Digital money transfer services see Western Union surpassed in performance
In a recent report focusing on publicly traded money transfer companies, the significance of digital remittances for the future strategies of major players like Western Union, Remitly, Wise, Intermex, Euronet’s Money Transfers division, and MoneyGram has been emphasized.
The report underscores the importance of establishing strong digital remittances foundations, as digital applications become the preferred channel for customers sending and receiving remittances. This shift towards digital and app-based payment methods is driven by a focus on ease of use, safety, privacy, and security, particularly in key remittance corridors such as the Asia Pacific region.
One key trend is the growth of mobile payment transactions, fueled by fintech platforms offering more convenient, accessible options. Real-time payments are also becoming standard, enabling instant or near-instant money movement, enhancing competitiveness and user satisfaction.
Stablecoins and blockchain integration are also emerging as new growth opportunities, with providers like Visa exploring their use on platforms such as Stellar and Avalanche to enable faster, cheaper cross-border remittances. The pressure to reduce remittance costs is leading to innovation in cost-efficient digital solutions and expanding fintech involvement.
Biometric payments and enhanced security are also becoming more prevalent, offering streamlined and secure payment experiences that potentially reduce fraud and increase customer trust in digital remittances. Banks are also integrating digital remittance services, leveraging existing digital banking structures to capture remittance flows.
Until recently, Western Union reported the largest branded digital money transfers revenue in the C2C market compared to all of Remitly’s revenue and all of Wise’s consumer money transfers revenue. However, in the last few quarters, Remitly and Wise have begun to overtake Western Union in digital money transfer revenues, with the gap widening significantly in Q3 2023.
Intermex and Euronet, another main players, reported a 63% Year-over-Year increase in digital transactions and a 20% Year-over-Year increase in direct-to-consumer digital transactions in Q3 2023, respectively.
The report suggests that the future of remittances lies primarily in digital services and digital remittances are seen as a key driver for companies' future growth. Companies are responding to evolving consumer expectations for digital-first, fast, secure, low-cost, and convenient remittance services, often partnering or competing with fintech platforms leveraging mobile and blockchain technology.
Western Union's total revenue growth has only recently returned to positive after over a year of consistent drops, but its digital money transfer revenues have never been more than a fifth of its total revenue. The branded digital revenues as a share of their overall C2C business have remained at 21%, down from a high of 22% in Q1 23.
The retail money transfers space still holds considerable revenue, but the focus is shifting towards digital remittances. MoneyGram, a publicly traded company until it went private earlier this year, is also increasing its focus on the digital space.
In conclusion, the report highlights the need for companies to focus on digital remittances for their long-term success and invest in digital remittances to secure their long-term position in the market. The shift towards digital remittances is a response to evolving consumer expectations and offers new opportunities for growth and innovation in the money transfer industry.
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