Western Union keen to apply for payments bank licence

By Shreya Sinha & Sangita Mehta

MUMBAI: Global money transfer company Western Union is keen to apply for a payments bank licence if the final norms being framed by the Reserve Bank of India (RBI) permit it to do so.

“We will definitely apply for it (payments bank licence). I believe the RBI will welcome Western Union in their financial system,” Hikmet Ersek, president and CEO of Western Union, told ET.

RBI has issued draft norms on payments banks, which will primarily focus on providing remittance service to people from lower income group who do not have access to formal banking services. The RBI had said that it will issue final norms by the end of this month. “If it is needed, we will apply for payments bank; if it’s not needed we won’t,” said Ersek.

Western Union has over five lakh agents across the world to enable funds transfer, with a fifth of its workforce in India.

The state-run India Post, with over one lakh offices, is also a strong contender for payments bank licence. RBI governor Raghuram Rajan had recently said, “We visualise mobile companies, but also companies with a large rural presence... maybe shops, maybe kiosks, but as well as possibly post office that would come into the payment bank licensing scheme.”

The draft norms require promoters to bring Rs 100 crore capital, while foreign holding in private banks is allowed up to 74%.

Speaking on emerging trends on remittances, Ersek said, “The fastest growing trend is the digital part. People now sit at home and send money anywhere across the globe from their mobile phones or PCs.” About 6% of Western Union’s revenue comes from mobile, tablets and PCs, Ersek said. “It is the fastest growing part of money sent.”

India, along with China, Mexico and Philippines, continues to be among the biggest beneficiary markets for remittances. Ersek also said he was very bullish on mobile phones emerging as an enabler for funds transfer. “Over time, everything will happen through mobile devices.

The bank account will be on your mobile, payment devices will be on your mobile, the money transfer will be on your mobile, the savings will be on your mobile. Mobile devices will manage all the financials. The issue will be that you can’t swipe your mobile to get cash like how it works at ATMs,” he said.