The Western Union Company is a financial services and communications company based in the United States. Its North American headquarters is in Englewood, Colorado. Up until it discontinued the service in 2006, Western Union was the best-known U.S. company in the business of exchanging telegrams.
Western Union has several divisions, with products such as person-to-person money transfer, money orders, business payments and commercial services. They offered standard "Cablegrams", as well as more cheerful products such as Candygrams, Dollygrams, and Melodygrams.
Western Union, as an industrialized monopoly, dominated the telegraph industry in the late 19th century. It was the first communications empire and set a pattern for American-style communications businesses as they are known today.
1.1 19th century,
1.2 20th century,
1.3 Involvement in early computer networking,
1.4 The end of telegrams,
2 Specific services
2.3 Western Union Mobile,
2.4 Sending and receiving funds,
2.5 Transfer fees,
2.6 Past services,
4 Scam industry,
5 Connection to military intelligence
5.1 Blocked transactions,
6 See also,
7 Alternative providers,
9 Further reading,
10 External links,
In 1851, the New York and Mississippi Valley Printing Telegraph Company was organized in Rochester, New York by Hiram Sibley and others, with the goal of creating one great telegraph system with unified and efficient operations. Meanwhile, Ezra Cornell had bought back one of his bankrupt companies and renamed it the New York & Western Union Telegraph Company. Originally fierce competitors, by 1855 both groups were finally convinced that consolidation was their only alternative for progress. The merged company was named The Western Union Telegraph Company at Cornell's insistence, and Western Union was born.
Western Union bought out smaller companies rapidly, and by 1860 its lines reached from the East Coast to the Mississippi River, and from the Great Lakes to the Ohio River. In 1861 it opened the first transcontinental telegraph. In 1865 it formed the Russian American Telegraph in an attempt to link America to Europe, via Alaska, into Siberia, to Moscow. (This project was abandoned in 1867.) The company enjoyed phenomenal growth during the next few years. Its capitalization rose from $385,700 in 1858 to $41 million in 1876. However it was top-heavy with stock issues, and faced growing competition from several firms, especially the Atlantic and Pacific Telegraph Company--itself taken over by financier Jay Gould in 1875. In 1881 Gould took control of Western Union.
It introduced the first stock ticker in 1866, and a standardized time service in 1870. The next year, 1871, the company introduced its money transfer service, based on its extensive telegraph network. In 1879, Western Union left the telephone business, having lost a patent lawsuit with Bell Telephone Company. As the telephone replaced the telegraph, money transfer would become its primary business.
When the Dow Jones Transportation Average stock market index for the New York Stock Exchange (NYSE) was created in 1884, Western Union was one of the original eleven all-American companies tracked.
By 1900 Western Union operated a million miles of telegraph lines and two international undersea cables.
The company continued to grow, acquiring more than 500 smaller competitors. Its monopoly power was almost complete in 1943 when it bought Postal Telegraph, Inc., its chief rival.
In 1914 Western Union offered the first charge card for consumers; in 1923 it introduced teletypewriters to join its branches. Singing telegrams followed in 1933, intercity fax in 1935, and commercial intercity microwave communications in 1943. In 1958, it began offering Telex service to customers in New York City. Western Union introduced the 'Candygram' in the 1960s, a box of chocolates accompanying a telegram featured in a commercial with the rotund Don Wilson. In 1964, Western Union initiated a transcontinental microwave system to replace land lines.
During World War II, families of sons in the military service dreaded the Western Union "boy on his bicycle" to arrive at their home with a telegram from the War Department or the Navy Department. The message began: The Secretary of War (soldiers and airmen) or Secretary of Navy (sailors and marines), regrets to inform you that name, rank and serial number of the man in the military service was killed in action (or missing in action).
Western Union became the first American telecommunications corporation to maintain its own fleet of geosynchronous communication satellites, starting in 1974. The fleet of satellites, called Westar, carried communications within the Western Union company for telegram and mailgram message data to Western Union bureaus nationwide. It also handled traffic for its Telex and TWX (Telex II) services. The Westar satellites' transponders were also leased by other companies for relaying video, voice, data, and facsimile (fax) transmissions.
In 1963 Western Union organized its international cable system properties and its right-of-way for connecting international telegraph lines into a separate company called Western Union International (WUI) which it divested that year to American Securities. In 1983 American Securities sold WUI to MCI Communications which renamed it to MCI International and moved its headquarters from New York City to Rye Brook, New York.
In the 1970s WUI installed and leased to the U.S. Department of Defense (DOD) dedicated 50 Kbps high-speed telecommunications facilities between the continental U.S. and Hawaii, Germany and the United Kingdom to provide a test bed for the DOD's Advanced Research Projects Agency (ARPA). This test bed provided ARPA with a proof of concept for the technology of packet switching which later became the Internet.
In 1976, Western Union partnered with E. F. Hutton & Co..
