Item 2.

This report on Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from those expressed in, or implied by, our forward-looking statements. Words such as "expects," "intends," "anticipates," "believes," "estimates," "guides," "provides guidance," "provides outlook" and other similar expressions or future or conditional verbs such as "will," "should," "would" and "could" are intended to identify such forward-looking statements. Readers of the Form 10-Q of The Western Union Company (the "company," "Western Union," "we," "our" or "us") should not rely solely on the forward-looking statements and should consider all uncertainties and risks throughout this report as well as those discussed under "Risk Factors" included within the Annual Report on Form 10-K for the year ended December 31, 2008. The statements are only as of the date they are made, and the company undertakes no obligation to update any forward-looking statement.

Possible events or factors that could cause results or performance to differ materially from those expressed in our forward-looking statements include the following: changes in general economic conditions and economic conditions in the geographic regions and industries in which we operate; adverse movements and volatility in capital markets and other events which affect our liquidity, the liquidity of our agents, or the value of, or our ability to recover our investments; changes in immigration laws, patterns and other factors related to migrants; technological changes, particularly with respect to e-commerce; the failure by us, our agents or subagents to comply with our business and technology standards and contract requirements or applicable laws and regulations, especially laws designed to prevent money laundering and terrorist financing, and/or changing regulatory or enforcement interpretations of those laws; our ability to attract and retain qualified key employees and to manage our workforce successfully; changes in foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers; political conditions and related actions in the United States and abroad which may adversely affect our businesses and economic conditions as a whole; failure to maintain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide; significantly slower growth or declines in the money transfer market and other markets in which we operate; failure to implement agent contracts according to schedule; our ability to maintain our agent network and biller relationships under terms consistent with or more advantageous to us than those currently in place; interruptions of United States government relations with countries in which we have or are implementing material agent contracts; deterioration in consumers' and clients' confidence in our business, or in money transfer providers generally; failure to manage credit and fraud risks presented by our agents and consumers or non performance of our financial services providers and insurance carriers; adverse rating actions by credit rating agencies; liabilities and unanticipated developments resulting from litigation and regulatory investigations and similar matters, including costs, expenses, settlements and judgments; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, and governmental or judicial interpretations thereof; our ability to favorably resolve tax matters with the Internal Revenue Service and other tax jurisdictions; changes in industry standards affecting our business; changes in accounting standards, rules and interpretations; failure to compete effectively in the money transfer industry with respect to global and niche or corridor money transfer providers, banks and other nonbank money transfer services providers, including telecommunications providers, card associations and card-based payment providers; our ability to grow our core businesses; our ability to develop and introduce new products, services and enhancements, and gain market acceptance of such products; our ability to protect our brands and our other intellectual property rights; our ability to manage the potential both for patent protection and patent liability in the context of a rapidly developing legal framework for intellectual property protection; any material breach of security of or interruptions in any of our systems; mergers, acquisitions and integration of acquired businesses and

technologies into our company and the realization of anticipated synergies from these acquisitions; adverse consequences from our spin-off from First Data Corporation ("First Data"), including resolution of certain ongoing matters; decisions to downsize, sell or close units, or to transition operating activities from one location to another or to third parties, particularly transitions from the United States to other countries; decisions to change our business mix; cessation of various services provided to us by third-party vendors; catastrophic events; and management's ability to identify and manage these and other risks.

Overview

We are a leading provider of money transfer services, operating in two business segments:

• Consumer-to-consumer money transfer services, provided primarily through a global network of third-party agents using our multicurrency, real-time money transfer processing systems. This service is available for international cross-border transfers-that is, the transfer of funds from one country to another-and, in certain countries, intra-country transfers-that is, money transfers from one location to another in the same country.

