Yesterday, Western Union Co. (WU) announced that it has partnered with OMV, one of the largest integrated oil and gas groups in Central Europe, to provide money transfer services in the European region.

The partnership with OMV will enable Western Union to offer its money transfer service to more than 1,800 OMV filling stations scattered throughout Austria, Bulgaria, the Czech Republic, Germany, Hungary, Romania, Slovakia and Slovenia. However, the service will be available only after a year and a half. 

This move is in sync with Western Union’s effort to aggressively expand its presence in Europe, which it eyes as a significant market opportunity. The attractiveness comes from the implementation of the European Union Payment Services Directive (PSD) in November 2009. The PSD, a regulatory initiative by the European Commission, aims to increase pan-European competition and participation in the payments industry (also from non-banks) by removing barriers to access by payment service providers to any European Union country.

The PSD has allowed Western Union, the world’s leading global payment services organization, to add agents such as mobile operators, retailers, e-commerce companies and funds-transfer organizations throughout Europe. Prior to the roll-out of this directive, the company had much difficulty in entering the region due to the licensing requirement and lack of attractive partnership opportunities. The licensing requirement made the agent model too expensive. Under the new framework, agents are essentially able to operate under Western Union’s license. 

In anticipation of the Payment Services Directive, Western Union acquired the money transfer business of Europe-based FEXCO, one of its largest agents, in February 2009.

Also during September 2009, Western Union signed three major agents in Europe – Largardère Services, Ortel Finance and PayUp.

The agreement with OMV is a significant step in Western Union’s strategy to capitalize on the growth opportunities offered by the PSD. The company sees continued strength in Europe, with most markets delivering stable or slightly improved transaction trends relative to year-end 2009. It targets an incremental 10,000 retail activations in the region by the end of the year 2010, and has made good progress on this front so far.

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