Good afternoon, and welcome to the Western Union First Quarter 2014 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mike Salop, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, Laura, and good afternoon, everyone. On today's call, Hikmet Ersek, Western Union's President and Chief Executive Officer; and Raj Agrawal, Executive Vice President and interim Chief Financial Officer, will discuss the company's first quarter 2014 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2013 Form 10-K, for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures on our website, westernunion.com, under the Investor Relations section. All statements made by Western Union officers on this call are the property of the Western Union Company and subject to copyright protection. Other than the replay noted in our press release, Western Union has not authorized and disclaims responsibility for any recording, replay or distribution of any transcription of this call. I'd now like to turn the call over to Hikmet Ersek.

Thank you, Mike, and good afternoon, everyone. We are pleased with how we started the year. Our core money transfer business continued to rebound and key growth areas such as westernunion.com online money transfer and Western Union Business Solutions delivered strong performance. We also continue to generate and deploy strong cash flow for our shareholders. Overall, first quarter revenues increased 2% or 4% constant currency. This improvement trend reflects benefits from the previously implemented consumer money transfer pricing actions, the investments in Digital and the investments in Business Solutions that we put in place over the last couple of years. Consumer money transfer transactions increased a healthy 9% in the quarter. Both international and U.S.-generated transactions, including domestic money transfer, delivered strong transaction growth. As I mentioned earlier, we are pleased with the rebound in our retail-initiated consumer money transfer business, which represents approximately 95% of our C2C money transfer revenue. Total C2C revenue increased 3% in the quarter or 4% constant currency, as the pricing actions and other promotions we undertook beginning in late 2012 are now translating into revenue growth. Mexico, for example, delivered an 8% increase in revenues, which was the country's first positive quarterly revenue growth in 2 years. In addition to the pricing actions, Mexico has also benefited from the competitive market changes and strong growth from our Vigo brands. Westernunion.com money transfer revenue growth accelerated to 45% in the quarter, driven by more consumer acquisition, stronger retention and increased revenue per customer. Enhancements to our platforms, mobile services, pay-in and payout options and risk management in various markets all contributed to the strong results. Mobile access continues to grow fast. In the first quarter, over 30% of our U.S. westernunion.com transactions were initiated through mobile devices. Our total electronic channels revenue increased 36% in…

Thank you, Hikmet. As mentioned, the first quarter results were in line with our expectations and consistent with our full year outlook. Total revenue was approximately $1.4 billion, an increase of 2% or 4% on a constant currency basis compared to the prior year. Consumer money transfer, Business Solutions and consumer bill payments each delivered positive constant currency revenue growth in the quarter. In the Consumer-to-Consumer segment, revenue increased 3% or 4% on a constant currency basis. The 3% growth compares to a 1% decline in reported revenue in the fourth quarter of last year. Revenue trends continued to improve from prior quarters as transaction growth remains strong, and we passed the anniversary of some of the key price actions. Total transactions increased 9% in the quarter, driven by our previously implemented pricing actions in key corridors and strong growth in westernunion.com and other electronic channels. The World Bank and Aite each recently issued updated market estimates for cross-border remittances. Both estimated 2013 cross-border principal growth at 4%, which was consistent with our results last year. And their 2014 projections for the market range from 5% to 7%. Western Union's C2C cross-border principal increased 8% in the first quarter or 9% on a constant currency basis. Principal per transaction declined 1% and was flat constant currency. The spread between the C2C transaction and revenue growth in the quarter was 6 percentage points, including a negative 1% impact from currency. For C2C, the impact of net price decreases was approximately 3% in the quarter, while mix had a negative impact of approximately 2%. The price impact primarily relates to actions taken in 2013, and we still anticipate 2014 pricing actions to be modest and back in line with historical standards. Turning to the regions. In addition to strong transaction trends, each…

[Operator Instructions] And our first question today comes from Darrin Peller of Barclays.

So good execution on the transaction growth, continuing to see momentum for the pricing changes. I guess, first of all, can you give us some color on -- you may have said this on the call, or maybe I missed it. But the actual growth in transactions where you didn't change pricing in the corridor, what was that this quarter? And maybe a little more context as to the growth trends you're seeing online. I know the numbers look very good, continuing to be in the 50% plus range. But what would we expect to see once some of the pricing changes there anniversary?

