Western Union Co.

Company Overview

Business Model: The Western Union Company is a leader in cross-border, cross-currency money movement, payments, and digital financial services. The Company empowers consumers, businesses, financial institutions, and governments with fast, reliable, and convenient ways to send money and make payments globally. Revenue is primarily derived from customer consideration for money transfers, which varies by factors such as channel, send/receive locations, funding method, principal amount, and foreign exchange rates. The Company also generates revenue from other consumer services including bill payment, money order, travel money, check acceptance, media network, prepaid cards, lending partnerships, and digital wallets.

Market Position: The Western Union Company brand is globally recognized for speed, reliability, trust, and convenience. The Company operates an extensive global network, including agent locations in more than 200 countries and territories, with approximately 360,000 locations having conducted money transfer activity in the previous 12 months as of December 31, 2025. Approximately 90% of its agent locations are outside the United States. The Company's top 40 agents and partners globally have an average tenure of over 20 years and accounted for approximately 50% of Consumer Money Transfer revenue in 2025. No individual agent or partner accounted for greater than 10% of the segment’s revenue during any of the periods presented.

Recent Strategic Developments:

• "Beyond" Strategy (November 2025): Announced a strategy to broaden consumer services offerings and modernize payments infrastructure, emphasizing technology-led innovation, including expansion of digital wallets, consumer financial services, and a digital asset network.
• Acquisition of International Money Express, Inc. ("Intermex") (August 10, 2025): Entered into an agreement to purchase the entire share capital of Intermex for approximately $500 million in cash. Intermex is an omnichannel money transfer provider focused on the United States to Latin America and the Caribbean corridors. The transaction is expected to close in the second quarter of 2026, subject to regulatory approvals.
• U.S. Dollar Payment Token ("USDPT TM ") Launch (October 28, 2025): Announced plans to launch a U.S. dollar-backed stablecoin, USDPT TM , to be issued on the Solana blockchain by Anchorage Digital Bank, N.A. The Company anticipates USDPT TM will be issued and available in licensed cryptocurrency exchanges during the first half of 2026, and plans to offer a credit card funded and secured by USDPT TM .
• Digital Asset Network (October 2025): Announced an innovative Digital Asset Network to permit licensed cryptocurrency exchanges to integrate The Western Union Company money transfer services into their consumer mobile apps, allowing cash payouts in fiat currency at The Western Union Company locations.
• Acquisition of Eurochange Limited ("Eurochange") (April 7, 2025): Acquired the entire share capital of Eurochange to expand travel money services and Company-operated locations in the United Kingdom.

Geographic Footprint: The Western Union Company operates a global network with agent locations in more than 200 countries and territories. Its corporate headquarters are in Denver, Colorado, United States. Key operational and leadership locations include Dublin, Ireland, and Dubai, United Arab Emirates. Shared service centers are located in Lithuania, Costa Rica, India, and the Philippines. In 2025, the United States accounted for $1,402.6 million (34.6%) of total revenue, while international markets accounted for $2,648.1 million (65.4%).

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 37.0% (2025) vs. 37.7% (2024)
• Operating Margin: 18.7% (2025) vs. 17.2% (2024)
• Net Margin: 12.3% (2025) vs. 22.2% (2024)

Investment in Growth:

• R&D Expenditure: Payments for internal use software were $85.0 million in 2025 and $81.4 million in 2024.
• Capital Expenditures: $150.8 million (2025) vs. $130.6 million (2024), including payments for capitalized contract costs, internal use software, and property and equipment.
• Strategic Investments: The Company entered into an agreement to acquire International Money Express, Inc. for approximately $500 million in cash, expected to close in Q2 2026. The Company also acquired Eurochange Limited in April 2025.

