Western Union eyes stablecoin rails in pursuit of a ‘super app’ vision

Key Takeaways 

Why is Western Union making a stablecoin bet? 

To cut operational costs and speed up traditional transfers. 

What’s the potential end-goal for the stablecoin move? 

Per an expert, forming a “super financial app” could be a long-term target for incumbents. 

Global remittances, like Western Union, MoneyGram, and others, are going all in on stablecoins. 

During its recent earnings call, Western Union CEO Devin McGranahan said that the firm would double down on and off ramps for digital assets. He noted, 

“Beyond treasury, we are exploring how our global payments network can serve as an on-ramp and an off-ramp between fiat and digital currencies.”

Source: Yahoo Finance

He added that they have seen a strong demand for last-mile delivery for stablecoins, especially in regions with limited traditional bank coverage.

According to him, the pivot would allow the firm to move money faster, transparently and cheaply without “compromising compliance or customer trust.” 

Stablecoin disruption or integration?

Reacting to the move, Omar Kanji, Partner at crypto VC Dragonfly, said,

“If it’s moderately successful, imagine any one of the crypto exchanges, payment companies, or stablecoin players takes a serious look at it (despite the hair) as an acquisition.”

According to him, such a move would make the Western Union a good acquisition prospect by native crypto players. 

The incumbent operates across over 200 countries with massive partners and retail locations. But it’s not the only old player rethinking its payment network with stablecoins. 

Remitly, MoneyGram and recently Wise, are reportedly eyeing a digital wallet strategy. According to the former Paxos product lead, Chuk Okpalugo, the end-goal was a “financial super app.”

He said

“Treasury efficiency is nice, but not differentiated. The real prize is monetizing the recipient. Once users hold money inside your app, you can offer savings, credit, investments, etc. It’s the financial super-app model.”

Stablecoins enter the mainstream treasury loop

That being said, the stablecoin sector has ballooned since the passage of the GENIUS Act in July. It crossed over $300 billion in overall market cap with over $118 billion in annualized settlement volumes as of August. 

According to the latest stablecoin report by Artemis, the flows had been dominated by business-to-business (B2B) followed by peer-to-peer (P2P) transfers. 

Source: Artemis

It’s not surprising, therefore, that most top players are exploring treasury support (corporate flows), including Western Union.

That’s where most flows are concentrated, per the Artemis report. In fact, AMBCrypto also reported a similar spike in demand for treasury support and yield-bearing stablecoins in emerging markets. 

Looking forward, it will be interesting to see how Western Union and the group will effectively integrate stablecoins as a step towards a potential “super financial apps.”