Good day. And welcome to The Western Union Company Third Quarter 2020 Earnings Release Conference Call. All participants will be in 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 Brendan Metrano, Vice President of Investor Relations, Western Union. Please go ahead.

Thank you. On today’s call, we will discuss the company’s third quarter results, our financial outlook for 2020 and then we will take your questions. 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. Western Union is still following a work-from-home policy. So on our remote call today is our CEO, Hikmet Ersek; our CFO, Raj Agrawal; and Head of Treasury and Investor Relations, Brad Windbigler. 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 2019 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 under the Investor Relations section. We will also discuss certain adjusted metrics. Although the expenses that have been excluded from adjusted metrics are specific to these initiatives, the types of expenses are similar to those that the company has previously incurred and can reasonably be expected to incur in the future. 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 will now turn the call over to our CEO, Hikmet Ersek.

Thank you, Brendan, and thank you all for joining our earnings call this afternoon. I am pleased to say that our business continues to rebound from the global shock caused by COVID-19 pandemic and delivered solid third quarter results with improving topline trends, operating margin expansion and very strong earnings per share. The quick and dramatic rebounds we experienced beginning late in second quarter reinforces our conviction in the solid foundation of our business and the effectiveness of our strategy. Although, macro uncertainty global remains elevated, the resilience of our business, employees and customers gives us optimism that prospects for the global community and our company are headed in the right direction. Given improve visibility into market dynamics and the trajectory of our business we have issued a financial outlook for full year 2020, which Raj will discuss in more detail shortly. Moving to the third quarter results. As you may recall, we saw robust consumer to consumer trends in the latter part of the second quarter and into July. The performance carried through the third quarter with transactions growth of 6% and cross border principle growth of over 20%. Year-to-date, our cross border principle is up 8%, which strongly suggests we are outperforming the remittance market based on previous independent forecasts. The primary driver of the sequential improvement in our C2C business was retail money transfer led by improving transaction trends and strong growth in principle per transaction, while the digital business stayed elevated. The quality and scale of our network continues to be an important differentiator that allows us to better attract and retain customers who choose to transact at a physical location or digitally. Our digital channels continue to perform exceptionally well both westernunion.com and digital partnerships. Digital money transfer transactions grew 96% in the third quarter…

Thank you, Hikmet, and good afternoon, everyone. My comments today will focus on third quarter results along with our newly reissued financial outlook for 2020 and some high level thoughts as we look forward to the remainder of the year. As Hikmet discussed earlier, the position of the business improved during the third quarter supported by the foundation we started to lay last year with our digitally focused growth strategy. We see our growth strategy taking shape with the continued rebound of our resilient retail business from the impact of COVID-19, strong topline and customer trends for westernunion.com and significant incremental growth from digital partnerships. Digging into the details of the third quarter, revenue of $1.3 billion declined 4% compared to the prior year period. While constant currency revenue declined 1%, a substantial improvement from last quarter. Currency translation net of the impacts from hedges reduced third quarter revenue by approximately $41 million compared to the prior year, primarily due to the depreciation of the Argentine peso. The decline in the peso negatively impacted reported revenue by a 3%. While the effect of inflation on our Argentina businesses is estimated to have positively impacted constant currency revenue by approximately 1%. In the C2C segment, revenue declined 1% or was flat on a constant currency basis, with transaction growth offset primarily by the impact of mix. Transactions grew 6% for the quarter led by 96% growth for digital money transfer, partially offset by declines for retail money transfers. It is worth noting that the sequential improvement in C2C transactions from minus 8 in the second quarter was primarily attributable to improving retail trends while our digital business sustained its high growth. Total C2C cross border principle increased 23% on a reported basis or 24% constant currency, driven by growth in digital…

[Operator Instructions] The first question comes from Darrin Peller of Wolfe Research. Please go ahead.

Thanks, guys. When we look at the…

Hi, Darrin.