• Consumer-to-business payment services, which allow consumers to send funds to businesses and other organizations that receive consumer payments, including utilities, auto finance companies, mortgage servicers, financial service providers and government agencies (sometimes referred to as "billers") through our network of third-party agents and various electronic channels. While we continue to pursue international expansion of our offerings in selected markets, such as our offerings of walk-in, cash bill payment service in certain countries in Central and South America, the segment's revenue was primarily generated in the United States during all periods presented.

Businesses not considered part of the segments described above are categorized as "Other" and represented 2% or less of consolidated revenue for all periods presented.

Significant Financial and Other Highlights

Significant financial and other highlights for the three months ended March 31, 2009 include:

• We generated $1,201.2 million in total consolidated revenues compared to $1,265.9 million for the comparable period in the prior year, representing a decline of 5%.

• We generated $340.9 million in consolidated operating income compared to $309.3 million for the comparable period in the prior year. The prior year results included $24.2 million in restructuring and related expenses.

• Our operating income margin was 28% compared to 24% for the comparable period in the prior year. The prior year results included $24.2 million in restructuring and related expenses.

• Consolidated net income was $223.9 million, representing an increase of 8% over the comparable period in the prior year, due in part to the $15.1 million of restructuring and related expenses, net of tax, incurred in the three months ended March 31, 2008 which did not recur in the comparable period in 2009.

• We completed 45.9 million consumer-to-consumer transactions worldwide, an increase of 7% over the comparable period in the prior year.

• Our consumers transferred $16 billion in consumer-to-consumer principal, of which $15 billion related to cross-border principal, which represented a decrease of 4% in consumer-to-consumer principal and a 3% decline in cross-border principal over the comparable period in the prior year.

• We completed 105.9 million consumer-to-business transactions, representing an increase of 2% over the comparable period in the prior year.

• Consolidated cash flows provided by operating activities was $356.6 million, an increase of 12% over the comparable period in the prior year.

Adoption of SFAS No. 157

On January 1, 2009, we adopted the deferred provisions of Statement of Financial Accounting Standards ("SFAS") No. 157, "Fair Value Measurements" ("SFAS No. 157") as defined by Financial Accounting Standards Boards ("FASB") Staff Position No. 157-2, "Effective Date of FASB Statement No. 157" ("FSP No. 157-2"). FSP No. 157-2 deferred the adoption date for certain non-financial assets and liabilities that are recognized or disclosed at fair value on a non-recurring basis.

Adoption of SFAS No. 141R

Effective January 1, 2009, we adopted the provisions of SFAS No. 141R, "Business Combinations" ("SFAS No. 141R"). This statement establishes a framework to disclose and account for business combinations consummated on or after January 1, 2009 and applies to all transactions in which an entity gains control of one or more businesses. Under SFAS No. 141R, we account for business combinations achieved in stages by re-measuring any noncontrolling equity investments in the acquiree to fair value as of the acquisition date immediately before obtaining control. All re-measurement gains and losses are recognized in earnings and the total fair values of the identifiable assets, liabilities and any noncontrolling interests are recorded in the consolidated balance sheet. We are also impacted by the adoption as it relates to costs involved with an acquisition, which are expensed as incurred. Additionally, under SFAS No. 141R, assets and liabilities are recorded at their fair market values as of the date of acquisition with the remaining excess of purchase price over the fair market value of the net assets acquired going to goodwill. Any contingent consideration related to the acquisition is recognized at its acquisition date fair value with subsequent changes in fair value generally reflected in earnings. SFAS No. 141R requires any adjustments to the assessed fair values of the assets, liabilities and any noncontrolling interests made subsequent to the acquisition date, due to facts that existed at the acquisition date, but within the measurement period, to be recorded as an adjustment to goodwill. All other adjustments are recorded in income, including changes in tax contingencies.

Results of Operations

The following discussion of our consolidated results of operations and segment results refers to the three months ended March 31, 2009 compared to the same period in 2008. The results of operations should be read in conjunction with the discussion of our segment results of operations, which provide more detailed discussions concerning certain components of the condensed consolidated statements of income. All significant intercompany accounts and transactions between our company's segments have been eliminated.