Business Segment Analysis

Consumer Money Transfer

Financial Performance:

• Revenue: $3,507.4 million (-8% YoY)
• Operating Margin: 19% (2025)
• Key Growth Drivers:
  • Consumer Money Transfer transactions decreased by 1% YoY to 285.9 million in 2025.
  • Cross-border principal transferred increased by 4.4% YoY to $107.4 billion in 2025.
  • Adjusted revenue (non-GAAP, constant currency, net of Argentina hyperinflation) showed 0% growth YoY.
  • Branded Digital revenue increased by 7% (GAAP) and 6% (Adjusted) YoY, with 12% transaction growth.
  • Europe and CIS region experienced revenue growth due to performance in Spain and the United Kingdom.

Product Portfolio:

• Core service: Money transfers from one consumer to another, predominantly cross-border.
• Distribution channels: Retail agent locations, Company-operated locations, The Western Union Company branded websites and mobile applications, and third-party digital partners' platforms.
• Funding options: Cash, debit cards (at agent locations), credit cards, debit cards, electronic funds transfer (ACH), online banking, and digital wallets (in digital channels).
• Payout options: Cash (at retail locations), bank account, mobile wallet, stored-value card, or debit card.

Market Dynamics:

• Represented 87% of total consolidated revenues for 2025.
• Faces robust competition from global and regional money transfer providers, digital service providers (including digital wallets, digital currencies, cryptocurrency exchanges), banks, postbanks, post offices, informal networks, and alternative channels.
• Competitive factors include brand recognition, trust, reliability, consumer experience, price, speed, distribution network, and variety of payment methods.

Geographic Breakdown (Revenue as % of Consumer Money Transfer revenue):

• North America (United States & Canada): 38% (2025). Revenue and transactions decreased due to declines in U.S. to Mexico and intra-U.S. transactions, geopolitical/macroeconomic conditions, evolving migration patterns, reduced active agent locations, and price reductions.
• Europe and CIS: 29% (2025). Revenue increased due to growth in Spain and the United Kingdom.
• Middle East, Africa, and South Asia (MEASA): 16% (2025). Revenue declined primarily due to reduced transactions from Iraq (monetary policy changes, central bank actions) and declines in Saudi Arabia.
• Latin America and the Caribbean (LACA): 11% (2025). Revenue declined due to decreases in Ecuador, Mexico, and Brazil, impacted by evolving migration patterns.
• Asia Pacific (APAC): 6% (2025).

Consumer Services

Financial Performance:

• Revenue: $543.3 million (+32% YoY)
• Operating Margin: 21% (2025)
• Key Growth Drivers:
  • Revenue growth in travel money services, including the benefit from the acquisition of Eurochange Limited.
  • Growth in cash-based bill payment services offered at retail locations in Argentina.
  • Adjusted revenue (non-GAAP, constant currency, net of Argentina hyperinflation) increased by 29% YoY.

Product Portfolio:

• Bill payment services: Provided in Argentina and the United States, offering options for consumers, businesses, and organizations to make payments to utilities, auto finance companies, mortgage servicers, financial service providers, and government agencies.
• Money order services: Used for purchases, bill payments, and as an alternative to checks.
• Travel money services: Currency exchange at retail locations.
• Other services: Check acceptance services, media network, prepaid cards, lending partnerships, and digital wallets (non-money transfer aspects).

Market Dynamics:

• Represented 13% of total consolidated revenues for 2025.
• Bill payment services provide real-time or near real-time payment posting for business partners.
• Money order services generate investment income from interest on settlement assets, primarily held in United States state and municipal debt securities.
• Travel money services earn revenue from the difference in exchange rates.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $224.7 million (23.7 million shares) in 2025, compared to $177.3 million (13.9 million shares) in 2024.
• Dividend Payments: $304.7 million in 2025, compared to $318.3 million in 2024.
• Future Capital Return Commitments: As of December 31, 2025, $775.3 million remained available under a $1.0 billion common stock repurchase authorization with no expiration date. A quarterly cash dividend of $0.235 per common share was declared on February 19, 2026, payable on March 31, 2026.