… actual additions that you are at -- that you have in your business and the transaction growth versus principal, looks like principal per transaction was up meaningfully double digits. I think you mentioned something about types of customers driving these. I guess I’d be curious to hear what you are seeing -- how you are seeing this trend, is the current principal per transaction sustainable and maybe if these new customers are really sticky for you guys? And then just bigger picture when we look at the digital mix here, I know it’s a little early to ask this. But once we anniversary, hopefully, some of these trends in the, let’s call it, mid -- middle of next year. Do you think that this 20% plus type mix from digital is sustainable at that rate based on behavioral trends of what you are seeing in your base?

Hey, Darrin. This is Raj. Yeah. On the first question on PPT trends, we are quite pleased to see that. We are still learning, I would say, in this environment, because people have changed your behavior a bit. Certainly the customers that are remaining in our business are the customers that they are transacting at a higher level, but they also have a higher ability to pay or to send money and so they are sending higher principal amounts. Even the new customers that are coming into our business are exhibiting the same type of characteristics. I would say that it kind of remains to be seen on how long this is going to stay in place. But most of the customers that are coming in, they say they are going to continue to use that and there’s certainly a strong need for the receive markets to keep receiving money. So it’s going to continue in the short-term, but we are going to have to see how this plays out longer term. Hikmet, do you want to add anything to that or…?

Yeah. I think, Darrin, the customers we acquire especially in the digital one with westernunion.com, they are new to us. We know that 80% of the customers didn’t use us and they are more stickier. They stay and they use a higher principal, they use their cards, accounts or debit cards, are sticky…

Yeah.

…stickier and they stay and we have with them a direct connection with our westernunion.com, loyal customers. So we love how that -- which direction that goes also with the higher principal.

And on your…

And just…

… question around digital…

Yeah.

… mix…

Yeah. Please.

Yeah. Sorry. And your question around digital mix, we had a dramatic turnaround in the retail business in the third quarter. It’s still declining on the retail side, but it’s much better than it was in the second quarter and we still maintained a roughly 20% mix on digital. So we think that digital will continue to be a very strong contributor. It’s running now at $230 million of revenue this quarter. So we still see good growth opportunities there and we want to do everything we can to bring the retail business back and also maintain that kind of a digital mix.

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

Hi, Jason.

To start with kind of a trajectory question on C2C business. I was wondering just kind of how the quarter progressed month-to-month and what you have been seeing in October so far relative to the 6% number that you saw for the full quarter in Q3?

Well, generally, I would say that the business is improving and improving day-by-day and if you like, how that -- which direction the business is going. I mean big contributions are -- retail is coming back. The contribution is the digital growth. It’s really the high revenue growth. And additional incremental is also are third parties, right? Their digital transactions relating to our success currently and it looks like we are gaining market share just compared with independent outside, so just like World Bank. And look at the 8% on principal gain has been pretty good. So I would say that it’s all over.

Yeah. On the third quarter trends you asked within the quarter, I would say, there were some holidays and other impacts. So it’s not really that -- when you look at the monthly data, it’s not that relevant. It’s more important if you look at the entire quarter and about 6% transaction growth is really a good level for where the business is. And October, I would say, it’s just in line with our expectations. So nothing new there at this stage.

Okay. And just in terms of capital deployment, I mean, obviously, you guys suspended the buyback back when COVID hit and now the business is clearly on firmer footing. You reinstated guidance, which is great to see. So just curious how you guys are thinking about what needs to happen before you are comfortable buying back stock again?

Well, as you know, we still have an authorization or buyback stock, right? We…

Yeah.

The environment is definitely still -- we are still in a pandemic situation. We are still looking around. But we feel day-by-day more confident of our business and our dividend policy has been very good and we will definitely consider other ways of giving back to the shareholders as we get more confidence about our business.

Next question comes from Tien-Tsin Huang of JP Morgan. Please go ahead.

Hi, Tien-Tsin.

Yeah. Thank you. Hey, guys. Good to talk to you all. So the retail improved nicely. That’s great. I am curious, just thinking about the guidance that’s reinstated. As Jason mentioned, the mid single-digit decline, I think, you were at 3.5% down year-to-date, Raj, if I am correct. If so, are you expecting or bracing for potentially thinking a little bit weaker in the fourth quarter, is that just conservatism on your part?

