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Digital money transfers to double by 2024, says report

By Marianne Curphey

Lower costs and attractive apps from online and mobile channels are challenging traditional operators and casual payments

Global international digital money transfers will double in volume to two billion by 2024. The number of transactions could increase by 78 per cent over the next five years, according to a new report by Juniper Research.

Both online and mobile channels are achieving strong growth, with fintech disruptors and existing players rapidly gaining traffic. Digital payments are rapidly replacing unofficial remittances, such as funds sent with travelling family members. Existing players such as Western Union and MoneyGram need to focus on their own app offerings or risk losing market share, it says.

The report says Money Transfer Operators (MTOs) must invest heavily in digital transformation, whilst retaining strong agent networks and physical places for recipients to cash out, to ensure they gain the full benefit of ongoing digital migration.

The report, Digital International Money Transfer: Key Trends, Player Innovation & Market Forecasts 2019-2024, says the mobile channel will account for 68 per cent of transaction volume in 2024; up from 63 per cent in 2019.

This dominance is primarily due to the superior app-based experiences available on mobile and highly competitive pricing. As a result, many digital MTOs are charging lower fees than traditional players. As digital solutions continue to proliferate, this trend will continue, the report says.

There has been a dramatic expansion by digital MTOs in the past year, in terms of their offerings, their marketing efforts and their international scale.

Research author Nick Maynard said: “Mobile has become the go-to channel for international money transfer; dominating the digital landscape. This means that incumbents in the area, such as Western Union and MoneyGram, must relentlessly focus on their app experiences; fully embracing digital transformation. A failure to do so will result in a steady erosion of market share by digitally-native disruptors.”

The new research found that international digital money transfer, while highly compelling via a digital channel, requires effective agent partnerships in recipient countries to ensure success. Juniper Research recommends that money transfer operators make partnerships in emerging markets a high priority, including with physical players such as supermarkets or retailers.

Popular corridors for payments include: US-Mexico, US-China, Hong Kong-China and UAE-India.

As the top migrant destination, the US accounted for $158bn (£120bn, €143bn) in remittances for the year 2018 (up from $148bn in 2017), followed by Saudi Arabia, UAE, the UK, Germany and Canada as the top remittance-sending countries. India continued to be the top remittance-receiving country, accounting for $78bn in remittances, followed by China, Philippines, Mexico, and France.

The report says the market share of digital-only challenger players such as TransferWise, PayPal, Xoom and Remitly is steadily increasing. For example, TransferWise, valued at around $3.5bn (following recent funding), reported that revenues for the financial year ended March 2018 nearly doubled, reaching $117m, up from $66m in 2017; the company posted its second annual profit of $8m.

Juniper Research estimates that between TransferWise, Xoom, Remitly and WorldRemit, the combined market share in terms of digital transactions processed increased from 2.5 per cent globally in 2015 to 8.5 per cent in 2018. Juniper expects this to reach 11.4 per cent in 2019.

FURTHER READING: Crypto could replace cash by 2030

FURTHER READING: TransferWise expands to Middle East with a new Abu Dhabi licence

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