Digital Wallets and Networks Transform the $630 Billion Global Remittance Market

The global remittance market, which sees hundreds of billions of dollars flowing across borders each year, is undergoing a significant transformation due to digital disruption, as stated in the article published on May 25, 2023, at PYMNTS. According to the World Bank, remittances grew by 5% in 2022, reaching $626 billion. These remittances serve as crucial funds for workers and individuals sending money back home to their loved ones.

However, with an estimated 1.4 billion adults worldwide remaining unbanked, traditional conduits like bank accounts are insufficient for facilitating the movement of money. As a result, technological advancements have pushed cross-border solutions into the digital age, replacing the reliance on physical agents receiving and redeeming cash.

While long-standing players in the industry have been adapting to digital channels, the COVID-19 pandemic accelerated this shift as physical agent locations were forced to close during lockdowns. Nevertheless, they face competition from digital-only upstarts.

For instance, Western Union reported growth in the number of digital transactions in its latest earnings results. During the March quarter, the company experienced a 7% increase in digital transactions and a 14% growth in its branded digital customer base. Meanwhile, MoneyGram is set to go private, with digital revenues up by 30% in the first quarter of 2023, now accounting for 50% of money transfer transactions. Going private allows MoneyGram to focus on digital efforts and navigate industry-wide changes without the scrutiny of quarterly reports.

The rise of digital wallets and peer-to-peer (P2P) offerings signifies the changing landscape of remittances. Visa recently introduced Visa+, a new service enabling P2P payments across different platforms and geographies without the need for a Visa card. The service utilizes Visa+ Payname, a personalized payment address for receiving payments. When a payment is sent through a participating app, the sender’s app requests an underlying token from the Visa+ service. The payment is then pushed to the recipient’s wallet, instantly credited to their account. Western Union is among the partners integrating Visa+ into its platforms. According to Visa’s research, 53% of consumers worldwide use digital apps for sending and receiving money, while 34% still rely on physical banks or branches.

Another significant player, Remitly, enables online remittances across 170 countries. In the first quarter of 2023, Remitly witnessed a 50% increase in active customers, reaching 4.6 million, and a 40% surge in send volume to $8.5 billion.

The remittance market’s transformation is fueled by the rise of digital wallets and networks, offering faster, more convenient, and inclusive money transfer options. As technology continues to advance, traditional players and digital disruptors will compete to provide seamless and accessible cross-border remittance solutions.