No. No. It’s -- the tables don’t exclude the benefit of Argentina, so that’s embedded in the year-to-date numbers and the outlook we have given, it excludes the impact of Argentina inflation. So Argentina inflation was about 150 basis points year-to-date. So that -- you have to take that into account as well then, Tien-Tsin. So, it’s really for the fourth quarter, I’d say that…

Yeah.

Yeah. For the fourth quarter, we have fully assumed a material change in trend. So we are expecting more of the same. Obviously we will see whatever the pandemic does, but generally, we would expect more of the same sort of trend.

Thank you for correcting me there. On the targeted pricing that you mentioned on the digital side, is that reactionary or maybe opportunistic to acquire customers when digital demand is so high right now. Just trying to think about the -- what the motivation there was?

It’s not, as you know, we are seeing so many corridors with our westernunion.com and sending money to 200 countries, more than 75 countries sending money to 200 countries. And we are adapting our prices to new countries and we also talk about the dynamic pricing, we are changing the pricing. It’s typical thing. It’s nothing special as we are doing corridor pricing, as we are doing holidays pricing and that’s what we are really focused on. Nothing extraordinary here that’s reacted to the customer needs.

That’s great. Okay. Thank you for that.

Thanks. And Tien-Tsin also, as you know, the market has been quite stable. The pricing market, so that’s -- it’s also we really can’t go and have a targeted actions for loyal customers, so that’s important and yet, we can see that we are very successful there.

Yeah. And as you said, the LTV is high, once you get the digital customer, so.

Absolutely.

Yeah. And we had 47% growth in the active average monthly customers at dotcom, so that’s much more sticky business than other parts of our business.

Yeah. Thank you for sharing that stat.

Thanks, Tien-Tsin.

Next question comes from Brian Keane of Deutsche Bank. Please go ahead.

Hi, guys.

Hi, Brian.

Hi, Brian.

How you guys doing? Doing all right?

Yeah. Good. You?

Yeah.

Well, we feel good with the quarter.

Yeah. Yeah. It’s good to see the progress at least, that’s definitely positive. I wanted to ask on the last quarter, when we showed July transaction trends for wu.com, digital transfer and C2C, and there were quite a bit higher than where they ended up coming out with the quarter. That decel we saw, is that all explained away by the holiday or was there were also some decel in the fundamental business in those three metrics?

Yeah. There is a lot of calendar stuff going on between July, August and September, and that’s why the most representative numbers are for the full quarter regardless of which channel you are talking about. So, on the digital side, we started to see some grow over from the digital white label business that began last year. So that’s some of what you are seeing there. But otherwise it’s really the full quarter numbers that are more relevant to really pay attention to there, Brian.

Got it. And then when I back into the fourth quarter EPS number on adjusted basis. I mean you came quite a bit ahead on the quarter in adjusted earnings. But when I back into the fourth quarter, it looks like it’s a little bit below Street and it looks like the margins might be down a little bit on the year-over-year basis. But just to make sure I understand that point, Raj. It sounds like there is some investments that will be made that were kind of pushed off and cause the margins potentially to drop in that fourth quarter, which might be, what we didn’t model correctly on the street?

Yeah. Yeah. We -- given the performance that we have had thus far, we did hold back on some planned spending in the second quarter and third quarter. Brian, that is now we started to re-launch some of the spending in the latter part of the third quarter, which will hit mostly in Q4. And what we are really pleased with is that we are now at 21% for the full year for outlook for margins, which is really our -- it’s our original margin objectives for the year even in a very down revenue environment. So we are really pleased with that. I think it just gives you a sense of the flexibility we have in our operating model with our 55% to 60% of our cost being variable in nature. So we are very pleased with that and I don’t see the fourth quarter really being as representative of the current the baseline of the business, it’s more about the full year numbers for us. Hikmet, do you want to add something?