Balance Sheet Position:

• Cash and Equivalents: $1,234.4 million (2025) vs. $1,474.0 million (2024).
• Total Debt: $2,877.8 million (2025) vs. $2,940.8 million (2024) (at carrying value).
• Net Cash Position: -$1,643.4 million (2025) vs. -$1,466.8 million (2024).
• Credit Rating: Not explicitly disclosed, but the Company aims to maintain a capital structure consistent with investment-grade credit ratings. Interest rate margins on credit facilities are determined based on credit ratings.
• Debt Maturity Profile:
  • Due within 1 year: $1,034.9 million (includes commercial paper and 1.350% notes due March 2026).
  • Due after 1 year through 2 years: $800.0 million (Term Loan Facility due December 2027).
  • Due after 5 years: $1,050.0 million (6.200% notes due 2036 and 2040).
  • The Company plans to refinance the March 2026 maturity through new notes, the Delayed Draw Term Loan Facility, or commercial paper.

Cash Flow Generation:

• Operating Cash Flow: $543.7 million (2025) vs. $406.3 million (2024).
• Free Cash Flow: $392.9 million (2025) vs. $275.7 million (2024).
• Cash Conversion Metrics: Working capital is affected by the timing of payments for employee and agent incentives, interest payments, and income tax payments.

Operational Excellence

Production & Service Model: The Western Union Company operates an interconnected global network for consumer transactions, leveraging its retail agent locations, Company-operated locations, and digital platforms. Its multi-currency, real-time money transfer processing systems enable agents to pay money transfers in nearly 130 currencies worldwide, usually within minutes. Agents provide the point-of-sale presence, while The Western Union Company provides central operating functions such as transaction processing, settlement, marketing support, consumer relationship management, and compliance training. The Company also utilizes master agents who manage subagents. Company-operated locations and "concept stores" are used to control customer experience, test new products, and acquire digital customers efficiently. The Company is increasingly operating as a digital-first entity.

Supply Chain Architecture: Key Suppliers & Partners:

• Agents/Subagents: A global network of post offices, banks, retailers, and independent locations that facilitate service distribution.
• Credit Card Processors/Banks: Used for collecting principal in Branded Digital transactions.
• Third-party Digital Partners: Host The Western Union Company branded websites and mobile applications.
• Anchorage Digital Bank, N.A.: Partner for issuing the USDPT TM stablecoin.
• Licensed Cryptocurrency Exchanges: Expected to integrate The Western Union Company money transfer services.
• Issuing Banks: For The Western Union Company-branded prepaid cards.

Facility Network:

• Corporate Headquarters: Denver, Colorado, United States.
• Key Operational & Leadership Locations: Dublin, Ireland, and Dubai, United Arab Emirates.
• Shared Service Centers: Lithuania, Costa Rica, India, and the Philippines.
• Manufacturing: Not applicable, as the Company provides services.
• Research & Development: Not specified as distinct facilities, but the Company invests in technology infrastructure and focuses on technology-led innovation.
• Distribution: Global network of agent locations and Company-operated facilities in approximately 45 countries.

Operational Metrics:

• Active Agent Locations: Approximately 360,000 locations as of December 31, 2025.
• Currencies Supported: Nearly 130 currencies worldwide.
• Employee Headcount: Approximately 9,600 individuals as of December 31, 2025, across more than 50 countries.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Through Company-operated locations and digital platforms (westernunion.com, mobile applications).
• Channel Partners: Extensive global network of agents and subagents, including post offices, banks, retailers, and independent businesses. Also, third-party digital partners.
• Digital Platforms: The Western Union Company branded websites and mobile applications, and platforms hosted by third-party digital partners.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Business partners for bill payment services include utilities, auto finance companies, mortgage servicers, financial service providers, and government agencies.
• Strategic Partnerships: Collaborations with various partners globally for money transfer services, and with Anchorage Digital Bank, N.A. and licensed cryptocurrency exchanges for digital asset initiatives.
• Customer Concentration: No individual agent or partner accounted for greater than 10% of Consumer Money Transfer revenue. No individual country outside the United States accounted for more than 10% of consolidated revenue.

