Western Union uses its scale to take on startups

Western Union's B2B payment platform

Western Union's growing digital business will allow it to fight off start-ups eyeing to compete against the money transfer giant, the chief executive told CNBC.

Fintech start-ups such as TransferWise and WorldRemit are challenging companies such as Western Union by claiming to offer cheaper and faster online money transfers.

But Hikmet Ersek, CEO of Western Union, said that the company's digital business which also allows online money transfers, is growing fast with expansion planned.

"Look if you are in 200 countries and people are starting to use their mobile phones and mobile phone money transfer by Western Union is huge, our digital business is about $300 million and the next competitors are far away from that business, and growing 25 percent, very strong growth," Ersek told CNBC in a TV interview at the Money 2020 conference on Wednesday.

"The digital business is only in 35 countries, so what we are going to do is we are going to go to 200 countries as soon as possible with our digital business."

The money transfer startups are also running into regulatory difficulties. Just this week, TransferWise was fined by the New Hampshire Banking Department because users in the state were using its service, but the start-up had no physical presence on the ground.

Nonetheless, Western Union is recognizing the need to diversify away from its core transfer business as margins come under pressure.

Earlier this week, it launched a new business-to-business product that allows companies to connect with each other and carry out invoicing and payments.