Alibaba is threatened by Western Union Edge, a platform to help companies connect and pay each other
Western Union launched its new business-to-business platform to let companies not only connect with each other but also pay each other, competing with the likes of Alibaba and Amazon as the conventional funds transfer business of the US group faces threats from many start-ups.
The procedure of international payments and procurements for businesses can prove to be fragmented and challenging. Individual contracts with every supplier and many times these may be done through conventional methods instead of online. On top of that, rates of foreign currencies can often trouble a company.
The American financial service provider’s B2B division hopes to solve that problem. It unveiled its online platform known as “Edge” on April 4, 2016, which allows businesses to connect with one another on a core platform and to set up payments and invoicing.
On April 11, 2016, Western Union Edge will unveil in half a dozen markets, such as United States, United Kingdom, Singapore, New Zealand, Canada, and Australia. The online platform will be offered in other chosen markets this year.
Edge provides invoicing facilities in one platform, and permits “near real-time" facility for 22 currencies when it is introduced. Within "a few months", it will provide support to 49 currencies in almost real-time. Often international payments can take many days to clear.
The recent product of Western Union pits against companies such as Alibaba and Amazon. The Chinese online retailer has a platform, which permits wholesale seller and buyers of items find one another and facilitate payments.
The Seattle based company provides a similar facility know as Amazon Business. Both services differ from the service offered by Western Union as they provide actual goods that can be purchased, whereas Edge is a platform, which has been introduced to mainly let companies connect and settle transactions.
Many tech companies are challenging Edge, such as Currency Cloud (a startup that facilitates global B2B payments) and Tradeshift (an invoice service provider). The Colorado-based organization holds the belief that the fact it is not an online trading offering can offer it an advantage whereas its expertise in cross-border payments will turn it into an appealing offering.
Western Union has shifted its concentration to business-to-business division as its central global money transfer service provider faces threats from newly established businesses. Organizations like remittances service provider, Worldremit and UK-based Tranferwise claim to provide a faster and cheaper money transfer facility from the US financial service provider.
The organization bets that Business Solutions – which presently contributed to around 7% of sales revenues – will be its future growth driver.
President of the Western Union, Kerry Agisotics states that the company‘s client network of 100,000 business clients has 2 million beneficiaries – a profitable potential addition to the WU EDGE user list. “Just connecting them will be a great traction,” he comments.
The new international payment service has been introduced at a time when the Chinese economy has continued to slow down similar to what it did last year but it would not affect Alibaba much as CNBC had reported that the during the economic slowdown, Hangzhou-based web retailer generated a gross merchandise volume of $14.3 billion in the last year.
