Fifth Third Is the Latest Bank To Use Western Union for Money Transfer

Fifth Third Bank will be offering global money-transfer services at its 1,300 branches in 12 states under an agreement The Western Union Co. announced Monday. The new service is part of the Cincinnati-based bank's ongoing effort to provide services to the unbanked and underbanked, Mark Erhardt, senior vice president of retail products, tells Digital Transactions News. Fifth Third views the Western Union relationship as “a great way for us to start to offer better service to our existing customers,” Erhardt says, noting that some customers withdraw money from their Fifth Third checking accounts and then “walk across the street to an organization that does Western Union transactions.” “We realize there are a lot of consumers out there who have traditionally not used banks at all or used banks for only certain types of services?maybe do some of their banking with us but then go to a non-bank entity,” Erhardt says. “We really felt it was important for us to continue to expand our product set beyond the traditional bank product.” By offering non-traditional services such as money transfers, Fifth Third will be able to reach out to the “underbanked and unbanked customers who wouldn't traditionally look at a large commercial bank for services, to get them to come in our front door and become familiar with various products and services that we offer,” Erhardt says. “Hopefully, we can convert them from being unbanked to being banked customers.” Fifth Third first moved into the unbanked/underbanked arena in November 2007 when it launched a prepaid MasterCard, Erhardt says. The bank also began offering single-merchant gift cards and international phone cards. “Western Union is the next big product offering that we have in this space,” he says. “Going forward, we're looking very seriously at developing our own reloadable prepaid card as the next-generation prepaid card.” With Fifth Third on board, a spokesperson for Englewood, Colo.-based Western Union notes that the company also has similar agreements with Minneapolis-based U.S. Bancorp, the nation's sixth-largest commercial bank, with 2,791 locations in 24 states, and Jacksonville, Fla.-based Fidelity National Information Services Inc., a processor for more than 8,500 U.S. financial institutions. The agreement with Fifth Third is part of Western Union's North American “go-to-market” strategy to expand its service offerings through banking channels, according to a statement from Stewart A. Stockdale, executive vice president and president, The Americas. While Western Union has long offered money transfers through banks outside the U.S., American banks historically shied away from such agreements because they considered wire-transfer providers as competitors, says Gwenn Bézard, research director at Boston-based Aite Group LLC. But over the past few years, Western Union and other providers have become more aggressive in trying to sign up U.S. banks as partners, he says. And banks are beginning to see Western Union in a new light?similar to Visa and MasterCard, which provide services to the banks. “They have a brand and a global network, which is in parallel” to banks, not in competition, Bézard says.