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Western Union Money Transfer: Compensation and Benefit Challenges - Essay Example

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This work called "Western Union Money Transfer: Compensation and Benefit Challenges" describes Western Union Money Transfer: Compensation and Benefit Challenges. The author outlines challenges facing the western union, possible problems, the position of customer needs. …
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Western Union Money Transfer: Compensation and Benefit Challenges
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Western Union Money Transfer: Compensation and Benefit Challenges. Course Professor Date History of western union Western union is a financial service and Communications Company based in the US and it conducts the business of wireless money transfer services. The company transfers money electronically from one area to another. The organization was founded in 1851 and it started as a messaging medium, it then added the USA’s first stock sticker, helped standardize time keeping nationally, debuted an early charge card and the singing telegram and finally shifted to money transfer services. Other competitors in the business include; Xoom PayPal Moneygram and E-gold. Challenges facing western union Money laundering and fraud by criminals is the major challenge that is faced by western union. Criminals either intercept the delivery of services or extort money from individuals. Ability to adapt to new technology in response to changing industry and consumer needs or trends is also a major challenge. Strategies applied by other organizations to solve these problems The other organizations such as Money gram have developed a link between them and the Interpol to bring the criminals back to book and hence making the others with the intent to commit the same crime to be afraid. They set up a fraud monitoring unit in their organization which helps track money transfer and thus ensure safety. Strategies to address the current situation The organization must try to link itself with the Interpol in order to arrest any criminals who may try to sabotage the money transfer process. The company should come up with new technologies and adapt them in order to help detect those trying to distort company business. For example the anti-theft money transfers software. Recommendations on how to address the challenges The management should consider creating good customer relations by addressing their needs on time before they go a long way in damaging the company image. This could be done by creating a customer complaints desk. The management should also embrace the new technology and also promote its application. The organization should also review the literature of their competitors and apply some of the positive aspects that have made them prosper. INTRODUCTION The purpose of this research is to shed more light into the challenges facing money transfer organizations and the possible recommendations on how to address those challenges. The paper aims at contributing to the training literature by highlighting a detailed description of the challenges in compensation and benefit systems of the money transfer organizations ,with major emphasis on the Western Union ,and giving the possible recommendations that need to be put in place in order to curb the problem. The topic is of very much concern because many organizations have been faced with extinction due to their inability to withstand the challenges in the industry. The topic area is intertwined with the topic in such a manner that if the challenges are addressed then these financial institutions are likely to grow and expand massively. Thesis statement: Because Western Union is faced with various challenges, it should exploit its potentiality of a good agent base, and network connection in order to reduce the magnitude of these challenges. 2.0 LITERATURE REVIEW 1. Money laundering and fraud Money laundering is the process of disguising illegal sources of money so that it looks like as if came from the legal sources. Criminals often use lottery scams and online auction to extort money from unsuspecting individuals. The individuals are convinced to send money with western union being used as a conduit to conduct these transactions. This has led to the deterioration of the customer’s confidence in the company. However, with the current advancements in technology, the money transfer tracking systems have been put in place curb this menace. The close ties between western union and the Interpol has also gone a long way in reducing these criminal activities. (Financial Action Task Force) and (John, 2004) 2. Industry Trends  The global business payments industry has evolved with technological innovations that have created new methods of processing payments from individuals or businesses to other businesses. The various products within the global business payments industry are in varying stages of development outside the United States. The cross-border payments industry is expected to expand considerably in the future due to the expanding global focus of many businesses. Furthermore, due to the weak economic situation in the United States, western union believes that many United States consumers who would use the company’s services are having difficulty paying their bills and are unable to obtain credit in any form, resulting in fewer bill payments being handled. (Levi, 2002) 3. Wide range of Laws and Regulations The efforts in the provision of services have been thwarted by the numerous laws and regulations that are in place. These laws include financial services regulations, consumer disclosure and consumer protection laws, currency control regulations, money transfer and payment instrument licensing regulations, escheat laws, competition laws and laws covering consumer privacy, data protection and information security. New and proposed legislation relating to financial services providers and consumer protection in various jurisdictions around the world may also affect the manner in which services are provided. These rigorous laws are difficult to comply with. (Ball, 2011) 4. Severe competition Western Union competes with a diverse set of service providers offering both cash and electronic-based payment solutions and business-to-business payment services. Competition in electronic payments and business-to-business payment services include financial institutions (which may offer consumer bill payment or business payment services in their own name or may “host” payment services operated under the names of their clients). Competition for electronic payments also includes businesses offering their own or third-party services to their own customers and third-party providers of all sizes offering services directly to consumers. In many cases, competitors specialize in a small number of industries. (Roth, 2007) .Competitors for cash payments includes businesses that allow consumers to pay a bill at one of their locations, or at the location of a partner business, as well as mail and courier services. The ongoing trend away from cash based bill payments in the United States and competitive pressures, which result in lower volumes and a shift to lower revenue per transaction products, are impacting this business. 