Founded in 1851 as the New York and Mississippi Valley Printing Telegraph Company in Rochester, New York,[3] the company changed its name to the Western Union Telegraph Company in 1856 after merging with several other telegraph companies.[4] It dominated the American telegraphy industry from the 1860s to the 1980s,[5] pioneering technology such as telex and developing a range of telegraph-related services, including wire money transfer, in addition to its core business of transmitting and delivering telegram messages.
After experiencing financial difficulties, it began to move its business away from communications in the 1980s and increasingly focused on its money-transfer services. It ceased its communications operations completely in 2006,[6][7] at which time The New York Times described it as "the world's largest money-transfer business" and added that the company would remain as such due to the large number of immigrants wiring money home.[8]
In 1857, Western Union participated in the 'Treaty of Six Nations', an attempt by six of the largest telegraph firms to create a system of regional telegraphy monopolies with a shared network of main lines.[13] After the creation of the 'Six Nations' system, Western Union continued to acquire both larger & smaller telegraph companies and by 1864 had transformed from a regional monopoly into a national oligopolist with its only serious competitors being the American Telegraph Company and the United States Telegraph Company.[5]
In 1866, Western Union acquired the American Telegraph Company and the United States Telegraph Company, its two main competitors, for a time gaining a virtual monopoly over the American telegraphy industry.[5] The company also began to develop new telegraphy-related services beyond the transmission and delivery of telegrams, launching the first stock ticker in 1866,[14] a standardized time service in 1870 and wire money transfer in 1871.[15]
In the 1870s, the company faced increased competition from newly formed rival telegraphy conglomerate Atlantic and Pacific Telegraph Company and from the nascent telephony industry led by the Bell Telephone Company. Western Union instead attempted to launch a rival telephony system before settling a patent lawsuit with Bell and leaving the telephone business completely in 1879.[16][17]
Financier Jay Gould orchestrated a merger of the Atlantic and Pacific Telegraph Company with Western Union in 1881, giving him a controlling share of the merged company.[18][19][20]
Monopoly & decline of telegraphy (1881–1963)
A Western Union telegram sent on September 7, 1896, to report on the positions of two cometsA 12-year-old Western Union messenger boy in Tampa, Florida, 1911
When the Dow Jones Railroad Average stock market index for the New York Stock Exchange (NYSE) was created in 1884, Western Union was one of the original eleven companies to be included.[21] By 1900, Western Union operated a million miles of telegraph lines and two international undersea cables.[22]
AT&T gained control of Western Union in 1909, acquiring a 30% stake in the company.[5] However, in 1913 AT&T, under indictment for violating the Sherman Antitrust Act of 1890, was forced to sell its shares in the company which once again became independent.[23]
Advertisement for Western Union "Tourate" telegram service, 193960 Hudson Street, Manhattan, was WU's headquarters in the early and middle 20th century.Western Union Telegraph storefront seen in the Chamber of Commerce Building in Toledo, Ohio, 1895
Western Union acquired its only major competitor in the American telegraphy sector Postal Telegraph, Inc. in 1945, effectively giving the company monopoly power over the industry.[5] After 1945 the telegraphy industry began to experience a decline as the use of telephones increased, especially in the case of long-distance calls, with total telegraph messages almost halving from 1945 to 1960.[5]
In 1958, Western Union began offering telex services to customers in New York City.[24] Teleprinter equipment for the telex network was originally provided by Siemens & Halske AG[25] and later by Teletype Corporation.[26] Direct international telex services commenced in the summer of 1960, with limited service to London and Paris.[27]
In honor of Valentine's Day 1959, Western Union introduced the Candygram, a box of chocolates accompanying a telegram that was featured in a commercial with the famously rotund radio announcer Don Wilson.[28][29]
Western Union International spin-off
In 1963, Western Union organized its international cable system properties and its right-of-way for connecting international telegraph lines into a separate company called Western Union International (WUI), which it sold that year to American Securities.
