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FEXCO continues to target new international markets Back  
Global payments company FEXCO has come a long way since it first established itself as a VAT refund operation in 1981, and now has operations in Finland, Malta and Australia, to name just a few locations. Declan Byrne describes its international strategy and discusses the challenges and opportunities FEXCO met along the way.
FEXCO is a global payments company headquartered in Kerry, Ireland with operations in Ireland, UK, Spain, Scandinavia, Dubai, Malta, Australia and USA. The company was established in 1981
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Copenhagen: In October 2004, FEXCO announced the acquisition of Money Transfer Nordic (MTN), a money transfer company operating in the Nordic Region. MTN operates the Western Union agencies in Sweden, Denmark and Finland. This acquisition enabled FEXCO to develop its Western Union agency business and make the company one of the largest network agents in the world.

United Kingdom: FEXCO UK was established in 1985. The company was initially set up to service the tourist Value Added Tax (VAT) refund market through a joint venture with Bank of Scotland. The UK market was difficult to break into, particularly for a virtually unknown Irish company, hence FEXCO’s partnership relationship with Bank of Scotland. FEXCO subsequently bought the Bank of Scotland shareholding and formed Tourist Tax Free Shopping UK in 1987.

FEXCO already had a well-established Bureau de Change service, set up in 1981, which provided services to American tourists traveling to Ireland. This Bureau de Change service was expanded to the UK by operating mainly through hotels and travel agents. While FEXCO’s business in Ireland has witnessed continuous growth in the Bureau de Change market, the UK market has presented challenges and the company has had to work harder to achieve the level of progress desired as a consequence.

In 1991 FEXCO was appointed ‘superagent’ for Western Union Money Transfer in the UK. The company had been appointed to the same position in Ireland the previous year. Western Union is the world’s premier international consumer money transfer system. Owned by First Data Corporation, Western Union has more than 190,000 locations in 190 countries.

In the UK, FEXCO has a total of 2,721 agent locations. The Western Union agency in the UK offered significant growth opportunities to FEXCO and, at the same time, provided the catalyst for the expansion of FEXCO’s call centre operation in Killorglin. This expansion resulted in the company’s development from an existing medium-sized employer to one of the largest employers in the region. FEXCO continues to provide huge employment in its Western Union call centres in Killorglin and Cahirciveen, Co. Kerry.

As a natural extension to the tourist VAT refund business, FEXCO set up FEXCO Tax Reclaim which was re-branded as FEXCO VAT Refunds (FVR) in 2004. FVR recovers VAT on eligible business expenses incurred by travelers to and within Europe. This enables savings of up to 20 per cent on corporate travel costs such as accommodation, exhibitions, training courses and car hire.

FEXCO extended its international payments service (now known as Western Union Corporate Payments) to the UK in the mid 1990s. This service is used by organisations that have overseas payments requirements in a variety of foreign currencies. Cost efficiencies are achieved through economies of scale, investment in technology and expertise in the foreign exchange area. The competition in the international payments arena is intense and state-of-the-art technological capability and delivery is critical. Over the last number of years, FEXCO’s business has moved from a pre-dominantly paper-based payments service to one where 95 per cent of its UK business is carried out by EFT and 30 per cent over the Internet.

In the mid 1990s FEXCO developed Dynamic Currency Conversion (DCC) and is now the global market leader in the delivery of DCC credit card services to merchants and acquiring banks. The DCC service allows merchants, such as hotels and restaurants, offer their customers (credit cardholders) the option of paying in their own currency (i.e. the currency in which the card was issued) at the point of sale. This ensures that the transaction remains in that currency through the entire transaction and settlement process thus providing payment efficiencies.

Much of FEXCO’s international expansion efforts will focus on promoting its DCC service in other markets.

Later this year the company will launch a number of pre-paid gift and spending card solutions which will be serviced under its existing portfolio of merchant services.

One of the greatest challenges facing FEXCO in the UK market, particularly in the early days, was establishing credibility among potential clients for each of its services. In order to overcome this, the company has formed partnerships with a number of major UK banks, in particular for the provision of its DCC service. FEXCO now works with some of the best-known banks in the world.