5. Inadequate accessibility The money transfer organizations have not adequately penetrated the market. Most people are unaware of the existence of these organizations especially those in the most remote and rural areas. This is again made difficult by the lack of adequate infrastructure and inaccessibility of the network connection in some areas. Some areas have no internet connection and thus derailing the service delivery. IMPLICATIONS OF THE LITERATURE 1. Loss of capital Money laundering defrauds the economy and the financial institutions over one billion US dollars a year. The financial companies have gone bankrupt and are faced with extinction due to these acts of sabotage. This also strains the relationship between the western union and its customers. The loss in capital massively affects the operations of the company. These crimes are not easy to detect and thus most of the crimes committed just goes unpunished. (The Economist, 2005) 2. Derailed operation The rigorous laws and regulations derail the operations of the company. The laws are difficult to consent and in some cases they end up wasting the company resources and time. Some of these laws are bureaucratic. (Ball, 2011). The laws should actually be merged in order to enable the company to be able to comply with them more easily. 3. Reduction in the customer base The number of customers is reduced due to the inaccessibility of some areas and also due to lack of infrastructural facilities. The decreased number of agent banks also has a profound effect on the ability of western union to reach more people. This is also coupled with the lack of confidence in the organization by customers. (Levi, 2010) The organization should try and come up with attractive services and increase the customer confidence in their services by addressing the customer complaints and ensuring customer safety and confidentiality. 4. Poor performance The performance of western union is growing negatively due to the company’s inability to keep up with the current trends in business. Failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other money transfer services providers, including telecommunications providers, card associations, card-based payment providers and electronic and internet providers. (Lawrence, 2005) CONCLUSION Western Union has been known for a long time to be a giant in the money transfer business and since it has been around for a long time it has grown to command customer trust and confidence. However, the organization has been faced with massive challenges which have lead to its drastic negative growth and to an almost extinction state. These apparent changes are attributed to the high competition in the money transfer business, inadequate adaptation of the new technology, inaccessibility of the market, rapid changes in the exchange rates, immigration problems, rigorous laws and regulations. However, if the company adopts some drastic measures it can reverse the state of events as they stand at the moment. Measures such as embracing the new technology, promotion of good customer relations, conducting an ongoing research on how to improve their services, addressing customer complaints and adopting measures to curb fraud could go a long way in re emergence of the organization. The organization should also take the initiative of linking with the Interpol police in order to avert any fraudulent activities and also be a warning to those with the intent of committing such a crime. The organization should also utilize the potential within its reach such as a good agent base in order to reduce the magnitude of these challenges. Finally, Challenges are meant to make us stronger and make us indentify new opportunities that we couldn’t have realized were in existence, there if the organization realizes this its can stand up and dust itself and grow to greater heights. REFERENCES 1. Ball, Deborah, et al. (March 22, 2011) “US Banks Oppose Tighter Money Rules” Wall Street Journal. Retrieved October 2, 2011. http://online.wsj.com/article 2. Financial Action Task Force. “Money laundering FAQ” Retrieved October2, 2011. http://www.fatf-gafi.org/document/29/0 3. Financial Action Task Force. “Global Money Laundering and Terrorist Financing Threat Assessment” Retrieved October 2, 2011. http://www.fatf-gafi.org/dataoecd/48/10/45724359.pdf 4. John, et al. (2004). “Monograph on Terrorist Financing”. National Commission on Terrorist Attacks upon the United States. August 20, Retrieved 20 September 2011. http://govinfo.library.unt.edu/911/staff_statement/911_TerrFin_Ch4.pdf 5. Lawrence M. Salinger (2005).Encyclopedia of White-collar & Corporate Crime: A – I, Vol 1, http:/en.wikipedia.org/wiki/special:BookSources/0761930043 6. Levi, Michael and William Gilmore (2002)"Terrorist Finance, Money Laundering and the Risk of Mutual Evaluation: A New Paradigm for Crime Control?” European Journal of Law Reform 4 (2) 7. Levi, Michael (2010)."Combating the Financing of Terrorism: A History and Assessment of the Control of Threat Finance”. British Journal of Criminology 50 (4) 9. Roth, Joseph, & Lester. (2007). “Criminal Prosecution of Banks under the Bank Secrecy Act “United States Attorneys Bulletin. Retrieved october2, 2011. http://www.justice.gov/usao/eousa/foia_reading_room/usab5505.pdf 10. “The Lost Trial”. The Economist October 20, 2005. Retrieved October2, 2011 http://www.economist.com/node/5056338?story_id_E1_VDVGPPR Read More
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