Good afternoon, and welcome to the Western Union Fourth Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [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. On today's call, we will discuss the Company's 2018 fourth quarter results and the 2019 financial outlook and then we'll 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 & Exchange Commission, including the 2017 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 would now like to turn the call over to Hikmet Ersek.

Thank you, Mike, and good afternoon, everyone. Overall, our business continues to provide a stable results as our customers remained resilient despite slowing global economic growth in parts of the worlds. Results remain strong with westernunion.com transaction accelerating to 25% growth in the quarter which translated into 22% constant currency revenue increase. In addition to ongoing turn in our U.S. outbound digital business, we are also making great progress in increasing westernunion.com penetration and growth in key European markets including France, the UK and Germany. For our entire money transfer business, revenues increased 1% in constant currency. Transactions however increased 4% in the fourth quarter, and cross-border principal volume grew 8% in constant currency terms so underlying metrics are sound. Business Solutions showed improvements with revenues increasing 5%, constant currency led by strong growth in Europe. We again delivered good performance in the payments area of B2B, including the education vertical. This quarter however we also had good growth in foreign exchange services aided by customers hedging related to increased foreign exchange volatility. The bill payments businesses posted mixed results with Argentina results in U.S. dollar terms continued to be heavily impacted by negative currency translation. From a profit perspective, margins were solid at 19.2% for the quarter and 20.1% for the year as effective cost management and our WU Way lean programs contributed to stability. Operating cash flow for the U.S. came in as projected, as we generated over $800 million dollars and we returned over $740 million to shareholders in 2018 through dividends and share repurchases. We are also very pleased to announce today a 5% increase in our quarterly dividend, raising it to $0.20 per share or $0.80 percent on an annualized basis. As we begin, 2019 we remain focused on driving digital expansion and growth, offering…

Thank you, Hikmet. As I review 2018 financial results, I will focus primarily on the fourth quarter. The similar information for the full year can be found in our press release and the attached financial schedules. Fourth quarter revenues are $1.4 billion decline 3% or increased 2% on a constant currency basis compared to the prior period. Currency translation net of the impact from hedges reduced fourth quarter revenues by approximately $69 million compared to the prior year, primarily due to continued decline in the Argentine pesos. The decline in the peso are negatively impact the total revenue by 4 percentage points, while they expect some inflation on our Argentina businesses is estimated to have positively impacted both reported and constant currency revenues by approximately 2 percentage points. In the consumer to consumer segments which represented 80% of company revenues in the quarter, revenues declined 1% or increased 1% constant currency while transactions grew 4%. Total C2C cross-border principal increased 5% or 8% on a constant basis while principal for transaction was flat or increase 3% constant currency. The spread between C2C transaction and revenue growth in the quarter was 5% with a negative 2% impact from currency. Mix had a negative impact of 5.2 percentage points in the quarter while pricing had a negative impact of 1% compared to the prior year period. The 1% pricing impact primarily reflects action taken in the Middle East earlier in the year. Excluding the Middle East, the net pricing change for the rest of the world was positive both for the quarter and the full year. Turning to the regional results, North America revenue was flat on both, reported and consequently basis while transactions grew 2%. The U.S. to Mexico quarter delivered strong revenue growth in the quarter, but this was offset…

We will now begin the question-and-answer session. [Operator instructions] And our first question will come from Tien-Tsin Huang of JP Morgan.

Just on -- I’ll start on the dotcom business, you've mentioned acceleration. You've mentioned new countries. I'm curious if you have an outlook for 2019 and what is it driven by? Is it again, more country expansion? Or are you just getting more penetration within your existing countries?

I think both will continue to do that because our U.S. outcome digital business is very strong and these are done by not the existing customers, but these have been here for a longer time. And as you know, we are also in the European Union countries longer time with our westernunion.com transaction. So that's going to continue. But we’re also very excited finding new customer segments in our new countries, and once you launch your country, takes the time with the marketing activities and you mean customers, but the growth rates are very promising. We came with Q4 also with a 25% transaction growth, which is also very encouraging. We are just starting in Middle East and Asia with our expansion. I think, that's really encouraging numbers, so that gives us additional channels and still these customers are new to us. Additional customer doesn't cannibalize our existing business.