More recently, the introduction of the euro has had a significant impact as much of FEXCO’s business is foreign exchange-related. Technology has played an important role in the company’s business and it strives to maintain its leading position in this area. The company makes the best use of its technology such as extending the range of applications used on its DCC terminal to include Bureau de Change and gift card services. Customers are becoming more and more demanding and there is an increasing need for a better, more efficient service.

Spain: FEXCO Espana was established in 1994. The primary focus of the business is the Western Union Service where FEXCO is one of three ‘superagents’.

Malta: In 1995 FEXCO Malta was established to service the Bureau de Change market. The company was formed in conjunction with Alpine Holdings, a Maltese travel agent which had a considerable distribution network. FEXCO continues to maintain a controlling interest in the company. FEXCO’s range of services has expanded over the last 10 years and the company now operates the Western Union Money Transfer service in Malta and offers International Payments Services. In December 2004, The Gift Voucher Shop, a wholly owned subsidiary of FEXCO, announced a deal with the Post Office in Malta, Maltapost, to distribute the One4All gift voucher product.

Australia: The Prudential Investment Corporation of Australia (PICA) became a wholly-owned subsidiary of FEXCO in 2004. PICA is primarily a residential property management company which offers its customers property and facilities management, financial and mercantile products and services. These are all supported by advice, technology and best industry practices. The company employs more than 230 people in its 15 offices located in New South Wales, Queensland and Victoria.

FEXCO’s investment in Australia provides it with the platform to provide some of its other services in the southern hemisphere, in particular, the DCC International product through the Global Choice brand. Global Choice is a trading name for the multi-currency processing services of OmniPay and the DCC services of FEXCO. Global Choice was formed to establish a working model for a complete end-to-end DCC service to be offered to acquirers and their merchants. Global Choice Establishment works in conjunction with First Data International (in all geographies i.e. US, EMEA, Asia Pacific). Global Choice Agreement covers all DCC customers who are joint customers of OmniPay and FEXCO.

FEXCO has just acquired Inscor Services through PICA. Inscor is a leading player in the property management sector in Victoria and its acquisition by Body Corporate Services (BCS), considerably expands FEXCO’s presence in this market.

The combined operation is now the leading provider of property management services in Victoria. BCS was already the number one provider in New South Wales and Queensland. FEXCO’s overall strategy for PICA is one of continued expansion by means of organic growth and acquisition.

Nordic Region – Finland, Denmark, Sweden: In October 2004, FEXCO announced the acquisition of Money Transfer Nordic (MTN), a money transfer company operating in the Nordic Region. MTN operates the Western Union agencies in Sweden, Denmark and Finland. This acquisition enabled FEXCO to develop its Western Union agency business and make the company one of the largest network agents in the world.

The acquisition has also provided FEXCO with a reach into new markets which offer significant growth opportunities to develop its range of payment services in this region. The company’s intention is to focus primarily on the VAT refund and DCC businesses.

USA: Through FEXCO’s association with First Data Corporation and through the Global Choice brand, the company is developing the DCC business. First Data Corporation offers a huge distribution network for FEXCO in this market and continues to develop relationships with leading EFT suppliers/VARs (value-added resellers) suppliers to offer a range of integrated solutions for merchants.

Dubai: FEXCO Middle East was established in 1993 to service the massive business VAT refund business in the Middle East.

Going forward
FEXCO is currently well positioned in terms of product portfolio and market growth prospects in relation to foreign exchange-based niche payment products. FEXCO will continue to seek new geographic markets for key products such as Western Union, Dynamic Currency Conversion and Corporate Payments.

FEXCO plans to develop its pre-pay product portfolio in terms of gift vouchers, giftcards, travel money and pre-paid debit by acquisition/ expansion and expand these products into the markets it already is active in by utilising its distribution partnerships and market knowledge.

The company will continue to look at widening its financial services business in the Irish market based on local brand recognition and distribution partnerships.

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