Article, Feature Post, Fintech

The History of Western Union

If you’ve ever needed to send money abroad, then you’ve probably used or at least thought of using Western Union. They have quite a large presence in the field along with a solid user-base that frequently uses their services. So, just how and where did it all start and how relevant are Western Unions’ services today compared to all the different online solutions that we now have available to us.

Early History

Let’s start with Western Unions (WU) origins. The company has been around for a long time, and I mean a really long time. It was founded in 1851 in New York, by a small group of businessmen. The most notable would probably be Hiram Sibley who is largely considered to be a pioneer of the telegraph within the United States. While Western Union is now of the biggest money-transfer services, they never started out that way.

In the beginning, WU was named The New York and Mississippi Valley Printing Telegraph Company and initially offered a message relaying service. They employed bike messengers that would travel around and relay your message or letter.  Their name would later change in 1856 to New York & Western Union Telegraph Company after a merge. With this merger, the company was able to rapidly buy out smaller companies across the United States and help them become one of the main innovators in communications at the time.

Western Union was also responsible for being the first to establish a line that would connect the already existing lines in the Eastern parts of the United States to the west (specifically California), which would later become known as the first ever transcontinental telegraph. During the 60s, this would serve as the only means of near-instantaneous communication between the two coasts. The technology would prove instrumental in keeping forces in different places well-connected and communicated and would go on to help Western Union secure more territory after the war.

Thomas Edison was even a worker at Western Union for a while, having worked as a Morse operator as well as completing his early inventions under the auspices of Western Union.  In 1866, WU provided brokerage firms with the very first universal stock printer, which was also another one of Thomas Edison’s inventions.


A universal stock ticker

Today we know Western Union was one of the world’s major international money transfer services, but they didn’t get into money transfer until the year 1871. That was the year when the company introduced money transfer as a service for the first time, utilizing their already established telegraph network to send money and introduced the concept of wiring money. This exert from Wikipedia demonstrates how it was done:

Money transfer would become WU’s primary business model as the telephone slowly replaced the telegram. By 1900, the company had over a million miles of telegraph lines as well as two international undersea cables.

Over the decades, the WU continued its expansion and growth. They had few rivals, but in 1943 the company bought out their biggest rival: Postal Telegraph Inc. With this acquisition, Western Union cemented their monopoly.

The Internet to the present day

The internet we know today was initially a communications application for the military and was called Automatic Digital Network (AUTODIN). Western Union was, in fact, one of the prime contractors in the AUTODIN. So, in a way, we have WU to thank for being one of the pioneers of the internet that we use now.

WU began providing online money transfer services in the year 2000, this would allow the company to expand their range of service even wider and within the next year, open their 150th agent location.  They started piloting mobile payments in 2007 and by 2011 already had their first mobile app. There’s even been talk of Western Union experimenting with applying Blockchain Technology to their current services.

So, with the inclusion of Paypal, online banking and numerous online services, how do WU services hold up today and why do people still use them? For this question let’s compare WU’s services to PayPal and Online Banking.

The first reason I would say is that Western Union is a well trusted and established company that has been around for over a century. People recognize who they are and are well-aware of their long-lasting business. When it comes to money, people generally want a reliable source that they do not have to worry about when using their services.

A second reason is the range of service that each company provides. Banks are usually limited to the country that they are established in and anything cross borders will result in high fees. Compared to PayPal, Western Union is available in over 200 countries and has more than 500,000 agent locations.

PayPal is also available in over 200 countries, however in order to use their services one must have a computer or smartphone as well as access to the internet. With Western Union, the receiver can receive the money as long as they have the CODE and information of the sender. No internet or computer needed.

WU also greatly helps those that are “unbanked”. Many individuals in the world do not hold a bank account. As of early 2018, the recorded number of adults that do not have access to a bank account is around 1.7 billion adults. That’s a lot of people that are unable to use online banking services or other services such as PayPal, leaving this population for Western Union to cover.

So, as you can see, even with all the other options available for us, Western Union still plays a big role in the money transferring world. And until every individual is recorded and hold a bank account, they will continue to do so. We have to also consider the fact that Western Union has been pioneers of communications technology in the past, which means they can definitely be pioneers of new technology in the future. Perhaps in a few years, we will be able to see what doors open for WU and the rest of us with Blockchain technology.



Links and References


Cover illustration artist WayneBenedet, DeviantArt

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A lover and advocate of all things Tech, Loy has had an exciting time learning about Blockchain and the possibilities it brings for the future.