Hey, Darrin. This is Raj. Thanks for the question. We didn't break out the price corridors in terms of transaction growth this time, so you didn't miss that. As we've said before, the price actions typically will allow transactions to peak within a 12-month period. So we've more than anniversaried most of the price actions. And so that's really part of our normal business. So we're not going to break that out anymore. But clearly, those price actions are having a positive impact on our transaction growth. And with respect to Dot.com, we're very pleased with the results there. 55% transaction growth, that's very much in line with expectations and 45% revenue growth, which is a significant step-up from last quarter. We would expect the transaction growth to moderate somewhat, but the revenue growth continues to accelerate there.

All right. That's helpful. With respect to the -- go ahead. We're you going to...

Yes. Just going to add. Online, we're always doing a lot of things in terms of promotion and looking at the right price points. But the major pricing actions we did there were in the fourth quarter of '12, so we've anniversaried those already.

And just a quick follow-up. On the online business, I mean, with respect to margins on the domestic business or the business overall, I mean, you've said in the past, those margins are in line with corporate averages. Does that still hold true? And any other opportunities you see improve margins in the U.S, whether it's East to East [ph] development, or any other technological innovations that might help that along? And then lastly, are you still on track for the $500 million target for the electronic business that you'd laid out awhile back?

Yes. Let me try. And maybe Hikmet, you can jump in afterwards. But in terms of margins, again, we're really pleased with the growth in the business. Clearly, we're in investment mode right. And right now, we're below company average margins. But we do believe that as the business scales and grows that top line like it is that we will be able to get closer to the company margins on an average basis. As we rollout more funding options, paying in by bank or paying out to a bank account, clearly, that will help the margin picture. But that business continues to deliver on our expectations, and we're very pleased with the results there overall.

Yes. I -- Darrin, just to add on that. Don't forget that we are in 24 countries with our online money transfer and send countries, and we are connecting to 200 countries. That gives us a huge portfolio. We are very pleased with our U.S. money transfer. We are very pleased with our transaction growth on the main corridors. Besides that, that really attracts also new customers to our network. We know that. From our data, 80% of our customers are new to westernunion.com online, are money transfer customers. And we are pleased with that. By the way, it doesn't cannibalize our existing business. That question comes up every time. We know that our business like U.S. to Philippines, U.S. to India, it's not going on, on the online very strong. It's also retail money transfer. We had saw a solid growth, good growth there. So I'm generally pleased with the business performance.

All right. Just the last one. I'll turn it back to the queue. The pricing changes you put into effect over the -- from 2012 onward, I mean, those really should start to see more and more inflection, I think, as I mentioned, earlier also, which means from a revenue-per-transaction standpoint, that should start to get better. I mean, with regard to respective pricing changes going forward, I mean, what should we expect? I mean, are we really back to the 1% to 2% or 3% change now per year? Is that something we can use to model?

I feel comfortable with our historical pricing models, Darrin. I mean, we always do pricing actions in corridor by corridor. We look at that, we always did that. And as you know, our business is quite complex. We are in 16,000 corridors. We look band by band. We look corridor by corridor. But I'm pleased with our current pricing structure, also with our historical direction. I don't see any big changes coming in near term.

And our next question will come from Jason Kupferberg of Jefferies.

Just wanted to get your general reaction to Walmart's initiative that was announced a couple of weeks ago. I mean, you guys expecting any kind of share loss around that, or any sort of competitive response? And do you guys expect that Walmart will ultimately extend that service to include cross-border remittances to its stores in places like Mexico or elsewhere? And if so, is that a potential concern for you? Or is that something that you have a plan of attack against?