Yeah. No. I just want to add something that’s all these investments which we are during Q4 Brian are really business for all sorts of future. As we outlined in the Q in our September 2019 part is definitely the marketing, but we are investing heavily in the technology and continue to put everything, as I mentioned, earlier to cloud and we are really improving here, and which will make us even more competitive in the future I think and more effective, I believe, and we are still committed to our $150 million year -- three-year savings, so that brings this year we are confident with our 21% margin and that’s what we gave in the beginning of the year before COVID-19.

The next question comes from Rayna Kumar of Evercore. Please go ahead.

Good evening and thanks for taking my questions.

Hi.

So, if we take three quarter to four quarter view when we might have a vaccine and quarters reopen without a 14-day quarantine, will it increase in migration improve your cross border money transfer growth rates further assuming we have moderate job creation and high GDP per capita countries to drive it?

Well, we all wait for the vaccine, right? That’s something that make us all probably better and we turn to new normal. One thing is clear from CEO point of view, I can -- I want to say that, there will be a new normal, things will be different. But we are -- as you could see that we are very confident for the future. I think as we were prepared during COVID-19 with our digital, with our global network and with our platform, I think we are also getting ready for the new opportunities. Of course, the migration, it helps our business, of course, exports/imports, more SME using our export/imports helps our business, students pay when the students go to the universities again and across border. That helps our business. But at the same time it shows also -- even during, COVID-19 how strong our branches how trustworthy is how much we are -- customers like us, they are coming and using us and even it shows or even how we are gaining market share. So I hope it could answer your question a little bit on that.

Very helpful. And then, for the last several quarters, you have been highlighting really strength in your white label partnerships, specifically in Russia and with Saudi Telecom. Maybe if you can speak a little bit about where there is other opportunities to have those white label partnerships?

Sure. I mean, we are very -- our platform is even adapting to the white label partners. As you could imagine that, signing a bank, a larger bank are signing a financial institution or telecom company that -- after signing that integration takes a little bit time. And we are -- we do have pipelines and we do have some signed agreements, some smaller, some bigger and that will contribute also in the future to our white label growth. We are excited and the good thing is also we see that and shows us also the incremental, because this financial institutions were using correspondent banking in the past, which is quite difficult to send money from cross border and expensive. So use -- and we do have programs, compliance program, multi-vendor of under program data oversight, which are really probably one of the best in the industry. So many financial institutions turning to us saying that, okay, for instance, can you drop for us to exit currencies in these countries, can you do that, because we are in 200 countries and we have a great platform. So this is something that I am excited about.

The next question comes from James Faucette of Morgan Stanley. Please go ahead.

Great. Thanks. Just wanted to follow up on the white label comments that you just made, when we think, obviously there’s lots of opportunity, et cetera. But how do we think about how expansive those can be and what your limits are and maybe any particular geography or if there’s exclusivity, just trying to think about how broadly you could take those partnerships?

So, on white label, as I said, Jim, it’s a great question. White label is though. This is a different environment. The people -- the financial institutions are using correspondent banking already.

Yeah.

The customer -- for customers to send money especially to an exotic currencies, let’s say, from dollar environment to different currencies or from your environment to different currencies worldwide, it’s a struggle and that’s in -- that sending in minutes, we have the real-time payments in accounts. We have real-time cash payout and these are big advantages for us if you drop money minutes and location or send money real times an account in the different currencies. This is probably the biggest advantage we offer to the financial institutions. So it’s not about excluded -- they are not excluded, they already use different methods. It’s really replacing, let me say, the struggle they have or costly system they have replacing with our most -- more efficient system and serving their customers in a better way.

Got it. And then…

Yeah.

… as Raj highlighted the strength of the balance sheet and overall capital position. I am wondering how do you think about and you already pay a nice dividend. How do you think about returns incremental to the dividend, whether it would be buybacks versus M&A and are you seeing opportunities perhaps to put that capital to work in buying new technologies or other businesses, et cetera?

Generally, I would say that, as we feel much more comfortable about business, we are not pre-COVID yet, but the direction is good. And our programs were pre-COVID, designed pre-COVID and announced pre-COVID. So that’s why we have on -- still on buyback $780 left billion, $780…

Yeah. Yeah.