In 1967, American Securities listed WUI as a publicly traded company on the New York Stock Exchange. WUI was acquired by Xerox for $207 million in stock in 1979[30] and subsequently sold for $185 million in cash to MCI Communications in 1981.[31] MCI renamed WUI to MCI International, ceasing the use of Western Union branding.[31]
Consolidation (1963–1984)
Logo, 1969 to 1990
Western Union purchased the TWX system from AT&T in January 1969, the only major competitor to its own telex network.[32]
Western Union became the first American telecommunicationscorporation to maintain its own fleet of geosynchronouscommunications satellites, starting in 1974. The fleet of satellites, called Westar, carried communications within the Western Union company for telegram and mailgram message data to Western Union bureaus nationwide. It also handled traffic for its telex and TWX services. The Westar satellites' transponders were also leased by other companies for relaying video, voice, data, and facsimile (fax) transmissions. The Westar fleet of satellites and ground stations were sold to Hughes (who originally built all of the Westar satellites launched) in 1988 after Western Union suffered financial losses with their telecommunications assets starting in the early 1980s.
In 1981, Western Union purchased a 50% interest in Airfone. It sold Airfone to GTE in 1986 for $39 million in cash.[33] From 1982, as a result of financial services deregulation, Western Union began offering wire money transfer services globally.[4]
In 1984, after years of declining profits and mounting debts, Western Union began to negotiate with its creditors regarding debt restructuring.[34] The restructuring was completed in 1987 when investor Bennett S. LeBow acquired control of Western Union through an outside of chapter 11 process that was a complex leveraged recapitalization.[34] The transaction was backed by a total of $900 million in high-yield bonds and preferred stock underwritten by Michael Milken's group at Drexel Burnham Lambert as part of an exchange offer. LeBow installed Robert J. Amman as president and CEO who led a complete strategic, operational and balance sheet restructuring of the company over the next six years.
Amman executed a strategy of redirecting Western Union from being an asset-based provider of communications services, with a money transfer business as a large but less important part of the business, into being a provider of consumer-based money transfer financial services. Thus, Amman ran the company as two separate companies. One business consisted of the money transfer business, which was funded and operated to take advantage of the significant growth opportunity. The second unit consisted of all the non-strategic communications assets such as the long-distance analog voice network, satellite business and undersea cable assets.
In the three-year period through 1990 Amman was supported by Robert A. Schriesheim, also installed by LeBow, as a special advisor who oversaw the divestiture of the four non-strategic telecommunications assets for about $280 million.
Most of the company's business services unit including the Easylink electronic mail and Telex businesses were sold to AT&T for $180 million in Dec 1990. Western Union Priority Services including Mailgram, Priority Letter and Custom Letter services were not included in the deal. This marked the end of Western Union's telecommunications carrier business. [35]
The official name of the corporation was changed to New Valley Corporation in 1991, as part of the company's move to seek bankruptcy protection to eliminate the firm's overleveraged balance sheet while continuing to grow the money transfer business. The name change was used to shield the Western Union name from being dragged through the proceedings (and the resulting bad PR).[36] Under the day to day leadership of Amman and the backing of LeBow, the company's value increased dramatically through its years operating under chapter 11.
Following various restructurings, including negotiations with Carl Icahn who became a large bond holder, New Valley Corporation was sold in a bankruptcy auction to First Financial Management Corporation in 1994 for $1.2 billion. In 1995, First Financial merged with First Data Corporation in a $6 billion transaction.[37]
Public listing & international expansion (2006–present)
Western Union European Regional Operations Office in Vilnius
On January 26, 2006, First Data announced its intention to spin off Western Union into independent publicly traded financial services company focused on money transfers through a tax-free spin-off to First Data shareholders. The spin off occurred as planned on September 29, 2006.[38] The next day Western Union announced that it would cease offering telegram transmission and delivery.[39]
In May 2009, Western Union announced its plan to acquire Canada-based Custom House from Peter Gustavson.[40] The deal closed in September 2009 for a purchase price of US$371 million.[41] This acquisition led the company to be re-branded as Western Union Business Solutions.[42]
In January 2011, Western Union acquired Angelo Costa, a group active in money transfer and services to immigrants. Angelo Costa has a network of 7,500 points of sale throughout Europe. The agreement was signed for US$200 million.[citation needed]
In July 2011, Western Union acquired Travelex's Global Business Payments division for £606 million.[43]
In October 2011, Western Union completed the acquisition of Finint S.r.l., one of Western Union's leading money transfer network agents in Europe, with more than 10,000 subagent locations across Italy, Spain, and the United Kingdom.[44]
In May 2015, rumors emerged over a proposed merger of Western Union and competitor MoneyGram, at a time when both companies’ revenue were declining.[45] Western Union denied this was the case.[46] In January 2017, Ant Financial, Alibaba’s financial technology firm instead unsuccessfully attempted to acquire MoneyGram for $880 million,[47] but this was blocked by the U.S. government citing national security concerns.[48]
Money can be sent online or in-person at Western Union agent locations. Cash can be collected in person at any other Western Union agent location worldwide by providing the 10-digit MTCN (Money Transfer Control Number) and identification. In some cases, a secret question and answer can be used instead of identification.