And just so my follow-up quickly, just I want to ask on Wu Way. I heard the $70 million in savings, but how -- where are you now in terms of potentially seeing better revenue production from Wu Way? Where are the investments going? May be just a quick update there?

Yes, I think we’re still very excited about Wu Way initiatives. I think there's still room from efficiency side also from growth opportunities how we implement that. Our focus is definitely on digital growth and we do -- when we launch in new country, we do launch with Wu Way initiatives. The Amazon Pay -- for our platform to Amazon, the collaboration with Amazon was done all via Wu Way and that has been launched 10 countries now, and we’re just starting to promote that in different countries. And from the efficiency side, I still believe there's some room and you know we gave our guidance about 20% margin for 2019. And while we do this efficiency program, we do invest also in the growth that we’re going to continue to happen. And we are -- Wu Way is definitely the way we operate.

And Tien-Tsin on those $70 million, that is our full run rate. We don't plan to call out any further savings there, but we will keep driving for lean and operating efficiencies and keep reinvesting in the business.

Next question will come from Bryan Keane of Deutsche Bank.

I wanted to ask about the regions. In the North America region, I see transactions accelerated in the quarter at least year-over-year from 1% to 2%, but constant current you see revenues went down a couple points, and then EU and CIS similar. Transactions remain the same at about 8% but the constant currency revenues dropped to couple points. Just curious, what's causing that? And is that the mix that you called out there?

This is Raj. In North America what you're seeing on the revenue side is, it's a growth over from higher foreign exchange spreads we had in the previous year fourth quarter, and some of those spreads were reversed during the course of the year. But transactions growth as you mentioned continue to accelerate, so that's good. Our U.S. outbound business actually did quite well. We had 7% transaction growth there which has been accelerating during the course of the year, but some of the pricing and mix impacts had the impact that we're referring to. And then the Europe and CIS, the dotcom business overall grew very well during the course of last year and in the fourth quarter and also our DMT business in France. So, those have some mix impacts. The slowdown in the fourth quarter is again related to higher FX spread that we had earlier in the year in those markets that we reverse part of those. So, transaction trends have been quite healthy and just some of our mix in pricing impacts are having the revenue impact that you're seeing there.

And then, Hikmet just thinking about the new opportunities that you're talking about for cross-border, is there a way to quantify that in terms of revenue opportunities those could produce?

We don't give that revenue guidance there, but I believe there's a new opportunity for additional customers like we did it with the westernunion.com. These customers like the offering our platform to third party like Safaricom or Amazon Pay are really new customers that we didn't offer that. And that's the only way they can do transactions because if you're in Brazil, the local currency owner, is it in form of card or cash, you can't do international transactions because you can't use your credit card, international credit card. There is no international credit card, but the people want to buy online, want to buy global and pay local. And that's really our platform which we developed over years enables that. Technology wise, compliance wise and settlement wise do that. So we are very excited about that and Amazon is definitely a partner, but there are other also opportunity to extend our platform to new payments capabilities. Paying local, buying global is definitely something you are excited about.

And the next question comes from Darrin Peller of Wolfe Research.

Just when you go into the mix impacts, hey, on this C2C segment that drove the two points of difference between transaction growth and revenue growth and I think you've mentioned one point pricing. Can you just explain a little more around the mix you are talking about? And then, when we think of '19 outlook, just if that's going to persist that kind of a mix impact is going to persist?

Darrin, the mix is something that we don't really try to forecast. It's difficult to forecast. It's difficult to forecast. It really is related to where the growth is coming from. It's mostly geographic mix around the world. So what it means ultimately is that, we're getting faster growth and lower revenue per transaction corridors and that's what you're seeing coming through. It varies a little bit, this time it was minus two and it also have to do with product mix, but mostly it's a geographic mix issue that's showing up there. So it's not something that we try to forecast overall, but our revenue outlook envisions whatever might happen there.