Geographic Revenue Distribution:

• United States: 34.6% of total revenue in 2025.
• International: 65.4% of total revenue in 2025.
• Growth Markets: The acquisition of International Money Express, Inc. targets the United States to Latin America and the Caribbean corridors. Europe and CIS showed revenue growth in Spain and the United Kingdom.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The money transfer and payment services industry is highly competitive and fragmented, characterized by rapid and significant technological changes and the constant introduction of new products and services. It is subject to increasing regulation focused on anti-money laundering, anti-terrorist financing, fraud prevention, consumer protection, transparent pricing, privacy, and data protection. A significant trend is the increasing market acceptance of electronic, mobile, and internet-based money transfer services, as well as digital currencies, which enables new entrants. Demand for services correlates with migration, global economic opportunity, and employment levels.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Global money transfer providers: Companies offering services to a wide variety of locations.
• Regional money transfer providers: Focus on specific geographic corridors or services.
• Digital channels: Digital service providers, payment providers, digital wallets, digital currencies (including cryptocurrencies), cryptocurrency exchanges, and social media/commerce platforms offering money transfer services.
• Banks, postbanks, and post offices: Compete through money transfers, wire services, payment instrument issuances, and card-based services.
• Informal networks: Unregulated fund transfer mechanisms.
• Alternative channels: Mail, commercial courier services, and card-based options.

Emerging Competitive Threats: New entrants leveraging electronic, mobile, and internet-based services, and digital currencies. Competitors offering no-fee money transfers through bank accounts, with potential international expansion. Advances in AI and machine learning enabling increasingly sophisticated fraudulent activity.

Competitive Response Strategy: The Company's strategy includes expanding higher-growth digital channels, broadening consumer services, modernizing payments infrastructure, and investing in technology-led innovation (e.g., digital wallets, USDPT TM ). It also pursues strategic acquisitions like International Money Express, Inc. to strengthen corridor focus and continuously adapts business practices to comply with evolving legal standards and industry practices.

Risk Assessment Framework

Strategic & Market Risks

• Global Economic Conditions: Demand for services is highly sensitive to global economic downturns, low consumer confidence, high unemployment, high inflation, changes in foreign exchange rates, remittance taxes, reduced global trade, and external events (civil unrest, war, natural disasters, public health emergencies).
• Migration Patterns: The Consumer Money Transfer business relies significantly on migration patterns, which can be adversely affected by economic conditions, job availability, changes in immigration laws, and geopolitical events.
• Competitive Landscape: Operates in highly competitive and rapidly evolving industries, facing competition from diverse service providers, including digital and crypto-based solutions. Failure to compete effectively on price, customer experience, or service differentiation could impact future success.
• Agent Network Dependence: The Consumer Money Transfer business is highly dependent on maintaining its agent network under acceptable terms. Agent attrition can occur due to competition, dissatisfaction, non-compliance, or difficulties in maintaining banking relationships.
• Technological Change: The industry is subject to rapid technological changes. Failure to adopt new technology and develop market-accepted products and services (ee.g., digital wallets, digital currencies) could adversely affect the business.
• Foreign Currency Exposure: A substantial portion of revenue is generated in non-United States dollar currencies, exposing the Company to foreign exchange rate fluctuations.
• Political and Economic Instability: Legal restrictions, political and economic instability, armed conflicts, or infrastructure limitations in certain countries could limit or disrupt services.

