Western Union sees Renminbi business payments rise

London - 2 October 2012

Western Union Business Solutions, a business unit of the Western Union Company (NYSE:WU), a leader in global payment services, has seen increased client appetite for making payments to China in its local currency, the Renminbi (RMB).

Western Union Business Solutions’ British clients increased the number of RMB payments to China by nearly 10% in the second quarter of 2012 compared to the previous quarter. Growth in UK RMB payments was driven mainly by SME trade with China. In the US, RMB payments rose over 15% during the same period, while France and Australia recorded increases of approximately 30% and 25% respectively.

Gareth Heald, Regional Finance Director (EMEA), Western Union Business Solutions said: “It is clear British companies are starting to re-evaluate how they transact business with China.

“While the vast majority of payments are still being converted from sterling into U.S. dollars, in a very short period of time we have seen a definite increase in the number and value of payments companies are sending to China using the RMB, particularly within the SME sector.

“British SMEs are doing what is necessary to gain a competitive edge in a difficult economy. This is encouraging, but the UK needs to be mindful of global competition. China is Britain’s third largest import trade partner and is not a market in which UK businesses can afford to be left behind.” [1]

Increasing RMB payment volumes are consistent with the findings of research conducted by Western Union Business Solutions that revealed a desire by Chinese companies to receive payments in RMB; 20% of the companies surveyed stated they added fees of, on average, three percent to their invoices to overseas buyers to cover the foreign exchange costs, representing an estimated £180 million cost to UK businesses.[2]

Heald continued: “UK SMEs are adapting the way they conduct business to suit the new environment. By-passing the US dollar middleman when trading with China can help them gain a competitive edge in their negotiations and shave off some of the hidden costs they can incur when paying in USD.”

[1] HM Revenue and Customs, Overseas Trade Statistics, 2011

[2] Research conducted by Western Union Business Solutions found that one in five Chinese exporters added an average of three per cent in fees or surcharges to account for FX risk associated with receiving $USD payments. Based on HM Revenue & Customs figures for 2011, there was £30.2 billion worth of merchandise imports from China into the UK. On this basis the value of FX related fees charged by Chinese exporters is approximately £180 million, or three per cent of the value of one-fifth of UK’s total imports from China.

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