Western Union Mobile
In October 2007, Western Union announced plans to introduce a mobile money-transfer service with the GSM Association, a global trade association representing more than 700 mobile operators in 218 countries and covering 2.5 billion mobile subscribers.
The proliferation of mobile phones in developed and developing economies provides a widely accessible consumer device capable of delivering mobile financial services ranging from text notifications associated with Western Union cash delivery services to phone-based remittance options. Western Union's mobile money transfer service offering will connect its core money-transfer platform to m-bank or m-wallet platforms provided by mobile operators and/or locally regulated financial institutions.
Western Union Connect
The company launched the Western Union Connect service in October 2015, following partnership agreements with major instant messaging apps WeChat and Viber.[52][53] The partnership allows users of WeChat to send up to $100 to China, the US and 200 other countries,[53] while Viber users can send up to $100 for $3.99 plus exchange rate fees, with that fixed fee increasing the more money is sent up a limit of $499.[52]
Most of these services were discontinued by Western Union in the late 1980s due to a lack of profitability, with the company's divisions providing said services being divested and sold to other companies, such as the 1988 sale of WU's satellite fleet and services to Hughes Space and Communications, and the sale of WU's Airfone service to GTE in 1986.
Charge card
In 1914, Western Union was the first to issue a charge card.[54][55]
BidPay
As the Internet became an arena for commerce at the turn of the millennium, Western Union started its online services. BidPay was renamed "Western Union Auction Payments" in 2004 before being renamed back to BidPay. BidPay ceased operations on December 31, 2005, and was purchased for US$1.8 million in March 2006 by CyberSource Corp. who announced their intention to re-launch BidPay. BidPay was later discontinued by CyberSource effective December 31, 2007.[56]
Sponsorship
Western Union was a major shirt-sponsor of the Sydney RoostersNRL team from 2002 to 2003. The company still sponsors the team, but not as a shirt-sponsor. Globally Western Union sponsors numerous community events that help support the diaspora communities that use the global Money Transfer service. They also sponsored numerous WWE and WCW pay-per-view events such as the No Way Out 1998 and Slamboree 2000. They sponsored UEFA Europa League from 2012 until 2015.[57][58]
The First Data Western Union Foundation donates money to charitable causes globally. After the 2004 Indian Ocean tsunami, the Foundation donated US$1,000,000 to the relief effort.[60]
Liverpool F.C. announced on August 9 2017, that Western Union would become their first ever sleeve sponsors, from the start of the 2017–18 season.[61] They signed a £25m deal for 5 years as Liverpool's sleeve sponsor.[62]
Involvement in early computer networking
Western Union telegrams were transmitted through a store and forward message switching system.[63] Early versions were manual telegraph systems. Later systems using teleprinters were semi-automatic, using punched paper tape to receive, store, and retransmit messages. Plan 55-A, Western Union's last paper tape based switching system (1948–1976), was fully automatic, with automatic routing.[64][65]
Western Union was a prime contractor in the Automatic Digital Network (AUTODIN) program. AUTODIN, a military application for communication, was first developed in the 1960s, but was dismantled in favor of the ARPANET, the precursor to the modern Internet in the 1990s. The Defense Message System (DMS) replaced AUTODIN in 2000.[66]
AUTODIN, originally named "ComLogNet", was a reliable service that operated at 99.99% availability, using mechanical punched card readers and tab machines to send and receive data over leased lines.[67] During the peak operation of AUTODIN, the US portion of the network handled 20 million messages a month.[citation needed] Western Union failed in its attempts to engineer a replacement (AUTODIN II), leading to the development of an acceptable packet-switched network by BBN (the developer of the ARPANET) which became the foundation of today's Internet. AUTODIN service ceased in 2000, years after it had become obsolete.[68]