In 1981 Western Union purchased a fifty percent interest in Airfone. It sold Airfone to GTE in 1986 for $39 million in cash.
Because of declining profits and mounting debts, Western Union slowly began to divest itself of telecommunications-based assets starting in the early 1980s. Because of deregulation at the time, Western Union began sending money outside the country, re-inventing itself as "The fastest way to send money worldwide" and expanding its agent locations internationally.
In 1987, Investor Bennett S. LeBow acquired control of Western Union through an outside of chapter 11 process that was a complex leveraged recapitalization. The transaction was backed by a total of $900 million in high yield bonds and preferred stock underwritten by Michael Milken's group at Drexel Burnham Lambert as part of an exchange offer. LeBow installed Robert J. Amman as President and CEO who led a complete strategic, operational and balance sheet restructuring of the company over the subsequent 6 years.
Mr. Amman executed a strategy of redirecting Western Union from being an asset-based provider of communications services, with a money transfer business as a large but less important part of the business, into being a provider of consumer-based money transfer financial services. In so doing, Mr. Amman ran the company as two separate companies. One business consisted of the money transfer business, which was funded and operated to take advantage of the significant growth opportunity. The second unit consisted of all the non-strategic communications assets such as the long-distance analog voice network, satellite business and undersea cable assets. In the 3 year period through 1990 Mr. Amman was supported by Robert A. Schriesheim, also installed by Mr. LeBow, as a special advisor who oversaw the divestiture of the four non-strategic telecommunications assets for about $280 million.
The official name of the corporation was changed to New Valley Corporation in 1991, just in time for that entity to seek bankruptcy protection as part of Mr. Amman's strategy to eliminate the overleveraged balance sheet while continuing to grow the money transfer business . The name change was taken to shield the Western Union name from being dragged through the proceedings (and the bad PR that would cause). Under the day to day leadership of Robert J. Amman and the backing of LeBow, the company's value increased dramatically through its years operating under chapter 11.
Following various restructurings that included negotiations with Carl Icahn who became a large bond holder, Mr. Amman engineered the sale of New Valley in a bankruptcy auction to First Financial Management Corporation in 1994 for $1.2 billion where he became vice chairman, and a year later merged with First Data Corporation in a $6 billion transaction. On January 26, 2006, First Data Corporation announced plans to spin Western Union off as an independent, publicly traded company. Western Union's focus will remain money transfers. The next day, Western Union announced that it would cease offering telegram transmission and delivery, the product most associated with the company throughout its history. This was, however, not the original Western Union telegram service, but a new service of First Data under the Western Union banner; the original telegram service was sold off after New Valley Corporation's bankruptcy and now operates as iTelegram.
The spin off was completed September 29, 2006 and Western Union became an independent, publicly traded company again.
Involvement in early computer networking:
Western Union telegrams were transmitted through a store and forward message switching system. Early versions were manual telegraph systems. Later systems using teleprinters were semi-automatic, using punched paper tape to receive, store, and retransmit messages. Plan 55-A, Western Union's last paper tape based switching system (1948-1976), was fully automatic, with automatic routing.
Western Union was a prime contractor in the Automatic Digital Network (AUTODIN) program. AUTODIN, a military application for communication, was first developed in the 1960s and became the precursor to the modern Internet in the 1990s. The Defense Message System (DMS) replaced AUTODIN in 2000.
AUTODIN, originally named "ComLogNet", was a highly reliable service that operated at 99.99% availability, using mechanical punched card readers and tab machines to send and receive data over leased lines. During the peak operation of AUTODIN, the United States portion of the network handled twenty million messages a month. Western Union failed in its attempts to engineer a replacement (AUTODIN II), leading to the development of an acceptable packet-switched network by BBN (the developer of the ARPANET) which became the foundation of today's Internet. AUTODIN service ceased in 2000, years after it had become obsolete.
A related innovation that came from AUTODIN was Western Union's computer based EasyLink service. This system allowed for one of the first marketable email systems for non-government users. In addition, the system allowed the same message to be sent simultaneously to multiple recipients via email, fax, mailgram, or telex services as well as allowing messages to be sent from the integrated formats. With the service, users could also perform research utilizing its InfoLink application. EasyLink Services is now its own company.
The end of telegrams:
As of February 2006, the Western Union website showed this notice:
"Effective 2006-01-27, Western Union will discontinue all Telegram and Commercial Messaging services. We regret any inconvenience this may cause you, and we thank you for your loyal patronage. If you have any questions or concerns, please contact a customer service representative."
This ended the era of telegrams which began in 1851 with the founding of the New York and Mississippi Valley Printing Telegraph Company, and which spanned 155 years of continuous service. Western Union reported that telegrams sent had fallen to a total of 20,000 a year, because of competition from other communication services such as email. Employees were informed of the decision in mid-January.
Telegram service in the United States continues to be available through iTelegram and other companies.