Okay. I guess just a higher level question then. We're seeing very strong growth of the dotcom business continue and to your point accelerate, and I guess it just feels like at some point there should be an inflection where it's big enough to more than offset some of the headwinds that you've seen, whether it's on mix or it's on pricing, and potentially something that starts to align more with the volume growth across-border or even the transaction growth on cross-border you're seeing, which is higher than revenue. When did -- can you give us a little idea as to when you think that could really start to show and materialize, so that the digital side is big enough for you that it offsets other areas?

Well, digital -- our wu.com business is, it's obviously a much larger than it was a few years ago. It was over 500 million last year, but it's still only 12% of consumer revenues. So, it's going to -- I don't know when that inflection point is -- clearly digital, we still see very strong growth opportunities. Retail, we think will be a flattish type grower, maybe low single digits. But you know, we've had negative growth in some of our other areas, which is really what's driving it down. WU is accelerated, which is good, but our bill payments businesses were negative. Generally speaking, so we need to get better overall performance there. If we could get those mid single digit type of growth and that gives us good flexibility in what we can do overall. So not just digital, digital certainly has to be there, but other components of our business also have to perform a little bit better than they have done.

Is there anything -- I am just going to leave it at this, but anything more you think that's possible to do from a restructuring standpoint? Beyond this, potentially, the B2B business we've talked about, maybe it's a sort of a domestic money transfer or anything else that can be done around a restructuring that could help the overall growth profile, the more near term manner?

I think yes, I mean, we’re looking constantly about to structure opportunities growth areas and on the efficiency margin part. Obviously, in the retail money transfer business, as Raj described earlier, I think it's going to -- we have a good market there and it's going to get flattish, but the growth will come from digital environment. And it's only the 12% of our revenue, it's the largest by far in the digital money transfer environment and the countries we rolled out, they will come also, adding additional customers. So I think if you're really keeps the customers on the retail side and add customers from the digital side, our C2C business is quite solid and will drive the growth. I think you have to really look at our payments parts, payments business. And on the payments parts, the volatility loss three months helped us and the B2B business, but that shouldn't pay the payments business, C2C business growing very well and we are building on that. We have to seek some the BMC and the domestic business and the SpeedPay domestic business has been a challenge, right. And that has an overall impact to our company's performance and the domestic businesses has been something we are focused enough to turn around.

And the next question comes from Jim Schneider of Goldman Sachs.

The Latin American region is one that continues to put up very good revenue growth for you. I think you talked about the U.S. outbound and the Mexico in particular. Can you maybe kind of a call out A, any other countries or geographies that really contributed to that? What initiatives you have been doing in other countries? And then B, to what extent that was held by the addition of wu.com in those quarters?

Jim, this is Raj. The Latin America revenue growth is really the outbound growth some Latin America, it starts that you're referring to now that we've mentioned by Argentina, Ecuador, Peru, Brazil, so we've had quite healthy growth in some of those other markets even though Argentina was impacted on a reporter basis by the currency devaluation there, other markets have been doing quite well in that region. So the conditions are quite good, it's a relatively small piece of our overall revenues a lot of times about 9% of total C2C revenues. So, we've seen continue good performance at least on a constant currency basis. But -- and then in terms of dotcom and certainly a focus that we have in terms of the expanding dotcom presence in Latin America, so that's really what we're focused on.

Yes, I think, Jim, generally C2C business has been stable especially the cross-border. C2C business is really stable. Latin America, as Raj said, this s a smaller part of our business, but we had also a strong growth in despite besides U.S. up and also Europe. UK, Germany and France have been going very well. But we also see now good transaction growth in the Middle East. As you recall, Jim last year, we implemented some promotions there. Now, they are showing good returns. I think that's also a good sign and shows how stable our business is. So, digital growth is definitely driving the top line, but also there are very stable numbers in the retail manufacturing business.

And then maybe as a follow-up. Some of your payments peers have noted a notable slowdown in cross-border travel and while I understand most of your trends are driven by migration which are longer term things. Are you seeing anything in the business as you start Q1 that gives you a little bit of pause in terms of a potential macro slowdown and to what extent is that baked into guidance?

