The US-headquartered Western Union Financial Services plans to launch domestic money transfers in association with the Indian Post.
It plans to increase its investment in India with a fresh capital of $50 million, largely aimed to expand the rural network and cover small towns.
Western Union president Christina Gold met with Finance Minister P Chidambaram on Monday to discuss the company's plans for India. "The finance minister talked of the need to expand the rural network," she said.
He urged Western Union to expand its rural reach and thereby enable rural masses to access the money transfer facility easily.
Western Union has tied up with Indian Post among a host of other banks and primary agents for internal remittance business.
Asked whether its entry into domestic money transfer would not pose competition for Indian Post and its local partners, she said: "There are different limits and different tie-ups. Money orders through post offices have a cap of about Rs 5,000. We could go beyond this."
Anil Kapur, regional vice president (South Asia), Western Union said talks have already started with the Reserve Bank of India on the local foray.
Western Union would also need government and Foreign Investment Promotion Board approvals.
About 60 per cent of Western Union's Indian business comes from the hinterland. While Western Union enjoys a market share of about 16 per cent globally, its share of the Indian $19-billion remittance industry is expected to be about $1 billion.
This is in spite of the fact that it has 21,000 agent locations across the country, which is second to that of the US. The plan is to double the number of sites to 400,000-500,000 locations globally, which would include doubling its presence in India.
The company is also open to changing its rates keeping with the competition. "We will change the rates depending upon customer needs and market growth," said Gold.
Today Western Union charges $22 for every $1,000 remitted from the US and $7 for every $1,000 remitted from the Gulf.
This is as opposed to ICICI Bank charging $ 8 for $1,000 money transfer from the US.
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