…million. Yeah. I will let Raj and we get more confident about the business. On the M&A side, I mean, given our financial strength, we will always look at the market. It has to have the right return and it has to have be aligned with our strategy and that’s where we are definitely looking if there is opportunities for us, good growth opportunities or even synergy opportunities, where we can be more active. We are definitely active in the market also. But I think from my point of view, I feel much more confident or -- about the business and I think that the shareholder return has been always on top of my agenda.

Yeah. And our capital priorities have not really changed, James. It continues to be invest in the business to drive the organic growth that we have and it’s largely digital and technology improvements. We pay a very healthy dividend, as you mentioned. That’s a key priority. Third would be M&A opportunities that fit nicely within our cross border payment strategy. And then the fourth one and important one, would be stock buyback to the extent we have excess cash flow. So that’s really the priority that we think about whenever we are making investment decisions.

[Operator Instructions] The next question comes from Ramsey El-Assal of Barclays. Please go ahead.

Hi guys. Thanks so much for taking my question. I wanted to ask you about the Kroger relationship and there was a change there in terms of exclusivity. Could you help us sort of dimensionalize how you are thinking about that? Is it -- you have a very diversified business. So will it be perceptible if you lose a little share in that particular client or not?

Well, we just announced our Kroger relationship and we are very happy after 35 years we again extended our relationship I think with Kroger. It’s a great partner. We have a very good partnership and it’s one of our partners globally. I think none of our partners are bigger than 5% of our revenue globally, right? And we have thousands of partners in globally and it’s one of the partners, which we would like to certify relationship very much look on the exclusivity or non-exclusivity, worldwide we are acting like one of our most successful market is the Middle East Gulf states and they have been always a non-exclusive market and we have been very much successful there and we are expanding our market. By the way the -- because exclusive agent is westernunion.com, right, I mean we -- our own agent, which has been doing very well and along this quarter growing very -- again from a very huge base, again growing very strong and that shows also how we can operate in an exclusive or non-exclusive market, customer -- how the customers are choosing us and how we are gaining currency market share. So I think we love Kroger and we are going to be together. Again, we are looking forward another multiyear agreement with Kroger.

Yeah. I would say, Ramsey, also most of our agents are well below the 5% threshold. There is none bigger than that. And so it really is a very diversified business mix that we have and so ultimately we are also looking at overall economics to Western Union and what it means as we look at opportunities around the world.

The next question comes from Ashwin Shirvaikar of Citi. Please go ahead.

Hello, Ashwin.

Hi, Hikmet. How are you? Hi, Raj?

Good. How are you?

Cool. That’s good to hear. I am trying to figure out the impact of some of these new shutdowns in France and Germany. Remind me whether the impact was immediate back in market, but a lot of this a situation where a three-week, four week shutdown would it really affect the numbers much, I don’t want to minimize the gravity of the situation, but just from our financial standpoint would that affect you?

Yeah. I think it’s a good question. First of all, as you saw, second quarter shutdown in the March area -- February or March area, it’s a different shutdown than this shutdown generally what we see in the market. It’s more focused. I think unfortunately we learned or the government learned their lessons how to do the new restrictions around to control COVID-19 pandemic. It’s -- so it is different. As you know also that our business after the restrictions get a little bit better immediately bounced back also in end of Q2, beginning of Q3 significantly. So I don’t expect that this shutdown in France and Germany is the similar one that it happened in February and March. So I am more confident that it will have less financial impact to us. That’s why we are also confident of our year-end guidance. We learned also and that’s why we are re-issuing our year-end guidance.

The next question comes from Timothy Chiodo of Credit Suisse. Please go ahead.

Thanks for taking the question.

Hi, Tim.

I wanted to touch on the -- hey. Thank you. I wanted to touch on the small, but fast growing, I believe in the slides 3x growth in terms of the account payout business, so count on both sides. The payout network has gotten quite large now. You mentioned billions of accounts, 120 countries…

Right.

