Mizuho’s Look at Mobile Payments Continues With Western Union, WEX

With third quarter earnings reports coming out all over, it’s no surprise that Mizuho once again dropped word our way about mobile payments companies and how their quarters fared. This time, Mizuho took on Western Union and WEX, and the word is looking somewhat mixed.

Mizuho’s look at Western Union featured some less-than-positive reporting, noting that Western Union’s core business was looking “sluggish.” Given that consumer-to-consumer (C2C) constant currency revenue, which accounts for 80 percent of Western Union’s total revenue, saw just two percent growth, it’s small wonder. This is part of a steady and seemingly ongoing drop in revenue, with the second quarter showing three percent and the first quarter turning in a five percent growth figure.

Some of this is said to be traceable to recent pricing actions in the Middle East, as well as some recently rolled-back price increases in both Europe and North America, who between the two of them account for 69 percent of Western Union’s C2C revenue. Ultimately, Mizuho kept Western Union at a Neutral rating with an $18 price target.

WEX, meanwhile, fared better. Results actually beat consensus estimates thanks to hefty growth in travel and corporate sectors, along with continued stability in the fleet class. Several major new corporate operations are onboard with WEX now, including Autozone, Chevron, and Verizon.

WEX’s diversification into corporate payments and other projects got it some extra attention from Mizuho and others, and Mizuho considers WEX’s momentum in the market to be “sustainable.”

So basically, we see here that the mobile payments landscape is dynamic, with lots of change coming in from all quarters. Perhaps Western Union’s biggest problem is that it’s trying to compete in the C2C space, which is currently crammed full of competitors from Apple Pay to Square. WEX is a lot more focused on the B2B space, meanwhile, and is seemingly gaining much more rapidly. It might be an oversimplification to say it’s just a market matter, but the sheer difference between the two suggests at least some relationship.

Market decisions are just part of the field, and who knows? Maybe if Western Union can perk up its own B2B offerings, we’ll hear about some significant gains to come. That’s a point on the future can tell.