Rapidly Increasing Transactions at Wise and Remitly
In a notable shift in the consumer money transfer market, Wise has surpassed Western Union in cross-border send volume for Q3 2024, according to recent industry reports.
Wise, the digital money transfer service, has shown significant growth in send volume. The company's Personal send volume in Q3 2024 was more than double what it was in Q2 2020, reflecting a steady upward trend.
This outperformance can be attributed to several factors. Firstly, Wise's use of the mid-market exchange rate with no markup or margin, a strategy that makes its services cheaper compared to competitors like Western Union, which often add a markup to the exchange rate. This transparent approach has helped Wise attract more customers seeking cost-effective international transactions.
Secondly, Wise's lower fees and transparency, with upfront fees and no hidden costs, are typically more transparent than Western Union's fee structure. This transparency and cost-effectiveness appeal to consumers looking for reliable and affordable international money transfers.
Thirdly, Wise's global network and efficiency. By maintaining local bank accounts in various countries, Wise avoids expensive international fees, reducing the need for intermediary banks. This strategy cuts down on transfer times and costs compared to services like Western Union, which often rely on the SWIFT network and its associated fees.
Fourthly, the speed of transfers at Wise, with a significant portion being instant, is a major advantage over traditional players like Western Union. This speed and reliability enhance the user experience and encourage more frequent use.
Lastly, Wise's focus on digital innovation and its ability to adapt quickly to changing market conditions have helped it stay competitive and innovative in the cross-border payment space. This agility allows Wise to continuously improve its services and attract a wider customer base.
In comparison, Western Union reports only its branded cross-border principal volume, excluding its domestic volume. Western Union experienced a Year-over-Year (YoY) contraction of -8.5%, while Wise saw a YoY increase of 18.4% in its Personal revenue. Western Union's send volume is smaller in the domestic sector compared to other aspects of its business.
Wise's Personal segment send volume for Q3 2024 was £26.1bn ($33.4bn), while Western Union's was $25.9bn for the same period. However, Western Union still leads in revenue, reporting $932m compared to Wise's Personal division's revenue of £238m ($304m).
Other players in the market, such as Remitly and Intermex, also reported their send volumes for Q3 2024, with Remitly's send volume at $14.5bn and Intermex's at $6.4bn. It is worth noting that Wise's Personal volume does not include domestic volume but includes some contribution from the B2B2X Wise Platform service, while Western Union's Personal volume does not include its domestic volume.
The Wise Platform is a "very small part" of Wise's overall volumes, indicating that the growth in send volume is primarily driven by the Personal segment. Wise's higher send volume per customer also reflects its more expat customer base.
In conclusion, Wise's combination of cost-effective rates, transparency, efficiency, speed, and innovative strategies has positioned it well in the market, contributing to its success over Western Union in cross-border send volume. This shift in the market underscores the growing demand for digital, cost-effective, and efficient money transfer services.
In light of Wise's success in surpassing Western Union in cross-border send volume, it's evident that investing in businesses offering cost-effective financial services, like Wise, could prove beneficial for long-term financial growth. Moreover, the company's strategic approach to business, focusing on transparency, efficiency, speed, and digital innovation, sets a benchmark for competition in the finance sector.