Well, I can't talk about Walmart's plans, obviously. It's not our agent, and it doesn't impact us so much because we have a very strong U.S. domestic money transfer business. Just putting under perspective, it's only 8% of our total company revenues. And putting things on perspective, we have many, many agents globally, which gives us 500,000 locations. It gives us -- we have thousands of contracts. And none of our countries are bigger than 5% of our total revenue and none of our biggest -- even the largest agent is not bigger than 4% of our total company revenue. So the diversification of portfolio, that's the beauty of Western Union business. Being everywhere, having so many agents distributing our revenue, it gives in a very good position. Basic, on the U.S. domestic money transfer business, I mean, our business have been growing very good in Q1, right? We grew by 1% by revenue and 5% by transaction. And these are the actions -- don't forget, these are the actions we've put in place in 2009, still growing, and we are gaining with 5 for 50 promotions a lot of transactions, lower band. We are pleased with our transactions. We have 46,000 locations. I don't know how many Walmart has, about 4,000 locations or something like that. So our 46,000 locations do serve customers. The customers value the speed. The customers value our brand. The customers value our locations. But we do also pricing actions if you need it quarter-by-quarter, band by band. But it's -- I just want to put things in perspective here.

Right. Right. But it sounds like, for now, you guys aren't planning on having to take any material new pricing actions for the balance of this year?

I don't think -- if you look at our portfolio, as I said earlier to Darrin, we do always look at pricing quarter-by-quarter, band by band, product by product, but I don't think that we are going to have big material pricing actions this year.

Okay, okay. Any impact on your business in Russia or the surrounding reasons just from all the geopolitical tension? I mean, anything that's been detectable?

Good that you asked that question. Being in 200 countries, we always have this [indiscernible].

Right. With Arab Spring a couple of years ago.

I know. You asked that question. I remember. But no, we don't see -- just to put again here the perspective, Russia is a very important market for is, but it's only 2% of our total company revenue, Ukraine is about 1% of our total company revenue. But we do have about 20,000 locations in Russia, and we do have about 15,000 locations in Ukraine, which gives us a good presence here. And we don't see any customer changes, behavior changes from our current business. We don't see any impact from the environment there yet.

Okay. That's great to know. And just one housekeeping for Raj on the tax side. Can you just review what the tax benefit in Q1 was? I know you said you're still going to be 15% for the full year. Is that kind of a similar tax rate each of the last 3 quarters? Or are there any ins and outs that we should be thinking about from a modeling perspective to get us to the full year 15%?

Jason, there were just some discrete benefits every some in Q1. Some of it's related to currency benefits. We still expect the tax rate for the year to be around 15%. And we'll -- as we move through the year, we'll see what that means for us overall. But there were just some discrete benefits in Q1.

Just some onetime stuff? Okay.

Yes.

And next we have a question from Tien-tsin Huang of JPMorgan. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Just a follow-on to Jason's question with Walmart, just the private label or store-to-store concept, in general. Do you see the potential for some of your larger against to consider doing something similar? I know it's a big change in the model. But from a foot traffic standpoint, I can see why certain agents might want to try it. Thoughts there?

I don't see -- I don't know any plans that -- any white label plans from our constant -- retail agents that it's going to do something like that. I can't talk for their plan. But don't forget, our 46,000 locations is easy to go to next corner and pick up the money from next corner in the U.S. We have, alone in the U.S., 46,000 locations. And it's -- I believe we are very competitive here. We'd really -- the U.S. domestic money transfer, Raj, was growing quarter-by-quarter over the past years, right?

Yes.

And we've been executing principal here. I don't -- I can't speak what the -- I don't hear any rumors on the market, and I can't speak to rumors. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Okay. Good. Just wanted to make sure. I appreciate that. Just on the -- I heard the commission comment -- I'm curious about just the renewal rate of large agents and, specifically just, exclusivity opening up, is that changing the pace? Is that changing at all as you go into the renewal process?

No. I think we do see sometimes competitive environment, sometimes not. But having personally negotiated hundreds of agent negotiations, and we have thousands of agents. There will be always some competitor. Sometimes, a higher agent commission. Sometimes, a lower. We do see some higher agent commissions in the current environment -- competitive environment that also impacts a little bit our bottom line. But generally, I would say that I do not see big changes from agent commissions. But we do, in some corridors, you know how it works, Tien-tsin, negotiation by negotiation, agent by agent, country by country, regulatory environment, all that affects the agent negotiations so...

And Tien-tsin, just to add, our goal, longer term, is to bring overall distribution costs down, and we believe that we can achieve that with the mix of the business as it changes to be a little bit more electronic. And then as we bring new agents into the mix, we also believe that we can bring them in at a generally lower overall commission rate. So there are a lot of different dynamics in that business, and we're working through all of those to get the right results.