Well, macro environment is definitely challenging, but as you look at our business, we are in 200 countries, you have 20,000 corridors. So, we clearly are -- our portfolio play in our case, right. So, we though actually don't see big changes in our economical environment in the retail manufacture business. On our dotcom business even stronger as continue to happen, the strong growth and Q4 exit was very good, especially as I mentioned earlier in transaction and the principal amount which was constant currency. Principal was about 8% growth in Q4. And so, I think the environment stable. However, there are some concerns and global concerns on the economical environment.

And next we have a question from James Faucette of Morgan Stanley.

I wanted to follow up on wu.com and as you're expanding into markets and corridors, what are you having to do from a pricing perspective to encourage and attract volumes? And how should we think about the pricing opportunity sets over time? I guess that’s my first question.

This is Raj Agrawal. When we expanded to new markets, we really look at the digital business as being new incremental revenues to us. So, we go into any new market, making sure that we priced competitively with whatever else might be available in terms of that similar service. We have a very unique service offering because the majority of our revenues payout at retail locations, even though they may be digitally initiated. So, we do try to price competitively and it doesn't really carry the legacy of the retail business. So, it's a new incremental business to us. We priced very competitively, we tried to get the business, and it's really about marketing and acquiring new customers more than anything else in terms of -- it's not really driven by the pricing. We're going to make that a competitive offering and then we just need to talk consumers about the offerings.

And then from a 2019 outlook, you've guided roughly 20% margins. 2018 in different parts of the year, you were a bit focused level. So could you talk to what would be the puts and takes that would allow you maybe to put back above 20% potentially in 2019?

Yes, I mean we are comfortable with our 20% margins. It could be a little bit above, a little bit below or just depends on how things play out. If you look at the pieces, we are investing in the growth opportunities like digital life, the relationship we have with Amazon. We're also investing back in regulatory items like privacy and other areas. And then when we are in a low growth environment like we are and we have negative FX impacts, gets more challenging to get leverage on our cost structures. So, we do need to get revenue growth overall to be able to drive better margins, which is our objective. But for this year, we're comfortable with the 20% level.

The next question comes from Jason Kupferberg of Bank of America Merrill Lynch.

Just wanted to start on C2C, I know the constant currency rev growth there I think came in at 1%, a little bit below recent trend and the comp is kind of tough in Q1. And so, I just wanted to get a sense of how we should think about the near-term trajectory on C2C in constant currency terms?

Yes, I mean, we don't give outlook on a specific business units, Jason. But if you just think about the pieces, the retail business is likely to be a flattish type grower. And digital, we continue to soon as good growth opportunities there and it's going to become a bigger and bigger piece. So, I think the consumer business overall will be solid and stable. And really is about getting good growth in the other areas, but the consumer business should be relatively stable. The underlying transaction trends have been good, so we've had some variation due to pricing and mix factors, last year in the fourth quarter, but for while the underlying metrics have been solid.

And then just in terms of sensitivity in 2019 guidance, I mean, if we just think about some of the macro uncertainties out there. Hypothetically, if there was to be, let's say, a hard Brexit. Is that -- would that be a material issue for Western Union as there been any risk adjustment in the 2019 forecast for that scenario? I mean it just seems like to do some size remittance market overall, so wanted to get your perspective?

Yes, from an operational standpoint, we're very well positioned, we were ready to operate under a number of different scenarios, and you can't predict exactly what the outcome will be. Economically, I don't know exactly what you expect, but I would say overall for Europe, we assumed slightly software environment. But from an operational standpoint, we're ready to go regardless of what scenario plays out.

Again, we believe that we are prepared. We've been working on that. I think operational replacement and customer wise, we don't see any issues in here. And just from the risk side, I mean, as I mentioned earlier, none of our countries are bigger than 7% of our revenue outside of the U.S. So, we operate in 20,000 corridors and I believe that we are very well positioned to despite the economic challenges. Globally, we are well positioned to respond and we believe we can have a stable 2019.

