Western Union, a Denver-based American icon and one of the largest money transfer businesses in the world, is taking a hit to its bottom line because of the Trump administration's immigration policies.
The company reported that revenues for its U.S.-based business declined 12 percent during the third quarter, continuing a slide that started earlier this year.
During a conference call with investors, CEO Devin McGranahan attributed the decline to a significant slowdown in cash transfers to Mexico, El Salvador, Peru and Ecuador.
“Recent policy changes have led to a substantial decline in border crossings and an increase in enforcement actions including workplace inspections and deportations which have created uncertainty and hesitation within migrant communities. These developments continue to impact customer behavior,” McGranahan said.
Western Union is uniquely positioned to capture a real-time snapshot of how immigrant communities are responding to the Trump administration's push to track down and deport undocumented people in the U.S. With a business built on getting money from one place to another, Western Union plays a central role in the lives of many immigrants. A lot of people rely on it to send money back to their families in their home countries.
“You think about why these people are here: They’re here to make money,” said Brett Horn, an analyst who covers Western Union for Morningstar, an investment research company. “How much money they're actually sending back, I think, is probably a pretty decent indication of how they're doing at any given point in time.”
Western Union’s business model has always been subject to political and regulatory pressures, according to Horn. But not on this scale.
“This is kind of an unprecedented situation,” Horn said.
The decline in transfers could be because there are simply fewer undocumented workers in the U.S. But in a previous earnings call over the summer, McGranahan said there could be other issues at play, like fear of being deported.
“What I can tell you is increases in activity, increases in visibility, and increases in media attention all seem to have a negative correlated effect on our customers' willingness to … particularly walk into a retail location.”
The slowdown extends to their digital channels as well, he said.
This week’s financial results weren’t as bad as some investors were expecting. Western Union’s stock closed up about 10 percent after the earnings report was released.
The slowdown looked to be largely in line with the previous quarter, according to Horn.
“There was a fear of ‘How bad can this get?’ I think it is kind of a sigh of relief that it doesn't seem to be getting worse,” Horn said.
Even so, Western Union’s stock is still down 15 percent this year.
“We're seeing this kind of an event that really hits them in the heart … The core of their business is U.S. to Latin America, and we’re seeing it getting hit across the board,” Horn said.