We incurred expenses of $24.2 million for the three months ended March 31, 2008 for restructuring and related activities, which were not allocated to segments. While these items were identifiable to our segments, they were not included in the measurement of segment operating profit provided to the chief operating decision maker ("CODM") for purposes of assessing segment performance and decision making with respect to resource allocation. For additional information on restructuring and related activities refer to "Operating expenses overview."

Overview

The following table sets forth our results of operations for the three months
ended March 31, 2009 and 2008.



                                                   Three Months Ended March 31,
                                                                               %
                                                  2009           2008        Change
     (in millions, except per share amounts)
     Revenues:
     Transaction fees                          $     958.5     $ 1,020.8         (6 )%
     Foreign exchange revenue                        205.1         210.0         (2 )%
     Commission and other revenues                    37.6          35.1          7 %

     Total revenues                                1,201.2       1,265.9         (5 )%
     Expenses:
     Cost of services                                669.1         758.6        (12 )%
     Selling, general and administrative             191.2         198.0         (3 )%

     Total expenses                                  860.3         956.6        (10 )%

     Operating income                                340.9         309.3         10 %
     Other income/(expense):
     Interest income                                   3.7          17.7        (79 )%
     Interest expense                                (40.0 )       (45.0 )      (11 )%
     Derivative (losses)/gains, net                   (3.6 )         6.8          *
     Other income, net                                 4.2           3.7         14 %

     Total other expense, net                        (35.7 )       (16.8 )        *

     Income before income taxes                      305.2         292.5          4 %
     Provision for income taxes                       81.3          85.4         (5 )%

     Net income                                $     223.9     $   207.1          8 %

     Earnings per share:
     Basic                                     $      0.32     $    0.28         14 %
     Diluted                                   $      0.32     $    0.27         19 %
     Weighted-average shares outstanding:
     Basic                                           707.1         746.7
     Diluted                                         708.0         756.8

* Calculation not meaningful

Revenues Overview

The majority of transaction fees and foreign exchange revenue are contributed by our consumer-to-consumer segment, which is discussed in greater detail in "Segment Discussion." Consolidated revenues declined 5% during the three months ended March 31, 2009. The revenue decrease is attributable to the strengthening of the United States dollar compared to most other foreign currencies, which adversely impacted revenue growth by approximately 5%, as discussed below. The weakening global economy and its impact on Western Union customers contributed to the decrease in revenue and slowing transaction growth. Also, impacting revenue was geographic mix, product mix including intra-country activity which has a lower revenue per transaction than cross-border transactions and price decreases.

Within our consumer-to-consumer segment, the Europe, Middle East, Africa and South Asia ("EMEASA") region, which represented 43% of our total consolidated revenue for the three months ended March 31, 2009, experienced revenue declines and slower transaction growth rates during the three months ended March 31, 2009 compared to the corresponding period in the prior year due to most of the same factors discussed earlier related

to the consolidated results. The acquisition of FEXCO's money transfer business did not have an impact on our revenue as we were already recognizing 100% of the revenue arising from money transfers originating at FEXCO's subagents.

The Americas region (which includes North America, Latin America, the Caribbean and South America), which represented a third of our total consolidated revenue, experienced revenue declines due primarily to the overall weakening of the United States economy.

The consumer-to-business segment, which is discussed in greater detail in "Segment Discussion," also experienced a revenue decline during the three months ended March 31, 2009 compared to the corresponding period in the prior year. Revenue was adversely impacted by the continued weakening economic situation in the United States and by a shift to lower revenue per transaction products in a portion of this segment.

Foreign exchange revenue decreased for the three months ended March 31, 2009 over the corresponding previous period at a rate relatively consistent with the decrease in our revenue from our cross-currency, international consumer-to-consumer business outside of the United States.