The next question comes from Ashwin Shirvaikar of Citi.

I guess my question is on operating margin. Raj, you mentioned lower bad debt. Is this some action you've taken maybe big data analytics type of stuff? What's feeding to this -- can you comment?

No, I would say, Ashwin, that's really a one-off item we have and that's a special item I would say that helps us from the bad debt side. But overall, from a bad debt standpoint, we do pretty good job of managing -- some of it is currently using data analytics. But generally, we manage the risk in our business quite well. And most of our business is on a good firm's model. So, there's not really too much that we have to deal with there, so I think we're in good shape.

The bad debt was primarily high bad debt expense in the prior year quarter, so the comparisons were just favorable.

And then the other question with regards to the cross-border principal growth. I was just kind of wanted to delve a little bit deeper into that. What's driving that? Is it sustainable? Is it specific deals, channels? Is it any -- is it reflective of any integration related concerns people send back money to their home countries? Any anything detail on that?

I think on general, overall business, we had a good U.S. to Mexico business doing well. I would say that our principal amount in Middle East turning around, as I mentioned earlier, the transactions growth has been good. So it impacts the principal amount also. And European business has been stable also. As you know, we have some issues in the U.S. domestic manufacturers business, but that's not the cause for the principal. And generally, the cause for principal has been a good environment and the market growth has been healthy and I think the people are using cross-border transfer and thank God they're using Western Union and going to continue to use Western Union.

That sounds like deal mix then?

Yes.

And our next question is from Jennifer Dugan with SunTrust.

I'm on for Andrew Jaffrey. Looking at the B2B and other revenue growth, both appeared very healthy but the margins in both were a bit weaker. Can you just go into some of the dynamics there?

In the B2B business, you're looking at the third quarter comparison and margins, third quarter to fourth quarter, first. In the B2B business, we just benefited in the third quarter from timing and expenses. So, that was really just related to timing. I would say the overall margin for the full year were around 6% for the B2B business or EBITDA margins close to 17%, which is more representative of the overall margins there. And then, in the other revenues or other area of our business, we did have lower overall revenues in that business, but we also had other corporate expenses because certain corporate expenses that are for strategy or M&A costs fall into the other part of our business reduced. That's where we record them so that impacted the margins as well.

And then, one other thing I wanted to talk a little bit more, I know you've mentioned some of the tech investments, around digital, and some of these opportunities with Amazon in addition to some of the regulatory expenses. But looking more at the tech investments, what is the timeline for some of these investments, timeline to getting them done and then the return timeline?

So, the digital investments will be ongoing. Our strategy there is really to drive growth and expansion all over the world. So we're going to it's a continual effort to improve the features and functionality in our platforms. We're launching new sites all the time. And so, you know, that investment will continue for the digital expansion. We're also leveraging our platform for new opportunities like the Amazon relationship. So there's some spending that goes with that. So, we continue to invest in the technology area and that's really to drive long term growth and expansion and so that's really our strategy.

I think from also -- if you are already in a country like, U.S. or Europe, it’s a digital which we invested already, it's wining new customers, expanding in the marketing wise, really making commercial on the digital. And if you launch in new country, there were we do investments, and as Raj mentioned the earlier, we want to be in 200 countries like we are in our retail money transfer business. We want to be also with our digital business in 200 countries and we are expanding that. That's one of our biggest competitive advantage is connecting 200 countries with 200 countries and using our payout network and retails with 560,000 locations but also buildings of accounts. We can drop money really monetarily very fast in accounts directly on more than 100 countries. So that investment is going and you could see in the numbers, the growth numbers are coming from digital investments.

The next question comes from Ramsey El-Assal of Barclays.

This is Ben on for Ramsey. I’ve had a question on the U.S. outbound, you’ve mentioned that it had grown quite nicely and then accelerated over the course of the year. And I guess, I'm just sort of wondering, what's going right? Is it more digital revenues is kind of taking more if you're going to piece of the whole or taking share or can you kind of parse that out a little bit for us?