A related innovation that came from AUTODIN was Western Union's computer based EasyLink service.[69] This system allowed one of the first marketable email systems for non-government users. The system allowed the same message to be sent simultaneously to multiple recipients via email, fax, mailgram, or telex services as well as allowing messages to be sent from the integrated formats. With the service, users could also perform research utilizing its InfoLink application. EasyLink was spun off as a separate company and is now part of OpenText.[70]
Controversies
Scam industry and money laundering
Western Union advises its customers not to send money to someone that they have never met in person. Despite its efforts in increasing customers' awareness of the issue,[71] Western Union is used extensively for internet fraud by scammers.[72]
Western Union has been required to maintain records of payout locations of the individuals who may be laundering the money, though this information may be obtained only through the use of a subpoena. Hence advance-fee fraud and romance scammers continue to receive funds via Western Union confident in the knowledge that money lost to overseas scammers is almost always unrecoverable.[73] For this reason, it is banned as a medium of payment through eBay,[74] and discouraged on other online auction websites.[75]
Western Union admitted to allowing wire fraud in January 2017 and agreed to pay $586m, for turning a blind eye as criminals used its service for advance fee fraud. Scammers engaging in various 419 advance fee scams including offering fake job offers and lottery prizes, were able to process transactions using Western Union money transfer, mainly by giving the agents a share of the earnings from their scams. Western Union failed to investigate hundreds of thousands of complaints that were filed by victims.[76]
Money laundering and terrorist financing
The Central Bank of Ireland reprimanded and fined Western Union €1.75m in May 2015 because of failures in anti money laundering practices which could have left the firm's payment services open to being used for money laundering and/or terrorist financing saying that they were concerned that Western Union "failed to have in place sufficiently robust systems and procedures to train agents, to monitor and identify suspicious activity in respect of smaller transactions, and to maintain appropriate records" and "the splitting of payments into many separate smaller payments is a common method used to launder money. Similarly, terrorist financing is often carried out by small payment transfers."[77][78]
Western Union agents in the US also allowed Chinese immigrants to pay hundreds of millions of dollars to human smugglers through the service, evading the transfer reporting requirements by sending the amounts in smaller increments.[76]
In 2017, Western Union admitted to money laundering and consumer fraud violations and agreed to pay $586 million in a settlement with the Department of Justice.[79] Among other charges, the Justice Department showed that Western Union was complicit in creating an ecosystem where criminals were able to engage in consumer fraud and human trafficking. The charges were dismissed in March 2020.[80]
In 2018, Western Union was fined $60 million by the New York State Department of Financial Services.[81] The press release accompanying the fine stated that, "Western Union executives put profits ahead of the company’s responsibilities to detect and prevent money laundering and fraud, by choosing to maintain relationships with and failing to discipline obviously suspect, but highly profitable, agents."
On May 29, 2019, Western Union announced the departure of a company executive, Odilon Almeida, who had served as executive vice president and president of Global Money Transfer.[82] In 2012, Stewart Stockdale, who had the same position as Almeida, left the company under similar circumstances.
