X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

MADISON, Wis. – Global payment solutions giant First Data Corporation announced plans to acquire VIGO Remittance Corp., one of the key partners behind the World Council of Credit Unions’ IRnet program. IRnet is the popular international remittance program that provides an affordable way for consumers to send money abroad. It charges $10 for up to $1,000 sent abroad, a small fee compared to other remittance programs. So far IRnet is set up in six countries – Mexico, Guatemala, El Salvador, Honduras, Nicaragua, and Jamaica. Approximately 200 CUs participate in IRnet. Affordable remittance programs are being discussed among U.S. and foreign financial regulators of late as the costs are still high from many providers, while regulations like the U.S.A Patriot Act, Bank Secrecy Act and OFAC are adding additional compliance burdens. First Data is already entrenched in remittances. It is the parent company of Western Union and Orlandi Valuta, the two of which make up a huge global money transfer network with 225,000 agents in 200 countries and territories. What’s interesting about the deal however is First Data’s Western Union charges much more than IRnet. According to a WOCCU, contracts between WOCCU and VIGO will remain in place (expires in 2007), the VIGO brand name will continue, and VIGO will operate as an independent subsidiary of First Data. Pablo DeFilippi, products and services manager for IRnet, said it’s too early to tell what effects the First Data acquisition would have on IRnet, if any. He stressed that there will be no immediate impact to the CUs participating in IRnet and IRnet will continue to be a low-cost provider of remittances. “This is something that we need to evaluate once the acquisition is completed. VIGO is a very important partner. We also do work with other partners like Travelex and MoneyGram. We have options,” said DeFilippi. He noted that VIGO was acquired about two and a half years ago by an investment firm that pumped capital into the company, but recently VIGO management told DeFilippi they were seeking another deal for additional capital to grow the company. “They told us they were looking, but they didn’t give us any names.” DeFilippi said he expects there to be consolidation among payment companies focusing on remittances in coming years. He said the compliance burdens are becoming so tough, firms need a certain economy of scale to just stay in the business and deal with all the regulations. “There are so many niche operators. Those are going to consolidate somehow,” said DeFilippi. Still the biggest problem with international remittances is finding ways to serve the unbanked. Most of the people who need the services are unbanked and are reluctant to use financial institutions, he said. International remittances have been on the world stage recently. WesCorp SVP of Payment Systems Tony Kitt recently addressed the G-8 Finance Ministers at a meeting in London where remittances were a focal point. WesCorp was the only U.S. financial institution to speak at the G8 meeting. “What they were looking for from the private sector was finding what problems were associated with international remittances,” said Kitt. What Kitt described to the G8 leaders was private firms struggle to strike a balance between cost of the product and complying with all of the regulations, many of which have come into existence since the 9/11 attacks. Yet Kitt is optimistic about costs dropping. “Competition in the marketplace will continue to drive the cost down. If individuals use our remittance product over the Internet (through a WesCorp CU), we reduce the cost by 30% on international wires,” he said. Kitt echoed what DeFilippi said about the unbanked population causing major problems for moving money. He said CUs in America can help by reaching out to the unbanked in this country and proving to these people that they can trust financial institutions. He said this will facilitate remittances abroad and can increase acceptance of financial institutions, though in some countries financial institutions unfortunately have bilked customers. Kitt said there are also exciting new options that could help such as the use of plastic cards, whether payroll or stored value, that could be sent to family members in other countries. “The other piece would be account-to-cash transactions, using a credit union account here and moving to a cash account,” said Kitt. [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.