It's a good point, Raj, but yes. Tien-tsin Huang - JP Morgan Chase & Co, Research Division: Okay. That's great. And then Raj, just housekeeping, no restructuring cost this quarter, did I hear that correctly? That's all I have.

Yes. We have some minor costs. But unless there is something more material, we probably won't break that out. It's just part of our normal business. We're continuously looking for opportunities to take cost out of the business. And so nothing material.

Our next question comes from Bryan Keane of Deutsche Bank.

Just wanting to see if we can get an update on the impact of the higher compliance costs. What kind of impact that had on transaction volumes do you guys figure?

Bryan, let me start with that. We did see some impact in the first quarter. As you know, we mentioned that for the full year, we expect about a 1- to 2-point negative impact on our top line. That's still in our outlook. That's still what we expect, especially as we ramp up in the compliance spending. We spent about 3% in the first quarter, and we expect that to ramp up the rest of the year in the 3.5% to 4% range. So we do still expect some impact to the top line.

And just seeing this through. I mean, the common question we get is, does that continue into 2015? Will you still have an additional 1 to 2 head point -- or 1 to 2 points of headwind from compliance, or does it start to level out?

Well, my -- our goal is to not have much impact, but that's something that we can't predict. What we do is when we put these compliance actions in place, initially, we see a negative customer reaction, and we'd like to learn from those customer experiences and improve upon those over time. And that's really our goal. So I can't really predict about next year. But the goal is to improve upon the interactions with customers and put the right systems and processes in place so that the customer experience can be a better one.

Saying that, though, the 2014 investment, Bryan, 3.5% to 4%, was a significant step-up from the last year investment. So we believe that we will have good programs in place. I can't say -- speak, as Raj said, for the future of how the relative environment looks like. But from today point of view, I think that team is doing a great job, putting the things right in place that we have with the compliance programs that it's a competitive -- even a competitive advantage. And I can see that part of that competitive advantage already in some countries like Mexico. Part of our growth in the Mexico is driven through the compliance environment, and we do have programs. We are increasing our programs, and we are investing here. And we are trying to build a competitive advantage like in Mexico and in other countries.

Yes. I was going to ask that. On the higher compliance costs, where -- which corridors are being impacted by that?

Well, it's a global program, by the way, right? So I mean, we have to -- it's a really -- it has a -- if you are in 200 countries, it's beautiful. But it has also a price to be in 200 countries, and that's the main corridor. It's you know that in the past, we invested in Southwest Border. That's -- additional to that, we have this investment like in the European union. We do have investments in some receiving countries and in Africa. And we do have in Middle East. It's all over actually, Bryan. And I think we have a good program that we cover the world with that investment.

And we have various KYC programs that we're implementing. We're implementing know-your-agent programs. It's pretty broad based, and it's in various parts of the world, as Hikmet said.

Last question for me. Europe and the CIS region, the transaction growth accelerated. I guess I'm curious on the economic front. Any signs of stability, finally, in that region that's causing that, or just would be curious to know if we're getting any kind of economic -- potential economic rebound?

Well, my view didn't change from last quarter. Unfortunately, it didn't change, I would love to report that the economic environment is better, but it's also not worse, that's the fortunate part. So I would say that it's the same. We do see some strong transaction growth in Germany. We do see some improvement in Southern European part like Spain and Italy. Our business is quite stable there, but I wouldn't say that it's now sunshine yet there.

Yes. We did a lot of the pricing actions in Europe in the first half of last year as well, so we're getting some benefit from that now.

And our next question comes from David Togut of Evercore.

This is Rayna Kumar for David. Do you expect to increase your dividend? And when will the board be making a decision on the dividend?

Sure. Hey, Rayna. This is Raj. The dividend is something that we evaluate on an ongoing basis with the board. We're very happy with where the dividend is right now. It's at about a 35% payout, which is very much in line with S&P 500 paying companies. So I expect that as the business performs and improves, the board will want to look at that again to see what the right level is. But our policy has been to return capital to shareholders through both buybacks and dividends, and I expect that we'll continue that as well.

And the next question is from Sara Gubins of Bank of America.

I wanted to go back to Mexico for a minute. You signed an additional, I think it was 10,000 agents in Mexico last year. Are those now all up and running? And are you comfortable with the current footprint in Mexico? Or do you think you'll continue to make a bigger push to expand in the region?