Connection to military intelligence
The book The One Percent Doctrine: Deep Inside America's Pursuit of Its Enemies Since 9/11 alleged that Western Union provided United States military intelligence with personal information.[83]
Anti-competitive behavior
Western Union has been accused of engaging in anti-competitive behavior in Africa as a result of a lack of competition on the continent.[45] According to a report by the Overseas Development Institute, this allows Western Union to artificially inflate its fees for money transfers, charging what has been called an “Africa charge” of 8% consistently “applied across countries regardless of the size of the market, regulatory costs or market risk.”[84] However, the fees can be as high as 10% or more, depending on the region.[85] Africa's remittance market remains the most expensive in the world,[86] and the region is estimated to incur excess costs of $1.4 billion to $2.3 billion per year as a result of these high remittance fees.[84]
The company has also been criticized for its use of exclusivity agreements with banks in countries that receive remittances, restricting competition and harming the consumer,[87] by requiring the consumer to conduct transactions via nominated banks.[84] This also allows for the imposition of above-average transaction fees.[84]
In February 2016, Harada Ltd filed a complaint with the EU antitrust regulator claiming that Western Union colluded with banks to push out smaller rivals from the money transfer market.[88] The commission concluded that the allegations were insufficient and found in favor of Western Union.[89]
Present-day telecommunications in Canada include telephone, radio, television, and internet usage. In the past, telecommunications included telegraphy available through Canadian Pacific and Canadian National.
Electrical telegraphy is a point-to-point text messaging system, primarily used from the 1840s until the late 20th century. It was the first electrical telecommunications system and the most widely used of a number of early messaging systems called telegraphs, that were devised to send text messages more quickly than physically carrying them. Electrical telegraphy can be considered the first example of electrical engineering.
Telegraphy is the long-distance transmission of messages where the sender uses symbolic codes, known to the recipient, rather than a physical exchange of an object bearing the message. Thus flag semaphore is a method of telegraphy, whereas pigeon post is not. Ancient signalling systems, although sometimes quite extensive and sophisticated as in China, were generally not capable of transmitting arbitrary text messages. Possible messages were fixed and predetermined, so such systems are thus not true telegraphs.
A teleprinter is an electromechanical device that can be used to send and receive typed messages through various communications channels, in both point-to-point and point-to-multipoint configurations.
Wireless telegraphy or radiotelegraphy is the transmission of text messages by radio waves, analogous to electrical telegraphy using cables. Before about 1910, the term wireless telegraphy was also used for other experimental technologies for transmitting telegraph signals without wires. In radiotelegraphy, information is transmitted by pulses of radio waves of two different lengths called "dots" and "dashes", which spell out text messages, usually in Morse code. In a manual system, the sending operator taps on a switch called a telegraph key which turns the transmitter on and off, producing the pulses of radio waves. At the receiver the pulses are audible in the receiver's speaker as beeps, which are translated back to text by an operator who knows Morse code.
The Society for Worldwide Interbank Financial Telecommunication (Swift), legally S.W.I.F.T. SC, is a cooperative established in 1973 in Belgium and owned by the banks and other member firms that use its service. SWIFT provides the main messaging network through which international payments are initiated. It also sells software and services to financial institutions, mostly for use on its proprietary "SWIFTNet", and assigns ISO 9362 Business Identifier Codes (BICs), popularly known as "Swift codes".
PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers; it serves as an electronic alternative to traditional paper methods such as checks and money orders. The company operates as a payment processor for online vendors, auction sites and many other commercial users, for which it charges a fee.
Adelphia Communications Corporation was an American cable television company with headquarters in Coudersport, Pennsylvania. It was founded in 1952 by brothers Gus and John Rigas after the pair purchased a cable television franchise for US$300. Combining various cable properties, the company became one of the most successful in the United States and reached over two million subscribers in 1998. In addition to cable television, Adelphia later started providing high-speed internet, phone services and voice messaging for businesses.
MoneyGram International, Inc. is an American interstate and international peer-to-peer payments and money transfer company headquartered in Dallas, Texas. It has an operations center in St. Louis Park, Minnesota, and regional and local offices around the world.
Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash office.
The Automatic Digital Network System, known as AUTODIN, is a legacy data communications service in the United States Department of Defense. AUTODIN originally consisted of numerous AUTODIN Switching Centers (ASCs) located in the United States and in countries such as England and Japan.
Allstream Inc. is a business communications provider based in Mississauga, Ontario, Canada, that provides Internet Protocol (IP) connectivity, managed IP services, unified communications and voice services to its customers in the United States and Canada.
