Latin Groups Oppose First Data - Concord Merger

The coalition believe that this merger will adversely affect competition and result in higher prices and fewer services in numerous payment systems markets. This merger will be particularly harmful to the millions of Latinos in the United States without traditional banking relationships. As a result, the Department of Justice should seek to prevent this anticompetitive merger from occurring. It is estimated there are over 10 million unbanked Latinos in the U.S. A current study shows that one out of every four Latinos, and one out of every two Latinos earning under $20,000 a year, does not have a relationship with a bank. Since the unbanked have relatively few options, they pay a tremendous amount for basic financial transactions. Unlike traditional banking markets, financial services for the unbanked come at a high price, due to the lack of competition. Consequently, there is more opportunity to exploit the unbanked, a group of particularly vulnerable consumers. One of the most important markets for the unbanked, especially the immigrant community, is the remittance market. Remittances, otherwise known as consumer money wire transfers, involve the transfer of money to distant locations. Currently, over $20 billion is sent to the remittance markets from the United States to Latin America. The unbanked pay exorbitant sums to have their monies sent abroad. For example, Western Unions total charges for a typical $300 remittance to Mexico is between $30-40 or as much as a days pay for an employee earning a minimum wage. The amounts of these charges are substantially higher than the amount or charges that banks pay for similar services. Such steep charges are particularly egregious when one recognizes the few alternatives available to the unbanked. For most consumers, competition in financial services brings a large number of efficient low-cost alternatives. It is unfortunate that at a time when the discipline of competition has been bringing other consumers money- saving improvements, the unbanked have not equally benefited. Unbanked consumers pay supra-competitive prices for money transfers because a single firm, First Data, through its Western Union subsidiary, dominates the remittance market. First Data has over 80% of the market in many segments and has been able to increase prices without restraint in the remittance and other markets (such as the bill payment market). First Data has solidified its dominant position through a complex web of exclusionary practices that make it difficult for new entrants or smaller firms to restrain their anticompetitive conduct. Not only have consumers suffered by having to pay supra-competitive prices, but First Data has also engaged in a variety of deceptive practices that have harmed consumers by not disclosing the exchange rates they set for international money transfers. The acquisition of Concord by First Data will harm the unbanked by increasing First Datas stranglehold on many payment markets and deter the development of potentially new products crucial to the transitioning of the unbanked/cash only individual into a world of convenience, security and lower cost transactions. The coalition gives three examples: The Remittance Market. First Data dominates this market with clear monopoly market shares. Other competitors have tried to revive competition, but their efforts have been hampered by a variety of anticompetitive practices by First Data, especially exclusivity arrangements that have limited the availability of key agents. This merger will harm competition in the remittance market in at least two fashions. First, supermarkets are critical agents for the remittance market. By combining Concords strong relationships in this merchant segment, First Data will be able to increasingly foreclose this distribution segment from other remittance rivals. Second, the First Data Concord merge