International remittance service, Western Union, is ready to facilitate the transfer of cryptocurrency once there is sufficient market demand. This was suggested by Western Union global money transfer president, Odilon Almeida in a ReutersPlus video posted to the company’s Twitter account on Monday.
In the video presentation, the company claim that it is in a unique position to connect the cash and digital world with almost half a million physical retail agent locations worldwide. The company believe that it provides an on and off ramp for global money movement.
Almeida expanded further:
“Western Union is ready today to adopt any kind of currency. We already operate with 130 currencies. If we one day feel like it is the right strategy to introduce cryptocurrencies to our platform, technology-wise, it’s just one more currency.
I think cryptocurrency may become one more option of currency, or assets, around the globe to be exchanged between people and businesses. If that happens, we will be ready to launch.”
In a subsequent video, Almeida talked about the technology generally:
“This [blockchain] technology I believe has a lot of potential. You are going to see more and more ways of using the technology going forward.”
He pointed out that cryptocurrencies have a number of limitations right now. Almeida identifies three elements that need to be addressed if cryptocurrencies are going to be used broadly – volatility, governance and compliance.
In terms of the first issue, he believes that we are beginning to see this element being addressed by way of the introduction of stablecoins. Many stablecoins have been launched in 2018 – pegged to the value of the U.S. dollar or another major FIAT currency. However, the issues of governance and compliance are items that are still in need of resolution.
Well known digital currency company, Ripple, has been collaborating with Western Union in the testing of its cryptocurrency based offering, xRapid. Previously, Western Union had said that it was not of the belief that Ripple could assist them in achieving cost savings. Notwithstanding that, in the recent video, the western union president is more positive about the collaboration:
“Our pilot with Ripple goes into the same space. It’s about learning. So, we are looking at the blockchain technology and really seeing if it can make us more efficient.”
Almeida says that he often is asked if Western Union will introduce a digital currency. He claims that the company have done so decades ago. However, he is referring to its movement of funds electronically through the conventional banking system.
It remains to be seen where Western Union’s consideration of cryptocurrency will lead. Should it decide to take that pilot with Ripple further and apply it on a day to day basis, Ripple differs significantly from decentralized cryptocurrencies. It works within the banking system on a business to business level, facilitating the transfer of funds between financial services companies in less time and with less cost than traditional means.
If Western Union was to consider being an on and off ramp for a decentralized cryptocurrency such as Bitcoin, it could harness its vast network of physical locations in achieving that. This would be a completely different proposition and likely would depend upon signs of more active real world use of decentralized cryptocurrency emerging.
On its twitter post, a user commented that if it doesn’t innovate, Western Union could find itself in the same position as Blockbuster Video. Blockbuster provided a network of video rental shops. At its peak, it employed 84,300 people. However from 2000 onwards the company began to lose market revenue to Netflix, leading to its eventual bankruptcy in 2010.
Blockbuster had the opportunity to buy Netflix in 2010 for $50 million but decided against. Netflix has a current market valuation of $33 billion, with 50 million subscribers across 40 countries.
It seems inevitable that cryptocurrency will disrupt the remittance industry. To smoothen that transition, it could be a win/win for Western Union to collaborate with Ripple and/or monetize the exchange of Bitcoin or another cryptocurrency by opening up its network of worldwide agents to digital money. Otherwise, we may be witnessing another re-run of the demise of Blockbuster Video.