit “Western Union” told a tale of heartbreak complete with sound effects.

Despite its historical significance, many today might wonder why Western Union still matters. After all, it seems as outdated as buggy whips or snuff boxes. However, the company has evolved far beyond its early days of dots and dashes. Today, it provides global financial services, specializing in cross-border money movement and payments.

According to Bret Jensen of DISCOVER TRENDSPro, Western Union was once at the forefront of technology, but now it's often seen as stodgy. While fewer people use its services, it still holds a niche market. In fact, the mere mention of the company’s name evokes its yellow and black corporate banner for many, even those who haven’t used its services in decades.

In August, Bloomberg reported that Western Union was considering issuing a stablecoin—a cryptocurrency pegged to a stable asset like the U.S. dollar. Such a coin could function like a savings account in U.S. dollars for customers in countries where regulators permit such activities. CEO Devin McGranahan noted this during a conversation with the news service. A recent law signed by President Donald Trump regulates stablecoins, prompting many financial firms to explore how they can leverage this product.

Challenges and Opportunities

Western Union recently missed Wall Street's expectations in July, lowering its full-year 2025 outlook due to a slowdown in its North America retail business and reduced revenue from Iraq. McGranahan acknowledged these challenges during the second-quarter earnings call, stating that the company is implementing its evolved 2025 strategy to return to sustainable, profitable revenue growth.

The company’s stock has declined by 20% this year and nearly 30% from 2024. Despite this, McGranahan remains optimistic about the long-term outlook, citing investments made over the past two years that have positioned the company for future share gains.

Jensen also highlighted Western Union’s planned acquisition of International Money Express, valued at roughly $500 million. This deal is expected to expand the company’s North American footprint. Additionally, Western Union recently partnered with dLocal, a Uruguayan fintech, to enable digital-payment methods on its online platforms in Latin America.

Diversifying Services and Adapting to Change

Western Union’s consumer services unit includes bill-payment services in the U.S. and Argentina, as well as money order services. The larger Consumer Money Transfer (CMT) business operates through approximately 380,000 agent locations for in-person transactions, though digital transactions are becoming increasingly significant.

However, Jensen noted that CMT revenues have declined since the end of 2021. This decline is partly attributed to the Trump administration’s immigration policies, which reduced remittances to Mexico. Additionally, service to Ukraine and Russia has been suspended due to ongoing conflicts.

Trading Strategies and Future Prospects

In his column, Jensen outlined a covered-call strategy for investing in Western Union. He suggested selecting the February $8 call strikes and creating a covered call order with a net debit between $7.55 and $7.65 per share. This strategy offers downside protection of 15% and potential upside returns of just over 11%, including dividends.

For those interested in more trading ideas, joining DISCOVER TRENDSPro could provide valuable insights. As Western Union continues to adapt and evolve, its journey from telegraph to global financial services serves as a testament to its resilience and ability to stay relevant in a rapidly changing world.