Operational & Execution Risks

• Credit, Liquidity, and Fraud Risks: Exposure to credit, liquidity, and fraud risks from agents, consumers, businesses, and third-party processors. Digital channels carry a higher risk of fraud and chargebacks.
• Information Security Breaches: As a holder of confidential and personal information, the Company is exposed to risks from cybersecurity breaches, unauthorized access, misuse, or disclosure of data, including from third-party service providers and agents.
• System Interruptions: Reliance on efficient and uninterrupted operation of computer information systems (internal and third-party). Systems are vulnerable to cyberattacks, viruses, natural disasters, power loss, and vendor failures.
• Third-Party Vendor Reliance: Dependence on third-party vendors for critical services (e.g., cloud-based software, call centers); cessation or defects in these services could disrupt business.
• Artificial Intelligence Risks: Growing reliance on AI for operations (e.g., AML/CFT, KYC) introduces risks of flawed algorithms, biased data, model validation failures, regulatory scrutiny, and potential disruptions.

Financial & Regulatory Risks

• Regulatory Compliance: Subject to increasingly strict and evolving legal and regulatory requirements globally (AML, CFT, sanctions, consumer protection, data privacy, digital currencies). Non-compliance by the Company, its agents, or service providers could result in regulatory action, license revocation, fines, and litigation.
• Tax Law Changes: Changes in tax laws or their interpretation, and unfavorable resolution of tax contingencies, could adversely affect tax expense and financial results.
• Debt Obligations: Substantial debt could restrict operations, limit shareholder returns, and increase vulnerability to economic changes.
• Investment Portfolio Risk: Market value or liquidity declines in the Company's investment securities portfolio could adversely affect financial condition.
• Unclaimed Property Laws: Subject to complex and evolving unclaimed property laws, with potential for significant impact on results if accruals differ from claims.
• Financial Soundness Requirements: Regulators impose requirements for financial soundness and strength, including capital requirements, which if not met, could adversely affect the business.

Geopolitical & External Risks

• Geopolitical Exposure: Operations in many developing markets are exposed to political uncertainties, global conflicts, and government restrictions (e.g., trade restrictions, sanctions).
• Trade Relations: Impact of trade tensions, policy changes, and new taxes or fees on remittances (e.g., the OBBB excise tax).
• Sanctions and Export Controls: Compliance with economic and trade sanctions programs is critical, and restrictions can limit business operations.

Innovation & Technology Leadership

Research & Development Focus: The Western Union Company's "Beyond" strategy emphasizes technology-led innovation. Its R&D focus areas include expanding digital wallets, developing consumer financial services, and modernizing payments infrastructure. The Company is also investing in a digital asset network supported by a U.S. dollar-denominated stablecoin initiative (USDPT TM ) and actively responding to advances in artificial intelligence and machine learning for transaction monitoring, fraud detection, and identity verification.

Innovation Pipeline:

• USDPT TM : Anticipated issuance and availability in licensed cryptocurrency exchanges during the first half of 2026.
• Digital Asset Network: Plans to permit licensed cryptocurrency exchanges to integrate The Western Union Company money transfer services into their mobile apps.
• Credit Card: Expects to offer a credit card to consumers funded and secured by USDPT TM .

Intellectual Property Portfolio: The Western Union Company owns patents and patent applications covering various aspects of its products and services, including money transfer, compliance analytics, fraud prevention, and mobile applications. Its trademarks and service marks, including The Western Union Company, Vigo, Orlandi Valuta, Eurochange, Pago Fácil, Quick Collect, Quick Pay, Quick Cash, and USDPT TM , are globally recognized and material to the Company.

Technology Partnerships: The Company has strategic alliances and research collaborations, including a partnership with Anchorage Digital Bank, N.A. for the issuance of USDPT TM and plans to integrate with licensed cryptocurrency exchanges for its Digital Asset Network.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company focuses on attracting, developing, and retaining key employees with critical skills and has succession planning and leadership development initiatives in place.

Board Composition: The Board of Directors regularly reviews and discusses significant risks, including cybersecurity threats. The Audit Committee, composed solely of independent directors, assists the Board in overseeing risk exposures and reviews cybersecurity risks at least annually.

Human Capital Strategy

Workforce Composition: As of December 31, 2025, The Western Union Company employed approximately 9,600 individuals across more than 50 countries, with approximately 1,600 employees located in the United States. The Company focuses on recruiting high-caliber talent with critical skills in technology, cloud, data architecture, cybersecurity, and payment systems.