… which is the vast majority of GDP, I would assume. I wanted to talk about a little bit of the mechanics of how this network has been build out to the extent you are leveraging partners like Visa Direct and Earthport to get access to accounts. What portion of this is perhaps proprietary integrations that you have built using your global treasury network into perhaps local ACH connections, et cetera. Really the mechanics of how you were able to build out such a broad account network?

Yeah. I think it’s -- if you have a big advantage. Obviously, we are in 200 countries present already, right? The other fintech companies and other companies are struggling to those on a country. Our present our licenses, our compliance programs, our settlement programs are already settling so many currencies. So what we do here is that we really over the years that we recall two years, three years ago, we started with inattentive signing more accounts globally, because we believe on to real-time with that we are achieving your customer segments with higher principle different customer segments, which did not use us in the past. And we have -- what I like is that most of the team did a great job the regional teams and is it in India, is it in Turkey, or is it in Bangladesh they did a great job signing the accounts directly, with the banks directly without having a switch. With that, we do have a more profitable business direct to account-to-account, we collect from an account, drop in an account without using a switch that makes us actually switch in the middle. We can do the treasury ourselves. We can do the settlement ourselves. So that’s a big advantage. We signed about millions of accounts or most of them are direct account. So what you do is that you signed a bank in China and you have a direct access. You have signed a bank in Argentina, you have a direct access, same in Brazil. And so with that account-to-account, it’s a highly profitable business. It’s still small, it’s still growing, it’s still -- and the banks on the send side have to promote that that they can send money via their account directly to an account in Vietnam and that’s what we are doing.

The next question comes from Jamie Friedman of Susquehanna. Please go ahead.

Hi. Congratulations on the excellent results here.

Hi, Jim.

I just wanted to ask, the dynamic pricing was a big theme at Analyst Day. It continues to evolve. Maybe -- what percentage of your constituent’s transactions is dynamic pricing applicable, is it only really in the digital environment, where do you see that evolving to? Thank you.

That’s a great question. We did talk about that. We do see also is a big advantage dynamic pricing obviously, especially we can have dynamic pricing from where we are an agent with westernunion.com, but we also have a retail dynamic pricing. So dynamic pricing is always a definition thing, how dynamic are you, are you dynamic meaningfully, are you dynamic in quarterly or are you dynamic in country wise or corridor wise, bank wise. And we do that we are almost like an airliner in many -- some corridors, I would not say we are everywhere yet, we are really learning and adapting to the customer needs, we build this customer data, our data is getting even more intelligent day-by-day to understand and we getting more influence with FX rate is the customer needs, is if the customer loyalty, is the corridor is it processing fees, is it day by -- holidays. All these things we are putting in our system and we are coming adopting the prices constantly to the customer needs and that’s continued to grow. It’s only the beginning. It’s a journey and I believe being in 200 countries with that’s huge.

The next question comes from Ken Suchoski of Autonomous Research. Please go ahead.

Hi. Good afternoon, Hik and Raj.

Hi, Ken.

Thanks for taking my questions. Hey. I just wanted to follow-up on Ramsey’s question on Kroger, because we got this one a few times over the last couple of weeks, but that agreement shifted from an exclusive deal to a non-exclusive deal. I know most agents are below the 5% threshold. But I was curious what percentage of your total agent locations and transactions are under exclusive agreements today. And then I guess a follow-up on that is just, how do you think about maintaining that share with Kroger, once Kroger brings in that second offering? Thanks a lot.

So, let me start with the second one, maintaining, that’s easy, because we are winning in the market anyway. We are operating in many non-exclusive areas anyway. It’s a customer choice, that’s actually, that’s also Kroger’s intention being a customer choice, who has a better service. If you send money to real-time to an account in Bangladesh or in Vietnam, probably you will go from Kroger and send money with Western Union and continue to if we our loyal customer to Western Union you are going to continue to use. So I am not worried about that. We are winning on the non-exclusive environment constantly and obviously it shows also the stats currently shows that we are winning. Maybe Kroger on the top line because it’s the U.S., but once you come with me to Saudi Arabia or to UAE or to other countries, we will see you in how which environment we are operating, which is non-exclusive and customers are choosing us, the customer trust us and continue to trust us. Raj do you want add?

