Western Union Corporation

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It all started with dots and dashes.

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The Western Union Company is a global financial services firm specializing in money transfers. Headquartered in Denver, Colorado, Western Union’s roots date back to 1851, when it established itself as a telegraph company in Rochester, New York.

Although its growth in the American telegraph industry attained a near-monopoly status in the early 20th century, Western Union’s inability to gain a foothold in the budding telephone industry resulted in a missed opportunity that eventually weakened its position in the communications domain over the course of several decades. Despite Western Union’s technological innovations—such as the Telex machine, undersea cable, and satellite systems—and dominance in the wire money transfer field, the company’s financial burdens came to a head in the 1980s, when it faced the prospect of insolvency.

By the 1990s, Western Union’s financial burdens would force the company to undergo significant restructuring. Its official name was changed to the New Valley Corporation in order to shield its brand from the negative press that typically accompanied bankruptcy proceedings. After being subject to a few key acquisitions, mergers, and organizational restructuring, Western Union was resurrected, publicly listed, and spun off in 2006 as a financial services company specializing in money transfers.

Western Union’s dominance in the global money transfer industry has fluctuated over the decades, but the company remains a competitive force, operating in over 200 countries with a market cap of over $4 billion.

Having sold its business solutions division in 2021, Western Union’s focus is geared toward the consumer market in money transfers, payments, and cash alternatives. Its main services include:

Western Union began as the New York and Mississippi Valley Printing Telegraph Company, founded in 1851 by Ezra Cornell, Hiram Sibley, and Samuel Selden. The company’s initial goal was to build a telegraph line from Buffalo, New York (the place of its founding) to St. Louis, Missouri.

Within the next few years, the New York and Mississippi Valley Printing Telegraph Company would acquire several independent telegraph lines, after which it restructured and renamed itself as the Western Union Telegraph Company in 1856.

The early 1850s saw the formation of several regional monopolies in the telegraph industry. Six of the largest companies would go on to create a pooling agreement in 1857—the “Treaty of Six Nations”—establishing a shared network of main telegraph lines.

The “treaty” marked the beginning of a series of consolidations that, in the course of just a few years, would form a national monopoly. The consolidations included smaller companies as well the larger firms participating in the treaty.

By 1866, only five years after Western Union had successfully constructed the first transcontinental telegraph line, the company had absorbed the last of its industry competitors, giving Western Union a virtual monopoly in the telegraph industry.

From the late 1860s through the early 1870s, Western Union began diversifying its services beyond its core telegraph and telegram business. The most notable of these new services, perhaps, was its money transfer service, which was launched in 1871. Western Union set a historical precedent by creating the world’s first wire transfer service.

By the mid-1870s, Western Union was arguably at the peak of its powers, commanding a 90% market share in the telegraph industry. This was also when the industry first glimpsed a new technology that, in time, would become its primary threat, and an existential one at that: the telephone. Spearheading this development was the Bell Telephone Company.

Recognizing the competitive risk that this nascent industry posed, Western Union attempted to establish its own telephone system. But it faced a patent dispute that, in 1879, resulted in a legal victory for Bell Telephone. Not only did this land a resounding blow to Western Union’s strategic aspirations; it also marked the end of the company’s venture into an industry that would shape the future of communications.

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Pedal power.

Library of Congress, Washington, D.C. (nclc 03731)

As the 20th century approached, Western Union controlled millions of miles of telegraph lines and owned two international undersea cables. Telegraphy became the primary means of communication, and Western Union occupied the center of the revolution.

But the telegraph industry faced stiff competition as the telephone began to eclipse it as a preferred means of communication. In 1900, there were approximately 600,000 telephones in use. By the end of the decade, in 1910, the number of phones skyrocketed to 5.8 million. By 1945, message output in the telegraph industry was half of what it had been in 1910.

By the end of World War II, Western Union had absorbed more than 500 other companies and acquired its main industry competitor, Postal Telegraph Inc. However, telegraph usage continued to wane, and, sensing this trend, Western Union began to diversify its suite of services to adapt to the dwindling demand.

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Bridging the gap between telegraph and email.

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Western Union’s introduction of Telex (teletypewriter) services to New York customers in 1958 and to customers in London and Paris in 1960 is one of the company’s more notable endeavors, marking a shift toward more advanced communication technologies. Western Union also offered private lines and a money order service.

Although these changes may have extended Western Union’s lifeline in a rapidly modernizing world, the decline in telegraphy, its core business, would ultimately weigh on its relevance in the world of modern communications.

With the Telex network standing as the only significant, if not relevant, advancement from the telegraphy era, in 1970, Western Union acquired AT&T’s TWX system, the last major competitor in the telex domain.

In 1974, Western Union embarked on an ambitious plan to establish its own satellite communications fleet, called Westar. The Westar system, which was capable of transmitting video, voice, and data communications, supported the company’s in-house communications, telex, and (remaining) telegram services. Western Union also leased its satellites to other companies. Another significant advancement took place in 1982, when Western Union globalized its money transfer services.

However, these expansions were not enough to stem the company’s declining profits amid surging debt. Western Union was in financial turmoil and about to enter a long and arduous process of restructuring. The 1980s saw wide-scale technological shifts with the adoption of fax machines and the dawning of high-speed digital data transmission, all of which rivaled Western Union’s technological advances.

Toward the end of the decade, Western Union, now under new leadership, sold most of its telecommunications assets to major corporations like AT&T and GM Hughes Electronics Corp. The beleaguered company then shifted its strategic focus toward the money transfer business. On the brink of bankruptcy, Western Union would file for Chapter 11, but not before protecting its oldest and greatest asset: its brand name.

Western Union renamed itself the New Valley Corporation in 1991, shielding its brand from the public stigma of insolvency as it sought to undergo Chapter 11 proceedings. Its goal was to rebalance its books while seeking growth in the global money transfer industry.

By 1994, following a series of restructurings, New Valley Corporation was acquired by First Financial Management Corporation, which then merged with First Data Corporation a year later. Recognizing the long legacy of the Western Union brand name, First Data decided to resurrect the company, retaining its strategic focus toward global money transfers.

In 2006, Western Union was spun off as an independent and publicly traded company. It also announced the end of its telegraph services. Within the decade, Western Union would embark on a series of business acquisitions to expand its global reach as well as its cross-border B2B (business-to-business) services, dubbed Western Union Business Solutions. Acquisitions included Custom House (2009), European money transfer networks Angelo Costa and Finint S.r.l. (2011), Travelex Global Business Payments (2011), and a 15% stake in Saudi Arabia–based stc Bank, formerly Saudi Digital Payments Company (2020).

In 2021, Western Union sold Western Union Business Solutions to Goldfinch Partners, LLC and The Baupost Group, LLC to focus on the global cross-border payments consumer market.