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 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 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 by our banks, lenders, or other financial services providers or insurers; 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 money transfer services providers, including telecommunications providers, card associations and card-based payment providers; our failure 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 failure 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.

• Global business payments (formerly consumer-to-business), which allows 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. As described further in Note 3, "Acquisitions" to the condensed consolidated financial statements, we entered into a definitive agreement to acquire Canada-based Custom House, Ltd., a provider of international business-to-business payment services, which will be included in this segment. To reflect the anticipated broadened activity of this segment, the name of this segment was changed from "consumer-to-business" to "global business payments."

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 and six months ended June 30, 2009 included:

• We generated $1,254.3 million and $2,455.5 million, respectively, in total consolidated revenues compared to $1,347.1 million and $2,613.0 million, respectively, for the comparable periods in the prior year, representing a decline of 7% and 6%, respectively.

• We generated $341.7 million and $682.6 million, respectively, in consolidated operating income compared to $336.2 million and $645.5 million, respectively, for the comparable periods in the prior year, representing an increase of 2% and 6%, respectively. The prior year results included $22.9 million and $47.1 million, respectively, in restructuring and related expenses.

• Our operating income margin was 27% and 28%, respectively, compared to 25% for both the comparable periods in the prior year. The prior year results included the restructuring and related expenses mentioned above.

• Consolidated net income was $220.2 million and $444.1 million, respectively, representing a decrease of 5% and an increase of 1%, respectively, over the comparable periods in the prior year. The prior year results included $12.7 million and $27.8 million, respectively, in restructuring and related expenses, net of tax.

• Our consumers transferred $18 billion and $34 billion, respectively, in consumer-to-consumer principal, of which $16 billion and $31 billion, respectively, related to cross-border principal, which represented a decrease of 8% and 6%, respectively, in consumer-to-consumer principal and a 8% and 5% decline, respectively, in cross-border principal over the comparable periods in the prior year.

• We completed 104.6 million and 210.5 million, respectively, global business payments transactions, representing an increase of 3% over both the comparable periods in the prior year.

• Consolidated cash flows provided by operating activities were $606.3 million, an increase of 8% over the comparable six month period in the prior year.

• In February 2009, we completed the acquisition of the money transfer business of one of our largest agents, European-based FEXCO, for $243.6 million, including $157.4 million of cash consideration.

Adoption of Fair Value Accounting Standards

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 Board ("FASB") Staff Position ("FSP") 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.

In April 2009, the FASB issued FSP No. 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP No. 157-4") which is required for interim and annual periods ending after June 15, 2009. FSP No. 157-4, which amends SFAS No. 157, provides additional guidance on estimating fair value when an asset or liability's volume and level of activity has significantly decreased in relation to normal market activity for the asset or liability thus indicating the need for additional considerations when estimating fair value. We adopted these provisions effective June 30, 2009 and there was no impact on our financial position, results of operations and cash flows.

The FASB also issued FSP No. 115-2 and SFAS No. 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments"("FSP No. 115-2") in April 2009, which is required for interim and annual periods ending after June 15, 2009. FSP No. 115-2 provides guidance on other-than-temporary impairments for debt securities. We adopted these provisions effective June 30, 2009 and there was no impact on our financial position, results of operations and cash flows.

Business Combinations

Effective January 1, 2009, we adopted the provisions of SFAS No. 141R, "Business Combinations" ("SFAS No. 141R"). 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. Also effective January 1, 2009, we expense all costs as incurred related to or involved with an acquisition. 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. Any adjustments to the assessed fair values of the assets, liabilities and any noncontrolling interests made subsequent to the acquisition date but within the measurement period, due to facts that existed at the acquisition date, are 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 and six months ended June 30, 2009 compared to the same periods 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 $22.9 million and $47.1 million for the three and six months ended June 30, 2008, respectively, 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 and six
months ended June 30, 2009 and 2008.



                                     Three Months Ended June 30,                 Six Months Ended June 30,
                                                                 %                                          %
                                   2009           2008         Change         2009           2008         Change
(in millions, except per share
amounts)
Revenues:
Transaction fees                 $   999.9      $ 1,081.3          (8 )%    $ 1,958.4      $ 2,102.1          (7 )%
Foreign exchange revenue             217.2          232.3          (7 )%        422.3          442.3          (5 )%
Commission and other revenues         37.2           33.5          11 %          74.8           68.6           9 %

Total revenues                     1,254.3        1,347.1          (7 )%      2,455.5        2,613.0          (6 )%
Expenses:
Cost of services                     700.3          799.4         (12 )%      1,369.4        1,558.0         (12 )%
Selling, general and
administrative                       212.3          211.5          -  %         403.5          409.5          (1 )%

Total expenses                       912.6        1,010.9         (10 )%      1,772.9        1,967.5         (10 )%

Operating income                     341.7          336.2           2 %         682.6          645.5           6 %
Other income/(expense):
Interest income                        2.8           12.7         (78 )%          6.5           30.4         (79 )%
Interest expense                     (39.8 )        (43.3 )        (8 )%        (79.8 )        (88.3 )       (10 )%
Derivative gains/(losses), net         0.8           (2.4 )         *            (2.8 )          4.4           *
Other (expense)/income, net           (9.8 )          4.8           *            (5.6 )          8.5           *