Yeah. Just on the -- yeah. Yeah. On the first part, Ken, as you said most of our business and agents are exclusive in nature, except with our Gulf states and Russia has been not exclusive for a long time. We were actually a later entrant into the Gulf States. But that’s a key part of our business in the Middle East, Africa, South Asia, what that is in terms of percent of total C2C. So I would say still the vast majority of our revenues and transactions in Asia are exclusive. In Africa, for example, just as another example you actually cannot have exclusive agreements, but it doesn’t mean you can’t work with agents exclusively, right, it just depend on how you incent agents in different parts of the world. So it’s a mixture of different kinds of agreements. But and ultimately, as I mentioned earlier, it really ends up being a question of economics. What are the best economics for Western Union? What kind of opportunities that we have and that’s how we make our decisions on, whether it’s something exclusive or not. It’s not about just the exclusivity really it is about economics ultimately.

The next question comes from Kartik Mehta of Northcoast Research. Please go ahead.

Hi, Raj.

Hi, Kartik.

Hikmet, you have talked a lot of our dynamic pricing and I am wondering now that the digital business is growing so fast and there are more competitors at least recognizable competitors on the digital side. Are you having to adjust pricing more because of just greater demand, greater competition, I am wondering if the pricing has to be adjusted more because of that and if you are seeing pricing pressure?

First of all, I guess that you saw during my presentation that, obviously, customers choose Western Union. I mean you saw from the downloads they have -- app downloads. We are by far the largest at the market, by far the best choice in the market and that’s not my statistic that’s from third-party independent statistics a customer continue trust that. I think if you operate in 75% countries and 200 countries you do adjust your prices or your customer loyalty programs or your programs cost and marketing programs constantly to the environment and that’s what we are doing. We see this pricing environment is very stable. I think that to drop money in minutes to somewhere, it’s not everybody’s art. We do it in, probably, we believe that we are doing in the best way and that’s why we are gaining also market share even in digital and especially in digital and that also retail is coming back. So that’s -- it’s a big advantage for us and I don’t see big pricing movements coming in the next near future.

Next question comes from Matthew O'Neill of Goldman Sachs. Please go ahead.

Yeah. Good afternoon, Hikmet and Raj. Thanks so much for squeezing me in here.

Hi.

I wanted to just focusing on slide 12, first and foremost, really appreciate Raj, Brendan you guys putting that together. I think it’s really helpful way to think about the dynamics of the traditional business, westernunion.com and of course the newer white label. To dovetail on the conversation you are having with Tien-Tsin about the customer acquisition cost and lifetime value. Just kind of thinking ahead here, I suspect there is even a greater delta between wu.com and the mobile app users as far as the engagement with the brand and the recurring nature of that business. And thinking about how that’s going to move forward given that we have had sort of a COVID driven inflection point in the business to incrementally more digital. Is there an opportunity that the stickiness of those customers could allow for margin expansion starting in ‘21 and beyond?

So, I think Raj spend a little bit time on the margins of the digital margins. We are very pleased with the digital margins actually. And you are absolutely right, I think we are focused on this business is that expense really could be also helps in our margin in the future also, because we do have less sense site expenses, on the sales expenses and the agent expenses, and you have direct control here with expenses. So that may help us. But at the same time, I -- we really like the digital -- the stickiness of the customers. We are now very much focused on the how can we have the customers even more sticky. Can we add additional products to that besides money transfer? Can we add additional incremental products, which will drive the margin and revenue for that? That’s something is very interesting our data is unique. Our data has about $150 million customers globally and for our customers, part of that is digital customers, but the relationship with the digital customers is unique and the customers are asking us, we love your brand, would you offer other products also and that’s something that we are definitely looking at that and in the future, long-term we would like to definitely talk more to you about these opportunities.

This concludes our question-and-answer session. I would like to turn the conference back over to Brendan Metrano for any closing remarks.

Thank you, Andrew. And thank you all for joining us today and for your interest in The Western Union Company.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.