Fedwire is a real-time gross settlement funds transfer system operated by the United States Federal Reserve Banks that allows financial institutions to electronically transfer funds between its more than 9,289 participants. Transfers can only be initiated by the sending bank once they receive the proper wiring instructions for the receiving bank. These instructions include: the receiving bank's routing number, account number, recipient’s name and dollar amount being transferred. This information is submitted to the Federal Reserve via the Fedwire system. Once the instructions are received and processed, the Fed will debit the funds from the sending bank's reserve account and credit the receiving bank's account. Wire transfers sent via Fedwire are completed the same business day, with many being completed instantly.
Safaricom PLC is a listed Kenyan mobile network operator headquartered at Safaricom House in Nairobi, Kenya. It is the largest telecommunications provider in Kenya, and one of the most profitable companies in the East and Central Africa region. The company offers mobile telephony, mobile money transfer, consumer electronics, ecommerce, cloud computing, data, music streaming, and fibre optic services. It is most renowned as the home of M-PESA, a mobile banking SMS-based service.
CNCP Telecommunications was an electrical telegraph operator and later a telecom company, which operated between 1967 and 1990.
Telex is a telecommunication system that allows text-based messages to be sent and received by teleprinter over telephone lines. The term "telex" may refer to the service, the network, the devices, or a message sent using these. Telex emerged in the 1930s and became a major method of sending text messages electronically between businesses in the post–World War II period. Its usage declined as the fax machine grew in popularity in the 1980s.
ACI Worldwide Inc. is an American payment systems company headquartered in Elkhorn, Omaha, Nebraska. ACI develops a broad line of software focused on facilitating real-time electronic payments.
Women in telegraphy have been evident since the 1840s. The introduction of practical systems of telegraphy in the 1840s led to the creation of a new occupational category, the telegrapher, telegraphist or telegraph operator. Duties of the telegrapher included sending and receiving telegraphic messages, known as telegrams, using a variety of signaling systems, and routing of trains for the railroads. While telegraphy is often viewed as a males-only occupation, women were also employed as telegraph operators from its earliest days. Telegraphy was one of the first communications technology occupations open to women.
In the nineteenth century, the United Kingdom of Great Britain and Ireland had the world's first commercial telegraph company. British telegraphy dominated international telecommunications well into the twentieth. Telegraphy is the sending of textual messages by human operators using symbolic codes. Electrical telegraphy used conducting wires to send messages, often incorporating a telegram service to deliver the telegraphed communication from the telegraph office. This is distinct from optical telegraphy that preceded it and the radiotelegraphy that followed. Though Francis Ronalds first demonstrated a working telegraph over a substantial distance in 1816, he was unable to put it into practical use. Starting in 1836, William Fothergill Cooke, with the scientific assistance of Charles Wheatstone, developed the Cooke and Wheatstone telegraph. The needle telegraph instrument suggested by Wheatstone, the battery invented by John Frederic Daniell, and the relay invented by Edward Davy were important components of this system.
The telegraph represented a disruptive innovation in the history of the United States from its invention in the 1830s onward by quickly becoming a vital part of the nation's communication infrastructure. Its relative importance declined with the spread of telephones in the 20th century. Telegraph service permitted short texts to be sent cheaply and arrive in a matter of minutes to hours, instead of days or weeks. Telegraphy facilitated faster and more profitable freight and passenger railway traffic, consolidated financial and commodity markets, sped political news and commentary, and lowered information costs for companies.
↑ Standage, Tom (2007). The victorian internet: the remarkable story of the telegraph and the nineteenth century's on-line pioneers (Pbk.ed.). New York: Walker. p.119. ISBN9780802716040.
↑ Vu, Angela; Terrell, Ellen (April 30, 2017). "Dow Jones Industrial Average First Published". This Month in Business History. Washington, DC: Library of Congress, Business reference Services.
↑ Strauss, Paul R. (September 1983). "Xerox at the Crossroads". Data Communications. Archived from the original on January 3, 2014. Retrieved November 6, 2013.
↑ David Brown (December 18, 2005). "Fraudsters Targeted In New eBay Crackdown". The People. p.33. The auction giant will protect customers by BANNING the use of online money transfers. Now eBay will bring in the ban – backed by Western Union and already in force in the US – from January15in the UK. It will tell punters to use secure payment systems that verify the identity of users, and which can track both buyers' and sellers' accounts.
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US$4.36 billion (2023) [2] 