Yes, it’s a number of things that are going well there. There's some pricing and mixed impacting the revenues overall, but the transactions growth has been accelerating. Dotcom, U.S. outbound and their digital business has been going very strong. And U.S. to Mexico was also very strong. And, that was be offset by some other things but those series have been very strong. And our price positioning for U.S. outbound is very competitive to your other offerings. And so, I would say it's a combination of those three things to cross-border wise, U.S. outbound to other countries has been doing quite well for us. And there is some impacts of revenue from mix in pricing, but otherwise, the transaction terms and principal terms have been healthy.

And then just on the tax rate, you had mentioned that you expected to come down a little bit in 2020. Can you give us any sense of like, the timing over the course of 2019 will there be some like a step down quarter-by-quarter? Or will it be a little more unpredictable and any color you can give there will be great?

Yes, we're very pleased with the solution that we're putting in place for the BEAT issue that came about as part of U.S. tax reform. It was really causing unwarranted double or triple taxation on a portion of our U.S. outbound business. So, we are implementing a solution, it's going to be implemented during the course of this year. I don't have a quarterly tax rate to give you. But certainly, it's going to be implemented during the course of this year. And next year, we see our tax rate falling back down to the mid teens level for really to foreseeable future given the current tax environment that we're in. So, we're very pleased with that outcome.

And the next question comes from Vasundhara Govil of KBW.

I guess my first question was on the free cash flow guidance. I guess you guys are guiding to slightly better free cash flow even though revenues are expected to be flattish and margin stable. So what's driving that better conversion?

Our operating cash flow versus for about $1 billion in 2019, and last year in 2018, we had $200 million of special type items that we paid for, and that's why the operating cash flow last year was just over $800 million. So, that's the primary difference overall in the operating cash flow.

And then in terms of the EPS outlook, what are you guys including in terms of contribution from share buybacks? And more broadly could you talk a little bit about your appetite for M&A and how it fits into your capital allocation authorities? Are you looking at deals actively and if so what types of targets are you'll be, would you be interested in?

We don't give a specific amount for share buyback or the impact to EPS. But if you look at the last years, we've been buying between $400 million and $500 million of stock each year. Basically, we've been returning 100% of our freight free cash flow back to shareholders through both buybacks and dividends. And so, I expect that we're going to be active again in 2019, and then in terms of M&A strategy where we're always looking for the right kind of acquisition that fits within our cross-border payments strategy. We would love to do that kind of digital type of acquisition, but it has to be at the right price. And it has to really -- whatever we really do it has to advance the ball for us. We have a great platform. We have great capabilities. So whatever we do, it has to really give us some additional capabilities that strategically within our strategy.

Next, we have a question from Tim Willi of Wells Fargo.

I had a couple questions on digital and then one on Amazon. But in terms of thinking about digital and the impact around the margin discussion, if I do the math correctly right now it appears that the digital channel is effectively driving all of the revenue growth in C2C. Would that be correct, if we just think about this contribution and its revenue growth rate, the digital sort of this all growing channel for C2C while sort of the traditional business, if you could sort of call it flattish or slightly down. Is that correct first of all?

Yes, digital is going to be the key growth driver not only for us when we lead in the market, long-term.

So if you think about like in a 12%, I know that there's always lots of moving pieces around margins and scale and investing and expanding that franchise, but is there a way to think just conceptually that by the time digital is at a 20% or 25% of revenue for that C2C. Is that sort of way to think about the inflection point about letting the scale and the growth of digital and that what should be inherently pretty attractive margin start to show through? I know you’ve always said it's profitable just not at the same sort of levels, the rest of the business. But I think you've always sort of said at some point it should be a higher margin business, if any updates on that thought process over the next several years?

Yes, I mean -- it's a great question. We're in heavy investment mode in that business. If you separate the marketing and technology, which is a much heavier concentration than the rest of our business we're spending in marketing technology for the long-term growth of this business. And so, you know, today the margins are lower than the rest of the Company and that continues to be the goal until we get broad expansion all around the world with digital. But when you look at the contribution margin on a percentage basis, and I think we've mentioned this before, the incremental margins are actually similar in both the retail and the digital business, right? It depends on how much money you're sending and the corridor that's involved. But the profitability of a transaction in from a percentage basis is actually quite similar to our retail business. So it can be a very profitable business you can drive the profitability up overnight if we wanted to, but that's not really the strategy we have is really continue to grow our business to 200 countries and territories. And then at some point it will be a better contributor to our overall profitability. And especially as we have more account channels, you know, accounts two accounts capabilities that we're building there that will also help the overall margin profile.

