16,000 corridors [between countries] and 5,000 of them are online, and our biggest competitors only have 30 or 40. So my portfolio is very different.
X: What kinds of payment-related trends in Silicon Valley are interesting to you?
FK: I will give you an example: Jumio is a very interesting company that allows you to use video streaming to do card recognition when you are doing some transaction online. A lot of online business is about knowing who is on the other side, in “card not present” situations, where you want to mitigate the risk of somebody trying to use somebody else’s card. These are the kinds of things we want to incorporate into our technologies.
We acquired a startup in October that we thought was interesting. It was called eBillMe and we renamed it WuPay. In the e-commerce space, there is a problem with customers who have the ability to pay but get declined for some reason. WuPay generates an invoice and sends it to your online banking system, where you pay the invoice as if you were paying a bill, and we provide the funds to the merchant. It means you can pay for Internet shopping from 17,000 banks in the U.S. We are also enabling people to walk into a location and pay cash for something they bought online.
X: Silicon Valley has an age-old dream of a cashless economy, although the things that we’ll supposedly use in place of cash seem to change every few years. Right now everyone seems to be excited about NFC-equipped smartphones. Does Western Union want to play in that world?
FK: We don’t say no to anything, but we focus on what we are best at. In the short term, our business is about moving money and storing money. We’re in the pre-paid business and the money transfer business, and the first, basic thing is to provide accounts to people and say you can start storing money, moving money, and receiving money. Then you can do something with these accounts like paying bills. That all builds on something we already have. The most important issue with pre-paid cards or e-wallets is having a network for topping up these things, which we already have. So we are more in the spirit of saying, how can we complement other partners in the value chain rather than trying to displace them.
X: Today Western Union has a very simple revenue model: you charge the sender a fee for all money transfers. Will you have to think more carefully about how to make money in a mobile- and Web-centric world, where you’re offering other kinds of services, and where consumers have an expectation that many services will be inexpensive or free?
FK: If the cost of the value you are providing is close to zero, then of course you are going to charge zero. But when you look at the value we are providing, for the foreseeable future that is going to be very difficult to provide for free. When you move money today, the reality is that for the next three to five years, cash is going to be present at one of the endpoints. I come from one of these countries where cash is king. Charging for that service is normal; who you charge and how much are things you can discuss. Also, cross-border transfers, compliance, dealing in multiple currencies—those are all things that a customer is willing to pay for. That does not mean we are not looking for other models. But when I look at our core market, where I want to grow to $500 million, the model is not going to change significantly.
X: You mentioned the Western Union smartphone app. Are you going to have a lot of people here working on other mobile products?
FK: Between now and 2015, when I look at our channels, the Web is still going to be very important, but mobile is growing in importance. When we look at new products and services today we start thinking mobile even before Web. There is a blurring, where HTML5 will bring a mix of [native] apps and Web-driven apps. But what we have to do is make sure we keep growing or evolving the front end, to give customers the best experience and make sure we keep up with the latest, best practices.