Fluctuations in the exchange rate between the United States dollar and currencies other than the United States dollar for the three months ended March 31, 2009 have resulted in a reduction to transaction fee and foreign exchange revenue of $60.7 million over the same period in the prior year, net of foreign currency hedges, that would not have occurred had there been constant currency rates. The impact to earnings per share during the quarter was less than the revenue impact due to the translation of expenses and our foreign currency hedging program. The majority of our foreign currency exchange rate exposure is related to the EMEASA region. If exchange rates between the United States dollar and other currencies remain constant with those experienced in the first quarter of 2009, we expect a continued negative impact on our revenue for the remainder of 2009.

Operating expenses overview

Restructuring and related expenses

For the three months ended March 31, 2008, restructuring and related expenses of $22.4 million and $1.8 million are classified within "cost of services" and "selling, general and administrative," respectively, in the condensed consolidated statements of income. These restructuring and related expenses are associated with the closure of our facilities in Missouri and Texas and other reorganization plans executed in the first quarter of 2008.

Cost of services

Cost of services primarily consists of agent commissions and expenses for call centers, settlement operations, and related information technology costs. Expenses within these functions include personnel, software, equipment, telecommunications, bank fees, depreciation and amortization and other expenses incurred in connection with providing money transfer and other payment services. Cost of services decreased for the three months ended March 31, 2009 compared to the corresponding previous period due primarily to agent commissions, which decrease as revenues decrease, the restructuring costs incurred in 2008 which did not recur in 2009 and the strengthening of the United States dollar compared to most other foreign currencies which resulted in a favorable impact on the translation of our expenses. Cost of services as a percentage of revenue was 56% and 60% during the three months ended March 31, 2009 and 2008, respectively. The decrease in cost of services as a percentage of revenue for the three months ended March 31, 2009 compared to the corresponding period in 2008 was generally due to the restructuring costs incurred in 2008 and the related cost savings in 2009 as well as signing selective agents at lower commission rates than in 2008, offset somewhat by certain agents signing at higher commission rates.

Selling, general and administrative

Selling, general and administrative expenses ("SG&A") decreased for the three months ended March 31, 2009 compared to the corresponding period in the previous year primarily due to decreased employee compensation and related expenses, the timing of marketing initiatives, better leveraging of our marketing expenses and the strengthening of the United States dollar compared to most other foreign currencies which resulted in a favorable impact.

Marketing related expenditures, principally classified within SG&A, were approximately 4% and 5% of revenue during the three months ended March 31, 2009 and 2008, respectively. The decrease over prior year is due to timing of marketing initiatives and better leveraging of our marketing expenditures. Marketing related expenditures include advertising, events, loyalty programs and the cost of employees dedicated to marketing activities. When making decisions with respect to marketing investments, we review opportunities for advertising and other marketing related expenditures together with opportunities for fee adjustments, as discussed in "Segment Discussion," and other initiatives in order to best maximize the return on these investments.

Interest income

Interest income during the three months ended March 31, 2009 decreased due to lower short-term interest rates and, to a lesser extent, lower average interest bearing cash balances.

Interest expense

Interest expense decreased during the three months ended March 31, 2009 compared to the same period in the prior year due to lower short-term interest rates and lower average borrowing balances.

Derivative (losses)/gains, net

Derivative (losses)/gains, net for the three months ended March 31, 2009 and 2008 relate primarily to the portion of the change in fair value of foreign currency accounting hedges that is excluded from the measurement of effectiveness, which includes (a) differences between changes in forward rates and spot rates, and (b) gains or losses on the contract and any offsetting positions during periods in which the instrument is not designated as a hedge. Although the majority of changes in the value of our hedges are deferred in accumulated other comprehensive income or loss until settlement (i.e. spot rate changes), the remaining portion of changes in value are recognized in income as they occur.

Other income, net

Other income, net increased during the three months ended March 31, 2009 compared to the corresponding period in 2008 primarily due to increased earnings on our equity method investments, partially offset by no equity method earnings for FEXCO recorded subsequent to the acquisition date.