Talent Management: Acquisition & Retention: The human capital strategy is centered on attracting, developing, and retaining employees with skills vital to the business. The Company aims to foster a strong culture of engagement to support retention and career growth. Compensation programs are designed to motivate, retain, and reward employees, aligning performance with business strategy and stockholder interests, with regular reviews to ensure equal pay for equal work. Diversity & Development: Employee development is supported through training programs, on-the-job learning, coaching, mentoring, and leadership development opportunities. All employees receive mandatory training on compliance, ethics, privacy, and information security. The Company regularly assesses employee engagement through surveys to inform leadership practices and empower employees.

Environmental & Social Impact

Environmental Commitments: The provided filing does not contain specific details on The Western Union Company's environmental commitments, such as emissions targets, carbon neutrality goals, or renewable energy strategies.

Supply Chain Sustainability: The provided filing does not contain specific details on The Western Union Company's supply chain sustainability efforts, such as supplier engagement on ESG requirements or responsible sourcing.

Social Impact Initiatives: The Western Union Company's core mission is to offer accessible financial services that help people and communities prosper. Its services empower consumers, businesses, financial institutions, and governments with fast, reliable, and convenient ways to send money and make payments globally. The "Beyond" strategy aims to broaden consumer services offerings, indicating a continued focus on social benefit applications.

Business Cyclicality & Seasonality

Demand Patterns: Demand for The Western Union Company's services correlates with migration, global economic opportunity, and related employment levels worldwide. The business is sensitive to global economic downturns, low consumer confidence, high unemployment, high inflation, changes in foreign exchange rates, and remittance taxes. Many of the Company's consumers work in industries (e.g., retail, healthcare, construction, hospitality, agriculture, technology) that can be quickly and significantly impacted by deteriorating economic conditions. The filing does not explicitly detail seasonal trends in demand.

Planning & Forecasting: The Company's planning and financial strategies include monitoring global economic conditions and migration patterns. The filing does not explicitly detail specific demand forecasting approaches, inventory management, or capacity planning.

Regulatory Environment & Compliance

Regulatory Framework: The Western Union Company's business is subject to a wide range of laws and regulations enacted by the United States federal government, states, localities, and numerous other countries and jurisdictions (e.g., European Union, United Kingdom). These include increasingly strict requirements related to financial services, banking, anti-money laundering (AML), countering the financing of terrorism (CFT), sanctions, anti-fraud, consumer disclosure and protection, currency controls, money transfer and payment instrument licensing, payment services, digital currencies, stablecoins, credit/debit cards, electronic payments, unclaimed property, competition, consumer privacy, data protection, and information security.

Industry-Specific Regulations:

• AML/CFT: Subject to the Bank Secrecy Act (BSA) in the U.S. and similar global laws, requiring risk-based AML programs, reporting of large cash/suspicious transactions, and customer/agent information collection.
• Economic and Trade Sanctions: Administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) and foreign jurisdictions, prohibiting or restricting transactions with certain countries, regions, governments, individuals, and entities.
• Money Transfer Licensing: Most services require state licenses in the U.S. and regulation in almost all operating countries, including requirements for eligible asset holdings (e.g., "A-" or better credit ratings for investment securities), government approval of shareholders/management, agent registration, consumer disclosures, and net worth levels.
• Payment Services Directives: The Company's EU business is managed through its Irish payment institution subsidiary, Western Union Payment Services Ireland Limited, regulated by the Central Bank of Ireland under PSD2. Its Austrian banking subsidiary is regulated by the Austrian Financial Market Authority. A UK payment institution is authorized by the Financial Conduct Authority (FCA).
• Digital Currencies and Stablecoins: Activities involving digital currencies and stablecoins are subject to rapidly evolving regulatory frameworks, including the U.S. GENIUS Act (clarifying payment stablecoins are not securities) and the pending CLARITY Act (granting CFTC jurisdiction over "digital commodities").
• Anti-Corruption Laws: Subject to the Foreign Corrupt Practices Act (FCPA) in the U.S. and similar laws like the Bribery Act in the UK.