Well, Sara, first of all, we are very pleased with our quarter on Mexico. I have to say that the 8% revenue growth is quite good. We did put programs, compliance programs, agent programs into place that -- they are working. We did sign agents to expand our footprint in Mexico. We are -- did not enroll all of them yet. They are in the pipeline and we believe that we're going to significantly increase our presence in Mexico with new host-to-host connections, new IT systems and new programs there. And I'm quite excited. Actually, I was in Mexico about 2 weeks ago and just came back from a meeting there and -- with a new potential agent there. And I was quite excited to increase my footprint there.

Okay. So it sounds like some more to come. And then as we think about the balance of the year, your comparisons get significantly more difficult throughout the year in terms of transactions. Is it reasonable to think that the trend should flow in the back half of the year on a more difficult comp?

As we -- Sara, we did see some pricing as well to Mexico, and we -- typically, we expect the pricing actions to cause transactions to peak within a 12-month period. So I expect that transaction growth is likely to level off. But we can't really predict what's going to happen each quarter. But generally, that would be the trend that we would see. We also expect to see good revenue growth for the year. So that's about where we are. Revenue growth would typically pick up in the 12 to 18 months period after pricing. And so that's what we're seeing.

Okay. Sorry, was that comment about transactions overall or Mexico-specific?

Overall.

Overall.

I think that the -- what we did -- Sara, we did thousands of pricing actions, and we do it constantly quarter-by-quarter. And if you do that, the cost -- revenue picks up about 12 to 18 months. And that generally has been not only Mexico, worldwide.

And next, we have a question from Smitti Srethapramote of Morgan Stanley.

Just another question on compliance. Can you give us an update on the subpoena that you disclosed in your 10-K from the middle district of Pennsylvania? And has there been any update since the 10-K on that issue?

Yes. Smitti, I would just refer you to our 10-Q that we are filing today. We don't really have more comments beyond that. It's early in the process, and it's something that we're working through. We have good monitoring systems in place. We have a multifaceted program to prevent consumer fraud and an outreach [ph] program with consumers. So that's about all we can say right now, and we're working through that.

Got it. And then maybe just on the Digital channel where you continue to see very good growth. Can you talk about how you're investing in westernunion.com and some of the other new solutions?

Sure.

Well, generally, why don't you just give a shout to me. I don't know.

Yes. That team is doing a great job, and I've spent a fair amount of time with them, and they're hitting on all cylinders. The 3 key areas that they're spending on: First is around the consumer experience. They have a new platform in place, and we're rolling that out to more markets. We're also adding more funding capabilities in different markets. Secondly, we're also adding more customers to the mix. And as Hikmet mentioned earlier, 80% of the customers that are visiting wu.com are new to the Western Union franchise. So we're adding significant new customers. And lastly, we're expanding distribution, either through ourselves or through other partners. So those are where the primary investments are, and they're paying off, as you can see. And we're very pleased with the results.

And the next question is from Ashwin Shirvaikar of Citi.

I guess my first question was, I'm trying to understand the spread between wu.com transactions and revenues. And it seems to fluctuate a lot between just 20% this quarter because it's been as high as 40%. Why does it bounce around so much? And why is it so different from the spread in your traditional business, which is more like mid-single digits?

Yes, Ashwin. This is Mike. We did some major pricing actions primarily in the fourth quarter of last year. There were some things we did prior to that as well. But we had some major actions in the fourth quarter. So we just anniversaried those as we went through the fourth quarter of 2013. It's just that we did those in the fourth quarter of '12. So now we have passed that anniversary, and it's more just mix issues and other promotions in the business. And that's why the spread has narrowed.

Okay, okay. Now my second question is with regards to segment margins, and I'm kind of looking at C2B margins and also B2B x integration costs, and they were both down. Is that currency in the C2B? Well, I'm trying to understand why in each of those areas why margins were down. And what's the trend we should expect going through the year?

