Western Union may start domestic money transfers

Western Union, a global money transfer services provider, might extend its business to the remittances segment within India.

With 100,000 brick and mortar agent locations across this country already, it is thinking of leveraging existing infrastructure to provide person-to-person payment services between cities.

“India has witnessed steady growth of rural to urban and intra-state migration. All such people desire to send money home to support their families. If the opportunity presents, we are keen to play a role in domestic money transfers,” said Kiran Shetty, managing director for India at Western Union.

The company has experience in conducting the domestic money transfers in America, Philippines, Indonesia, Australia and New Zealand.

With India Post, State Bank of India and eight others as its top agents, the company caters to around 11 million customers in India for cross-border remittances.

Shetty said a majority of the company’s agent locations were based in semi-urban and rural areas, ensuring a strong base for domestic money transfers as well.

In India, local money transfers are mainly conducted through 155,000 post offices. Banks also provide remittance services with the help of business correspondents (BCs) to get rural penetration. In March, the Reserve Bank of India (RBI) allowed interoperability at retail outlets or sub-agents of BCs, which means they can cater to more than one bank at a time. The central bank had also allowed banks to appoint companies as BCs, to achieve the broader goal of financial inclusion. These measures have made the local payments space more remunerative for new players.

“There are many models emerging to support all types of transfers, including domestic money transfer. We are exploring all the opportunities to service this sector,” said Shetty.

Data from RBI shows BCs more than doubled the coverage of villages to 76,801 in 2011-12. By the end of the next financial year, banks aim to cover 348,283 villages, of which 320,412 would be covered with the use of BCs.

Shetty said the convenience and simplification of remittance services would help promote formalised channels to send money within the country.