Trade & Export Controls: The Company is subject to export restrictions and sanctions compliance requirements, including country-specific limitations and licensing requirements.

Legal Proceedings:

• Argentina Class Action (October 2015): A purported class action lawsuit against Western Union Financial Services Argentina S.R.L. alleging excessive fees and inadequate foreign exchange rate information. The Company is unable to predict the outcome or possible loss.
• DRC Commercial Court Judgments (late 2017): Judgments entered against alleged The Western Union Company entities and The Western Union Company for privacy rights violations, totaling €19.5 million. The Company is challenging these judgments.
• AUSTRAC Audit (September 2025): Western Union Financial Services (Australia) PTY Ltd. received notice of suspected non-compliance with Australia’s money laundering and counter-terrorism financing act, requiring an independent audit. The outcome and potential loss are currently unpredictable.
• Consent Agreements: The Company has continuing obligations under Joint Settlement Agreements (2017) with the DOJ, FTC, FinCEN, and state attorneys general, and a Consent Order with the NYDFS (2018), related to anti-money laundering programs and consumer protection. Annual reports to the FTC are required through January 2028.

Tax Strategy & Considerations

Tax Profile: The Western Union Company's effective tax rate was 20.2% in 2025, compared to -51.0% in 2024. The significant change in 2024 was primarily due to the recognition of deferred tax assets associated with the reorganization of international operations ($255.2 million benefit) and a settlement of the IRS examination of 2017 and 2018 federal income tax returns ($137.8 million benefit). In 2025, 122% of the Company’s pre-tax income was derived from foreign sources. Undistributed foreign earnings are indefinitely reinvested in foreign operations.

Tax Reform Impact:

• One Big Beautiful Bill Act (OBBB) (July 4, 2025): The income tax provisions of this U.S. government act are not expected to have a material impact on the Company's future financial position or results of operations. However, beginning January 1, 2026, the OBBB assesses a 1% excise tax on certain international remittances sent from the United States funded with cash, which is expected to negatively impact North America and Consumer Money Transfer revenues and transactions.
• 2017 Tax Act: The final installment payment of approximately $220 million related to the U.S. taxation of previously undistributed foreign earnings was made in the second quarter of 2025.

Tax Contingencies: As of December 31, 2025, total tax contingency reserves were $21.0 million, including accrued interest and penalties. The Company's tax returns and positions are subject to review and audit by federal, state, local, and foreign taxing authorities. Unrecognized tax benefits totaled $52.6 million as of December 31, 2025 (excluding interest and penalties).

Insurance & Risk Transfer

Risk Management Framework: The Western Union Company has a risk management program to address market risks from changes in foreign currency exchange rates and interest rates, and credit risk related to agents and customers.

• Insurance Coverage: The Company maintains business interruption insurance and utilizes insurers to mitigate exposures to litigation and other risks.
• Risk Transfer Mechanisms:
  • Foreign Currency Hedging: Uses short-duration foreign currency forward contracts (days to one month) to offset foreign exchange rate fluctuations on settlement assets and obligations. Longer-term foreign currency forward contracts (up to 36 months) are used to mitigate risks on forecasted revenues (e.g., euro, Canadian dollar, British pound).
  • Interest Rate Hedging: The Company may use interest rate swaps to manage its mix of fixed versus floating rate debt, though none were outstanding as of December 31, 2025.
  • Credit Risk Mitigation: Regularly reviews investment concentrations, trading levels, credit spreads, and credit ratings. It diversifies investments among global financial institutions and performs ongoing credit evaluations of its agents.
  • Fraud Prevention: Applies verification and other tools to authenticate transactions and protect against fraud, particularly in digital channels.