Sure. Ashwin, this is Raj. On the C2B business, as I mentioned in some of my comments, there were a couple of things that impacted us there were, higher credit card usage by our customers. We opened up some new funding options in certain parts of our business, so consumers started to use more carded-type transactions. Secondly, we had higher principal transactions as well, and some of that higher PPT was related to the severe weather we had in the U.S., which caused utility payments to be higher. So that business achieved about a 20% margin last year, and that's about where it is in the first quarter, and I would expect it to be in that range for the year as well. With respect to B2B, that business -- last year, we achieved low-teens EBITDA x integration. And in the first quarter, we had some timing of expenses that drove the margins down. But I would expect to see that improve as we move through the course of the year. Longer term, we still expect that business to expand margins as it gains scale and leverages the infrastructure that it's put in the last couple of years. So those are some of the reasons behind the margins that you saw in the first quarter.

Okay. And also, I'm trying to understand with regards to C2C transaction growth. Obviously, through the course of last year, transaction growth rebounded pretty nicely. But it seems to have plateaued the last 3 quarters right around 9%. And is it fair to expect further acceleration? Or is it kind of upper-single digit is about what you can do without price concessions and more marketing dollars? Or how should we think of that?

Ashwin, we haven't really provided a transaction growth outlook. And so I won't give you a specific number. But generally, as we have said, the pricing actions are driving a lot of the transaction growth that you've seen in the last 3 quarters, and that continues to have a good effect. But we would normally see transaction growth leveling off after -- within a 12-month period. But then the thing that we are seeing is that as expected, the revenue growth is picking up. In the 12 to 18 months after a pricing, we typically expect to see revenue growth pick up, which is what's happening. So those are some of the parameters. I would expect transaction growth, to your question though, to level off.

Okay. Understood. One last housekeeping question. You did mention in the Q, you have about $700 million in the U.S. I just wanted to clarify, is all of that really available for any actions you might want to take, buybacks, whatever?

If it was all available, I would probably use it. But most of the cash on the balance sheet is not available. We had $1.7 billion at the end of the quarter and, as you said, about $700 million in the U.S. A lot of it is cash in-transit. Another chunk, we hold for regulatory purposes. And then we just need money for liquidity purposes. We move hundreds of billions of dollars around every year, and we need to keep some cash on hand for liquidity purposes. But clearly, we do things as efficiently as we can. And to the extent that there's any excess cash, we will use it. But I would say most of it's not readily available.

And our next question will come from George Mihalos of Credit Suisse. Georgios Mihalos - Crédit Suisse AG, Research Division: I just wanted to start off on the compliance side. Nice to see you reiterate the compliance amounting to about 3.5% to 4% of revenue this year. But will that be uniform throughout the course of the year? Or should we see 1 quarter versus another maybe have a little bit more or a little bit less of that expense?

Hey, George. It's Raj. The -- I can't give you a quarterly number on that. We expect about 3.5% to 4%, and it really depends on the pace at which we hire and the pace at which we put programs in place. Clearly we're going to try to do things as efficiently as we can. And if we don't need to spend the money, we won't. But that's our current expectation for the full year. Georgios Mihalos - Crédit Suisse AG, Research Division: Okay. And then just for the first quarter, were you within that range, 3.5% or 4%? Or can you share that?

Okay. That's our full year expectation. For the first quarter, we were at 3%.

We were at 3%, yes. Georgios Mihalos - Crédit Suisse AG, Research Division: Okay. 3%, 3%. Okay. And then just going back to your commentary around trying to add some leverage in the margin in terms of long term bringing commissions down. Obviously, it's a competitive landscape, but some of the steps that we saw recently or some of the announcements. As it relates to Walmart, do you think that could potentially impede a competitor from maybe approaching some of your agent partners on the receive side? Just curious what your thoughts are there.

Well, competition was always here, right? We all -- George, we were always competing. And I've been in the market 14 years, and I've been always competing with the competition here. But I don't see any big changes. Don't forget that our top 40 agents have been 17 years exclusive with us. They like us. They like our brand. They like that we bring customers to them. They like that it's a win-win situation. And they like to serve our customers. And I did not see any big changes here. We do have definitely agent by agent some negotiations. And sometimes, the negotiations are tough. Sometimes, you have to fly around the world and do these negotiations. But it's a win-win situation. And I'm very pleased with our current agent structure, and that gives us 500,000 locations, 100,000 ATMs, and that's a huge, huge, huge number.

And the next question will come from Kartik Mehta of Northcoast Research.

