By NEIL HARTNELL
Tribune Business Editor
A publicly-traded Jamaican conglomerate has expanded its Western Union partnership into the Bahamas and pledged to open multiple money transfer locations in 2018.
GraceKennedy Money Services, a subsidiary of GraceKennedy Ltd, announced on Wednesday that its first Western Union location in the Bahamas had opened at local firm, Tripoint Communications, the point of sale (POS) and payments solutions provider, on December 30, 2017.
A Tripoint employee, when contacted yesterday by Tribune Business, confirmed the GraceKennedy/Western Union opening and tie-up, but said further questions would have to be answered by other executives not present at its offices. Despite leaving a detailed message, this newspaper's queries were not answered before press time. GraceKennedy is an authorised Western Union agent of 27 years' standing, and the duo's Bahamas expansion now means they serve 12 countries in the Caribbean via the money transmission business.
"This makes the third consecutive year of entry into new territories, with the Cayman Islands in 2015, Turks and Caicos in 2016, and now the Bahamas in 2017," said Don Wehby, group chief executive for GraceKennedy Ltd.
"I am pleased that we are able to deliver on this strategic goal of expanding our regional footprint by providing convenient and innovative remittance services to the Bahamas and throughout the region."
"The Caribbean is very important to Western Union, and we are committed to providing our customers with the best service across the region. GraceKennedy plays an important role in our regional strategy, and therefore we are delighted with their expansion in the Bahamas," said Andre Largie, Western Union's country director.
GraceKennedy's statement promised "to add additional locations during 2018" for its Western Union partnership in the Bahamas. It added: "The opportunity to provide remittance services for consumers in the Bahamas fulfills a combined strategic objective, and responds to customer demand for greater access to money transfer services across the region."
Tribune Business sources yesterday suggested that GraceKennedy's arrival in an already highly competitive money transmission market threatened margins that are already "razor thin" in a business driven by transaction volume.
"GraceKennedy is coming to open up quite a few locations this year, so it's going to become very competitive in that sphere," said one contact, speaking on condition of anonymity. "With such razor thin margins, it's going to be a very interesting run this year."
Tribune Business was told that the Jamaican conglomerate's Caribbean partnership with Western Union functioned as a front office/back office split, with GraceKennedy staffing the outlets and handling day-to-day operations such as the collection of remittances and Know Your Customer (KYC) due diligence.
Western Union handles the 'back office' dealing with the management of money, its transmission and technology systems. The two companies have used their joint venture to operate Western Union agencies around the Caribbean, and are now bringing that model to the Bahamas.
Western Union has been desperate to re-enter the Bahamian money transmission market in a big way ever since Fidelity Bank (Bahamas) severed ties as its local franchisee several years ago.
Fidelity came to believe that a money transmission business was not a good fit with its core banking model, given that the former was 'high risk' for too little reward. Extensive customer due diligence was required on very small sums to mitigate anti-money laundering and terror financing risks, and profit margins on each remittance were extremely small.
GraceKennedy/Western Union will now be competing for market share against established players such as Cash N'Go and Omni Money Transfers and Payments, as well as the web shops. The Bahamas is largely a 'sending' destination, with Haitian, Jamaican and Filipino workers remitting money to families back home.
GraceKennedy's Western Union partnership is already present in Jamaica, Trinidad and Tobago, the Turks and Caicos Islands, the Cayman Islands, St Vincent and the Grenadines, St Kitts and Nevis, Antigua and Barbuda, Guyana, Anguilla, Montserrat, and the British Virgin Islands.