Total other expense, net             (46.0 )        (28.2 )        63 %         (81.7 )        (45.0 )        82 %

Income before income taxes           295.7          308.0          (4 )%        600.9          600.5          -  %
Provision for income taxes            75.5           76.5          (1 )%        156.8          161.9          (3 )%

Net income                       $   220.2      $   231.5          (5 )%    $   444.1      $   438.6           1 %

Earnings per share:
Basic                            $    0.31      $    0.31          -  %     $    0.63      $    0.59           7 %
Diluted                          $    0.31      $    0.31          -  %     $    0.63      $    0.58           9 %
Weighted-average shares
outstanding:
Basic                                700.6          736.5                       703.8          741.6
Diluted                              702.7          747.5                       705.2          752.2

* 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 7% and 6% during the three and six months ended June 30, 2009, respectively. The revenue decrease was attributable to the strengthening of the United States dollar compared to most other foreign currencies, which adversely impacted revenue by approximately 5% for the three and six months ended June 30, 2009, as discussed below. Also impacting revenue was the weakening global economy resulting in slowing transaction growth, geographic mix, product mix including intra-country activity which has lower revenue per transaction than cross-border transactions and price decreases.

The Europe, Middle East, Africa and South Asia ("EMEASA") region, which represented 45% and 44% of our total consolidated revenue for the three and six months ended June 30, 2009, respectively, experienced revenue declines and slower transaction growth rates during the three and six months ended June 30, 2009 compared to the corresponding periods in the prior year. The revenue declines were driven by the impact of the stronger United States dollar and the other 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 (including North America, Latin America, the Caribbean and South America), which represented 32% of our total consolidated revenue for both the three and six months ended June 30, 2009, experienced revenue and transaction declines due to the overall weak United States economy.

The global business payments segment, which is discussed in greater detail in "Segment Discussion," also experienced revenue declines during the three and six months ended June 30, 2009 compared to the corresponding periods in the prior year. Revenue was adversely impacted by the weak economic situation in the United States and by a mix shift to lower revenue per transaction products in a portion of this segment.

Foreign exchange revenue decreased for the three and six months ended June 30, 2009 over the corresponding previous periods at a rate relatively consistent with the decrease in our revenue from our 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 have resulted in a reduction to transaction fee and foreign exchange revenue for the three and six months ended June 30, 2009 of $60.1 million and $120.8 million, respectively, over the same periods 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 periods 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 half 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 and six months ended June 30, 2008, restructuring and related expenses of $19.5 million and $41.9 million, respectively, are classified within "cost of services" and $3.4 million and $5.2 million, respectively, are classified within "selling, general and administrative" 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 half 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 and six months ended June 30, 2009 compared to the corresponding previous periods 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% for both the three and six months ended June 30, 2009 and 59% and 60% for the three and six months ended June 30, 2008, respectively. The decrease in cost of services as a percentage of revenue for the three and six months ended June 30, 2009 compared to the corresponding periods in 2008 was generally due to restructuring costs incurred in 2008 and the related cost savings in 2009, reduced commissions resulting from the acquisition of FEXCO, selective agent commission reductions as well as other cost savings initiatives.

Selling, general and administrative

Selling, general and administrative expenses ("SG&A") were flat for the three months ended June 30, 2009 and decreased slightly for the six months ended June 30, 2009 compared to the corresponding periods in the previous year primarily due to better leveraging of our marketing expenses and to the restructuring costs incurred in 2008 which did not recur in 2009, offset by incremental costs associated with our FEXCO business and costs related to evaluating and closing acquisitions.

Marketing related expenditures, principally classified within SG&A, were approximately 5% of revenue during both the three and six months ended June 30, 2009 and approximately 6% and 5% during the three and six months ended June 30, 2008, respectively. 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 maximize the return on these investments.

Interest income

Interest income decreased during both the three and six months ended June 30, 2009 compared to the same periods in the prior year primarily due to lower short-term interest rates.

Interest expense

Interest expense decreased during both the three and six months ended June 30, 2009 compared to the same periods in the prior year due to lower short-term interest rates on certain debt with floating interest rates and lower average borrowing balances.

Derivative gains/(losses), net

Derivative gains/(losses), net for the three and six months ended June 30, 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 (expense)/income, net

Other (expense)/income, net decreased during the three and six months ended June 30, 2009 compared to the corresponding periods in 2008 primarily due to the $12 million reserve taken against our receivable from the Reserve International Liquidity Fund and a decline in earnings on our equity method investments, primarily as a result of an absence of equity method earnings for FEXCO recorded subsequent to the acquisition date.

Income taxes

Our effective tax rates on pretax income were 25.5% and 26.1% for the three and six months ended June 30, 2009, respectively, and 24.8% and 27.0% for the three and six months ended June 30, 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 the second quarter of 2008, we implemented additional foreign tax efficient strategies consistent with our overall tax planning which impacted our effective tax rate for all subsequent periods. Recent proposed changes to United States international tax law, if enacted, could potentially adversely affect our future effective tax rate. We are closely monitoring the proposed changes, and the potential effect on our future effective tax rate will depend on the final form of any new law.

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 June 30, 2009, the total amount of unrecognized tax benefits is a liability of $456.6 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 . . .