Income taxes

Our effective tax rates on pretax income were 26.6% and 29.2% for the three months ended March 31, 2009 and 2008, respectively. We continue to benefit from an increasing proportion of profits being foreign-derived and therefore taxed at lower rates than our combined federal and state tax rates in the United States. In addition, in 2008, we implemented additional foreign tax efficient strategies consistent with our overall tax planning which impacted our effective tax rate for all subsequent periods.

We have established contingency reserves for material, known tax exposures, including potential tax audit adjustments with respect to our international operations restructured in 2003, whereby our income from certain foreign-to-foreign money transfer transactions has been taxed at relatively low foreign tax rates compared to our

combined federal and state tax rates in the United States. As of March 31, 2009, the total amount of unrecognized tax benefits is a liability of $426.0 million, including accrued interest and penalties. Our reserves reflect our judgment as to the resolution of the issues involved if subject to judicial review. While we believe that our reserves are adequate to cover reasonably expected tax risks, there can be no assurance that, in all instances, an issue raised by a tax authority will be resolved at a financial cost that does not exceed our related reserve. With respect to these reserves, our income tax expense would include
(i) any changes in tax reserves arising from material changes during the period in facts and circumstances (i.e. new information) surrounding a tax issue, and
(ii) any difference from our tax position as recorded in the financial statements and the final resolution of a tax issue during the period. Such resolution could materially increase or decrease income tax expense in our consolidated financial statements in future periods.

The United States Internal Revenue Service ("IRS") completed its examination of the United States federal consolidated income tax returns of First Data for 2003 and 2004, of which we are a part, and issued a Notice of Deficiency in December 2008. The Notice of Deficiency alleges significant additional taxes, interest and penalties owed with respect to a variety of adjustments involving us and our subsidiaries, and we generally have responsibility for taxes associated with these potential Western Union-related adjustments under the tax allocation agreement with First Data executed at the time of the spin-off. We agree with a number of the adjustments in the Notice of Deficiency; however, we do not agree with the Notice of Deficiency regarding several substantial adjustments representing total alleged additional tax and penalties due of approximately $114 million. As of March 31, 2009, interest on the alleged amounts due for unagreed adjustments would be approximately $25 million. A substantial part of the alleged amounts due for these unagreed adjustments relates to our international restructuring, which took effect in the fourth quarter 2003, and, accordingly, the alleged amounts due related to such restructuring largely are attributable to 2004. On March 20, 2009, we filed a petition in the United States Tax Court contesting those adjustments with which it does not agree. We believe our overall reserves are adequate, including those associated with adjustments alleged in the Notice of Deficiency. If the IRS' position in the Notice of Deficiency is sustained, our tax provision related to 2003 and later years would materially increase.

Earnings per share

During the three months ended March 31, 2009, basic and diluted earnings per share were both $0.32. Unvested shares of restricted stock are excluded from basic shares outstanding. Diluted earnings per share reflects the potential dilution that could occur if outstanding stock options on the presented dates are exercised and shares of restricted stock have vested. As of March 31, 2009 and 2008, there were 43.1 million and 8.2 million, respectively, of outstanding options to purchase shares of Western Union stock excluded from the diluted earnings per share calculation under the treasury stock method as their effect was anti-dilutive. The treasury stock method assumes proceeds from the exercise price of stock options, the unamortized compensation expense and assumed tax benefits of options and restricted stock are available to acquire shares at an average price throughout the year, and therefore, reduce the dilutive effect throughout the year. The increase in anti-dilutive shares is primarily due to the majority of our outstanding options having an exercise price higher than our average stock price for the three months ended March 31, 2009.

Of the 45.3 million outstanding options to purchase shares of our common stock as of March 31, 2009, approximately 43% are held by employees of First Data.

Earnings per share increased during the three months ended March 31, 2009 . . .