Hikmet, I know you said you haven't heard any rumors about agents wanting to do private label. But I'm wondering in your top 30 agents, do any of them have the option to do a private label if they wanted to?

Well, don't forget, we do have agents for years. They do. They have their own money transfer business in some countries internationally, right? They do have -- banks, for instance. We work with banks. They have been doing money transfer for years, and they switch to us, or they do both. I don't see -- it's not like we don't do that, and they have their -- or if you send the money from one bank to other bank, it's kind of a private label. But they choose us. Customers choose us because they prefer to send money from U.S. to Vietnam or from Finland to Argentina in minutes, and that's what we provide, and that's our beauty in crossing the borders. I don't see -- within the environment, we do have a pretty good business model, I guess.

And then I'm just wondering, have you seen the impact of the compliance on other regional companies? It seems as though you've spent a lot of money on compliance because you're the largest. Are you starting to see that trickle down to some of your other competitors that might be a little bit smaller?

Well, I can't speak name of them, but I know that we are investing a lot, and I believe it's going to be a competitive advantage. I only can tell some -- in some countries, as I mentioned earlier, that we do see some people saying that we are -- or we can't invest in this business. There's obviously companies like Western Union, who has the right compliance program or investing in the current compliance, upgrade their compliance programs. And that brings us definitely customers. My example was Mexico. We see there. But generally, I would say that my hope is that it's good for the industry that everybody invests here and invests significantly here and do a good business here. And that's what we do. We believe that we are investing in the right way. And to comply with the regulations and being -- having a good compliance program.

And I know, Raj, this might be a little early. But when you had indicated the increase in compliance, one of the things that I think you said is you're hoping to automate some of the processes so that maybe you can control the compliance costs a little bit more. Is -- have you looked at that? Is that an opportunity? Or is it just still too early to tell what you might be able to do in terms of automating and connect-controlling that compliance pause [ph] as we go forward?

Hey, Kartik. It is early, but we're always looking for opportunities to automate our processes. That's an ongoing initiative for us. Our goal in the short term is to get the programs and processes in place. But longer term, it is to automate, and that's where some of the technology spending comes into play, that our CapEx is expected to be about 5% of revenues this year, which is a little bit higher than the last couple of years, and that's part of the reason. So we are trying to automate those things as much as we can, and we learn as well over time.

Yes. I think compliance and compliance optimization is one of the highest programs we have in the company. We have an executive who is only focused on that to upgrade that, to do it in a best way. That's why we invest here, and we believe it's going to be long-term a competitive advantages. It will be automated everything, and we believe that we will have the -- we -- aim to have the best-in-class one.

And our next question is from Andrew Jeffrey of SunTrust.

My question's around wu.com and the strategy there a little bit just with regard to, I guess, a few different initiatives, at least rumors of which have been bandied about. One would be instant ACH and your outlook for offering instant ACH, and which markets do you think that's the most attractive. And then second, I think, Hikmet, did I hear you say that about 30% of wu.com transactions are mobile? I guess I'd like to hear a little bit about the mobile strategy, too? And how important you think that is and thoughts around new mobile apps and so forth? So just kind of focusing on -- in on how you view that business and those offerings evolving here over the next several years.

Raj, do you want to take the first part? And I'll take the mobile part.

Hey, yes. Andrew, let me just talk about instant ACH. We were very happy with the results in wu.com, and that business is doing some great things. We operate in 24 markets around the world, where we send money from into 200 countries and territories into cash or to retail locations, and then we can also send money into a bank account in 50 markets around the world. And you've already seen the success that, that business is having with the customer experience, adding more customers to the mix, as well as the distribution expansion. So we're doing a lot of great things already in that business. And from our perspective, instant ACH is going to be another feature that our customers will want, and we'll add that later this year. We have an ACH product in the U.S. today. It's on a 4-day basis. And we have similar bank funding mechanisms in a few other countries, and we're expanding that on an ongoing basis. So throughout instant ACH, it is important to add later this year, but it's not the only thing that's going to drive this business. Clearly, we're already having a lot success around that. And then, Hikmet, I'll give it to you for the [indiscernible].