Yes, it makes sense I totally understand. It sort of curious, if there's a way we could sort of think about a mile marker that, okay or that’s a billion dollars of revenue, we should really start thinking about digital having a positive upward impact on margins. But I can understand, there's a lot of to go on between point A to point B, when you get there. My follow was just sort of on Amazon. I think over the years, you know, again you guys struck partnerships and tried to leverage this vast network your brand and your competencies around cross-border and risk management, some with mixed results, some have announced and I don't think necessarily there's been a ton of follow through I guess we point to over the year, but obviously Amazon is Amazon. So I guess I'm just sort of curious when you think about this partnership relative to other agreements that had been struck over the many years, how you feel or how this evolution maybe different than this potentially could be something where, hey, this actually has really or had an impact it really leverage the brand of the network of Western Union better than other kinds?

Yes, I think, we are very excited about the opportunity with the largest global online marketplace, right. I mean, and I think Amazon wants to get to the customer segments and really offered their products to the new customer segments and they have the product and using our platform. Our platform is uniquely invested over the years and we are very proud of our platform. Not many companies have licenses, so operating 200 countries and we do have it not many companies can settle in 137 currencies, acting 130 currencies we have it. And that's technology that regulator environment puts us in a unique position to offer our platform to Amazon. Now it's a new product as you know, it's nobody did that earlier. We are the first doing this, and partnership with them. We are testing it. It's very promising. It a $600 billion market for online shopping. And I think that millions of customers don't have an excess on that. And we hope that our platform will help Amazon so for their products to new customer segments.

Okay, the final question will come from Bob Napoli of William Blair.

First question just on the domestic money transfer business. And I know that's been a challenge. How big is that business now? And how much is it declining? And do you expect that to continue to decline over the next few years?

Yes, I think as you know, Bob, hello, how are you Bob? That's a quite challenging business because there's a domestic money transfer business, there's some pricing pressure. And but there are some loyal customers still using that because they want immediate cash at our senior locations payout and there are customers are loyal and saying, it is about 8% of our C2C business and it's a declining business. And but there are some loyal customers who use that sending money online for instance paying immediately in cash. It's quite attractive for many customers.

Bob, we not disclose the groceries on that but it was about 9% of C2C revenues in 2017. So it's down from 9% to 8%.

Then Western Union is invested in the education vertical, I think in payments and you talked about payments, Hikmet, being the healthy business for you. Can you give an update on the education vertical and what the opportunities are in that business? And I think there's some good competitors out there as well.

Yes, there are some competitors out there definitely, but it's a great business for us. We acquire globally universities and universities are attracting more and more foreign students. Foreign students, if I was going through that, in Spain for instance, there are about 200,000 Chinese students studying in Spain. Along that number puts things in prospect, there are millions of millions of students going abroad and studying, and they want to pay their tuition, local currency and study abroad in their universities. And we enable that. Now, we are a few countries with our student pay, with mostly in Anglo-Saxon countries. But also we're expanding our university acquisition constantly to offer the product to the new segment. I'm particularly excited about future of Western Union. Once we build this C2B abilities, we could do that also besides the university also to other verticals. I think that gives us a unique position to do the cross-border payments for many needs of many customers because we can handle 137 currencies.

Can you give us any feel for the size and growth rate of that business?

We don’t particularly break that business, but the main growth on the B2B, this quarter, we had good also trading business but main growth of the B2B comes from the payments part of the business. And it's something that we're very excited.

Yes, just within B2B it's about half of the business comes from refer to those payments and half of it comes from the basic FX services. Education vertical is one of the businesses within payment. So, we don’t disclose specific size.

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