In May 2009, Western Union announced their intention to acquire Custom House from Peter Gustavson. The deal closed in September 2009, with Western Union purchasing Custom House for $370 million USD. Its acquisition led the company to be re-branded as Western Union Business Solutions.
In January 2011, Western Union acquired the 100% of Angelo Costa, CEO Francesco Costa, a group active in money transfer and services to immigrants. Angelo Costa has a network of 7,500 points of sale in various European countries. The agreement was signed for $ 200 mln.
In July 2011, Western Union acquired Travelex's Global Business Payments division for £606 Million.
In October 2011, Western Union completed the acquisition of Finint S.r.l., one of Western Union's leading money transfer network Agents in Europe, counting more than 10,000 subagent locations across Italy, Spain, and the United Kingdom.
Western Union's website, westernunion.com, still allows users to send and receive funds to others, pay bills, or purchase gift cards.
The domain westernunion.com attracted at least 8.7 million visitors annually by 2008, according to a Compete.com study.
As the Internet became an arena for commerce at the turn of the millennium, Western Union started its online services. BidPay was renamed "Western Union Auction Payments" in 2004 before being renamed back to BidPay. BidPay ceased operations on December 31, 2005, and was purchased for US$1.8 million in March 2006 by CyberSource Corp. who announced their intention to re-launch BidPay. BidPay was later discontinued by CyberSource effective December 31, 2007.
Western Union Mobile:
In October 2007, Western Union announced plans to introduce a mobile money-transfer service with the GSM Association, a global trade association representing more than 700 mobile operators in 218 countries and covering 2.5 billion mobile subscribers.
The proliferation of mobile phones in developed and developing economies provides a widely accessible consumer device capable of delivering mobile financial services ranging from text notifications associated with Western Union cash delivery services to phone-based remittance options. Western Union's mobile money transfer service offering will connect its core money-transfer platform to m-bank or m-wallet platforms provided by mobile operators and/or locally regulated financial institutions.
Sending and receiving funds:
In order to send funds, a sender goes to a Western Union office and presents funds (plus fees) for "Next Day" or "Money in Minutes" service. The sender provides his or her name and address, the recipient's name, and a designated payment destination. Western Union then provides the sender a 10-digit Money Transfer Control Number (MTCN) that the sender must provide to the recipient. The recipient then proceeds to a Western Union agent office in the designated payment location, presents the 10-digit MTCN, and a photo ID. Money is then paid out to the recipient. In some locations, if a recipient lacks identification documents, the sender and receiver can set up a pre-arranged password. Funds are paid out in cash, although if payment exceeds a local maximum or cash on hand, a check is issued. Alternatively, a sender may forward funds to a recipient by using Western Union's website or by phone. In some countries, the recipient doesn't need the MTCN number if he has sufficient identification.
Fees vary based on the sender and receiver's location, type of transfer, and whether the money is sent from a counter location or by the website.
Along with satellite telecommunications, Western Union was also active in other forms of telecommunication services:
Common carrier terrestrial microwave networks,
Business communications networks such as Telex and TWX, which was acquired from AT&T Corporation and renamed Telex II by Western Union,
Landline-based leased voice and data communication circuits,
Long distance telephone service,
Airfone air-ground radiotelephone service from 1981 to 1986,
Cellular phone service for a very short time in the early 1980s (the phones were made by 2-way radio manufacturer E.F. Johnson Company),
Western Union was a major shirt-sponsor of the Sydney Roosters NRL team from 2002-2003. The company still sponsors the team, but not as a shirt-sponsor. Around the world, Western Union sponsors numerous community events that help support the diaspora communities that use the global Money Transfer service.They also sponsored the WWE in 1997 at the Final Four PPV show.
The First Data Western Union Foundation donates money to charitable causes around the world. After the 2004 Indian Ocean tsunami, the Foundation donated US$1,000,000 to the relief effort.
Western Union advises its customers not to send money to someone that they have never met in person. Despite its efforts in increasing customers' awareness of the issue, Western Union is used for internet fraud by scammers.
Western Union has been required to maintain records of payout locations of the individuals who may be laundering the money, though this information may be obtained only through the use of a subpoena. Hence advance-fee fraud and romance scammers continue to receive funds via Western Union confident in the knowledge that money lost to overseas scammers is almost always unrecoverable. For this reason, it is banned as a medium of payment through eBay.
Connection to military intelligence:
There were allegations by that Western Union provided United States military intelligence with personal information.
Western Union has begun blocking transactions based on suspicion of terrorist connections, as a part of the company's involvement with the War on Terror. Currently, transfers sent from the Western Union website require telephone confirmation of the sender's identity. On occasion, the transfer will fail and Western Union's customer service will inform the sender that the transaction "does not meet our requirements". If details are requested, no information will be given other than the fact that their disclosure is forbidden. Numerous customers have reported this problem. As denial of service occurs after issuing money transfer numbers to clients, alternative providers may be preferred for sending money in emergency situations.
Text from this biography licensed under creative commons license