Yes. Just to complete on the ACH program. As you said, there are different ACH program around the world, right? In Germany, an ACH sounds different like a direct debit from your account than in France and then in the U.S. So -- and being into -- that's the beauty of being in 24 countries, right, and expanding our portfolio. I mean, long term, I want to be with Digital in 200 countries. A big part of that, that's the second part of your question, is the mobile. I believe on the mobile. I think it's the future is that people sending money instantly from their mobile phone and receiving on their mobile phone, and we've been with our Western Union apps in the U.S., very successful, 30% of the transactions are already on mobile. And the people do use fast money sending from their mobile, and I think it's going to be a growing area. I'm going to continue to look at that. And we're going to have -- continue to evolve -- involve to invest more on the mobile to sending money. But don't forget, in the end of today, you need the Western Union fundamentals. You need the operation. We have 100 -- we payout in 121 currencies. Not many companies can do that in minutes. Not many companies do that. We have operational excellence. In the middle, we have the compliance programs. Not many companies can combine worldwide hybrid economies, sending money from your iPad in minutes to rural areas of Bihar in India. We can do that, drop money in rupees in minutes. I think -- and that's -- adding on that mobile function is, I think, a very important part of my strategy.

Okay. And is it -- for how long, I guess, do you see not specifically, but conceptually, would you see or be willing to do things like subsidize interchange and so forth to drive volume? Is there a -- as that business grows faster and gets bigger, is there a sensitivity to sort of the incremental costs in that versus the lower cost, but still somewhat slower and maybe riskier, hence more expensive ACH network?

Andrew, we're evaluating all different options. It's a balance of continuing the success that we've had and then looking at new funding options. We're doing that in many markets, and we'll do that in the U.S. as well. But we want to manage the risk around the instant ACH product, which you really have to manage well. But if you can get the formula right, it can be a nice growth driver. So we're managing all that. We'll look at all the options there.

And Andrew, we typically have different prices in different corridors, as you can imagine. But where we can, we often have higher fees for credit card funding as opposed to bank funding, so more of the promotional is driving to the lower cost bank funding.

Okay. So it sort of depends on which area you were talking about?

Yes.

Okay. And then last, Hikmet, it sounded like last quarter, you were kind of getting away from highlighting the agent count, perhaps trying to rationalize the agent base. Could you give us an update there? And kind of -- are were thinking -- should we be thinking about directionally more agent concentration rather than less over time?

No. You should think more that, we're going to get more agent locations and more distribution and more ATMs. I'm still driving to my teams to do more touch points. And it could be agent locations. It could be ATMs. It could be a sales kiosk. And I think that's going to expand. What we have done is also -- we also leaned back a little bit, looked at the agent productivity over a few quarters. And found they're saying that, "Okay. We want to have more revenue, more transaction on the send side from the agent transactions and we focus on that." And the secret of that business is also that you have to be in every corner, and I would like to see a Western Union brand in every corner of the world. Is it on an ATM? Is it on a location? Because it's then easy to combine a mobile phone from Denver here to worldwide, any location, rural areas of Vietnam or rural areas of Ukraine or in Turkey to a location. And if you don't have the locations or if you don't have the sales kiosk or if you don't have the ATMs, you can't do that. So my strategy will continue to push my team to expand our distribution channels.

Laura, we'll take one more call.

The last question will come from Kevin McVeigh of Macquarie.

It looks like your transactions actually increased for the first time in awhile. Any thoughts on that? Principal per transaction was up modestly just as we think about that over the course of '14.

I think we had already the strong transaction growth, but [indiscernible].

Yes. Principal per transaction was flat on a constant currency basis. Is that what you were referring to Kevin or...

Yes, yes. As opposed to -- do you think we're at an inflection point, I think that's actually a pretty big positive as opposed to kind of the declines you've been seeing the last couple of years.

I think it's really just related to mix and what might change in the businesses. It's hard to predict exactly where that's going to be, but we're pleased with that result. But I think it's mostly just related to mix.

Got it. And then if you said this, I apologize. But are we still on target for the $500 million by 2015?

Yes. We still have the approximately $500 million as a target. The team and everybody is focused at reaching the approximately $500 million, and I think we are -- have a very strong growth, 45% revenue growth, convince me that we are on that direction.

That was a $500 million target for our Digital business just to clarify. So everybody, thanks for joining us for the call and have a good afternoon.

Thank you.

Thanks.

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