With about 250 million international migrants presently living and working in foreign countries, the growth of the remittances industry is trending upwards.
With about 250 million international migrants presently living and working in foreign countries, the growth of the remittances industry is trending upwards. In fact, the total annual value of global remittance transactions has tripled from the $200 billion seen in the early 2000s to $600 billion in 2015.
According to the World Bank, some emerging nations now depend on remittance inflows for up to 8% of their gross domestic product! India alone receives $70.4 billion in remittances from its worldwide diaspora. Other countries like the Philippines, China, Mexico and Nigeria are also major remittances destinations.
Yes, the remittances industry is big business and nothing has done more for the growth of this industry than the coming of the digital age. Long gone are the days when sending money from one country to another came with frustrating delays and high fees and significant potential for loss due to fraud.
Leading money transfer companies like Western Union and Moneygram have certainly played their parts in presenting the money transfer industry as the way to go for cross border money transfers and payments. Services like same day money pickup or pickup in minutes have increasingly become the norm and have allowed migrants to send much needed resources back home faster than ever.
In a recent interview with Yahoo Finance, Odilon Almeida said that Western Union’s digital solution at walk-in retail locations is a win for its stakeholders. He went on to say that customers are able to get the convenience and control they want, and Western Union’s retailers can offer more services with minimal space and staff requirements.
Additionally, the rise of mobile technologies means that money transfer can now be facilitated on mobile device applications, therefore, improving ease and convenience for senders who once had to find a local branch or kiosk location of a money transfer operator.
Increasing competition, lowered rates
As always, newer technologies can open up opportunities for hungry newcomers who can take advantage of their small size to innovate and satisfy unmet needs in a market. And in recent years, banking institutions and non-banking entities like Western Union and Moneygram have seen the entry of newcomers like WorldRemit, TransferWise, Remitly, Transfast and a handful of others into an industry previously defined by high costs to entry.
According to the World Bank, Transfast, which began providing money transfer services from the US to India only in 2012, is already beating an established money transfer giant like Western Union in the remittance business in Egypt.
“What is unique for Transfast is that 8 million Egyptians live abroad and they can send remittances through our network via multiple channels. This means Egyptians can go to locations to send money through a bank, financial institution or retail partner. In addition, they can send money via mobile or online. So, Transfast can provide a cheaper channel that is more convenient to Egyptians abroad when they send money home,” said Samish Kumar, CEO of Transfast.
“Transfast is already the leader in the lowest remittance cost category in a very important country like Nigeria, and despite our heavy investments in online security. We are in all the Francophone African countries and we aim to continue innovating and bringing value for those sending money back home,” added Jay Vix, Global Marketing Director for Transfast.
Illustrating the vocal nature with which some newcomers are openly challenging the opaque business practices of an entire banking industry, the London-based TransferWise held a naked protest against the US banking sector upon its launch in the country. While the emergence of these newcomers, undoubtedly, increase competition in the money transfer market only time will tell what their full impacts will be to the business of sending money across borders.
In the meantime one thing is certain – increased competition is allowing customers to benefit from reduced service fees and families back home are getting more bang from their sponsors’ hard earned cash.