Western Union's stablecoin gamble: Can a 172-year-old traditional store make a glorious transformation?

Traditional payments giant Western Union faces digital challenges and its share price is bleak. The company hopes for a stablecoin strategy, but the real turnaround may lie in becoming a key bridge between physical cash and the digital economy. This article originated from an article written by Stablecoin Blueprint, and was compiled, compiled and written by TechFlow. (Synopsis: Western Union begins to integrate stablecoins!) It is expected that 3 working days will become minutes, and wire transfer fees will be greatly reduced) (Background supplement: A brief history of stablecoins: a new financial system, a new currency standing on the shoulders of tradition) Western Union (Western Union) seems to have ushered in a long-lost dawn on July 22. After its CEO mentioned in an interview with Bloomberg that the company would delve deeper into the stablecoin space, the traditional payments giant's share price soared rapidly, closing the day up nearly 10%, attracting a "bottom-hunting" craze that investors hadn't seen in years. However, this hope was fleeting. A week later, Western Union's earnings report again fell short of analysts' expectations, and the stock price immediately fell back to a low, completely erasing earlier gains. This short-lived market excitement is not only about Western Union, but also reflects Wall Street's new preference for stablecoins. Against the backdrop of the passage of the iconic genius bill and the astonishing fivefold increase in the share price of stablecoin issuer Circle, investors have almost developed a conditioned reflex: they flock to "stablecoins" when they hear about them. But this pursuit of "stablecoins" is more a misunderstanding of buzzwords than a real business strategy. Stablecoins won't save Western Union's core business, but if the company does the right thing, it could open up a whole new future. The Fall of the Giants Founded in 1851, Western Union (Western Union) was once a giant in the global remittance space, but its financial performance tells the story of a giant struggling in a new era. Wall Street has seen the world's largest remittance company as melting ice in recent years, and the data bears it out: Since 2021, the company's revenue has shrunk from more than $5 billion to an estimated $4.1 billion by 2025, while market share continues to be eroded by digital-first competitors. This recession is also reflected in its share price: it fell from a high of $26 in 2021 to hovering between $8 and $9 today. The foundation of the 172-year-old giant, whose network of nearly 400,000 physical proxy points around the world, is now its biggest structural weakness. This agent-dependent model is costly, accounting for about 60% of the cost of Western Union services. The network primarily serves a key customer group: cash-dependent migrant workers who often lack access to banking services. For decades, this model served as a moat for Western Union. However, as global digitalization accelerates, this cash-dependent customer base is in a long-term structural decline. In the field of digitalization, the battlefield of the future, Western Union is far inferior to its competitors. In the last quarter, the digital revenue of the Western Union brand grew by only 6%, while competitors such as Wise and Remitly grew by 20%-30% or more. Once the undisputed king of remittances, it is now losing ground in the digital realm of competitors. Fascinating but flawed solution On the surface, the stablecoin plan proposed by Western Union (Western Union) seems to be quite comprehensive. In its recent earnings call, the company laid out four key strategies: improving its financial management; Global payments through stablecoins; Provide buying, selling and holding functions in digital wallets; Most importantly, use its global network as an exit point for the crypto ecosystem. However, the company's current focus is clearly on the first strategy. As CEO Devin McGranahan puts it, "most of our time and energy is focused on this area," which is solving back-office operational efficiency issues with stablecoins. The appeal of this strategy is undeniable. McGranahan emphasized that stablecoins can "significantly increase settlement speed and reduce the amount of upfront payments required by partners." As an example, he mentioned that a recent weekend liquidity rush in India caused payment delays, and stablecoins can replenish liquidity in real time and provide services around the clock, thereby greatly improving the customer experience. However, while optimizing financial management through stablecoins is a smart goal, it does not provide a long-term competitive advantage. Western Union's main competitors, such as MoneyGram and Remitly, are already implementing similar stablecoin-based settlement strategies. Any cost savings can be undermined by competitive pressures, especially in the face of digital companies that have lower operating costs themselves. This reduces this potential innovation to a "business operating cost" that cannot reverse the company's current structural decline. Source: FXC Intelligence The Real Opportunity: A Cash Bridge to the Digital Economy The future of Western Union (Western Union) lies not in trying to catch up with competitors in the digital space, but in becoming a role they can't replace: the world's main cash-to-stablecoin access layer. Companies should leverage their 400,000 physical proxy points as their most important strategic assets. By strengthening this network and building on its trusted brand, Western Union is poised to solve a key financial infrastructure problem: providing a seamless connection between physical cash and the global digital economy, a service that many emerging markets desperately need. This strategic transformation can be achieved in two ways. First, own traffic. Western Union can integrate cash-to-stablecoin conversion directly into its acclaimed mobile app. Users can walk into a trusted Western Union agent, deliver volatile local currencies, and deposit USD stablecoins into their digital wallets within minutes. This is an attractive solution for users who want to protect their wealth with a USD stablecoin, especially in areas with high currency volatility. The second, more powerful method is through platform traffic. A more promising way is to open its proxy network to third-party wallets and fintech companies through APIs. These partners can embed "Pay with Western Union" or "Cash out via Western Union" buttons directly in their apps. The market demand for this is already apparent. McGranahan revealed on the company's earnings call that they were pleasantly surprised by the "unexpectedly high demand" for deposit and withdrawal services. This approach transforms Western Union from a closed remittance service to an open infrastructure that becomes a key "last mile" connection between the fast-growing digital ecosystem and the physical world. With deposit and withdrawal services alone, Western Union can achieve substantial financial returns. Based on current fee rates and agency economic models (considering their pricing power in cash transactions), just $1 billion in in/out trading volume could result in an operating profit of approximately $80 million, which is a significant boost over the company's current total profit of approximately $800 million. For comparison, digital competitor Remitly saw a $5 billion increase in transactions in the most recent quarter compared to last year. In addition to transaction fees, Western Union offers more financial services through its digital wallet entry point, such as spending finance for online purchases...