- Oct 26, 2023
- Four minutes read
How money remittance businesses can reach more people around the world
Why money remittance is growing, the challenges businesses must overcome, and how they can evolve to meet the changing needs of consumers.
More people than ever are sending money abroad, but this growth is posing new challenges for money remittance businesses who must adapt to serve a broadening, global consumer base, as discussed in our latest report, The top trends in money remittance.
In this article, we tackle the current state of money remittance, the challenges of the blossoming industry, and how the right payment platform can help businesses meet changing expectations and flourish in the future.
How money remittance has grown
The past three years have seen great changes across money remittance. In 2020, the industry was valued at $701.93 billion, and it’s growing quickly — by 2030, analysts predict it'll be worth $1,227.22 billion.
In 2019, 90% of transactions were settled in cash, with the industry failing to fully embrace digitalisation. Then, catalysed by the global pandemic, people had to turn to online methods of transferring money.
As a result, money remittance businesses adapted, and today, around 50% of the world's remittances are sent digitally. This number is only set to grow, with digitalisation now a vital part of the industry’s future.
So what are the other factors shaping the future of money remittance?
B2B and money remittance
While consumer behaviour is influencing the industry’s growth, business-to-business remittance volumes are also impacting the market. By 2030, businesses will have made $56.1 trillion in cross-border payments. B2B also represents an opportunity to innovate — to date, only around 3% of those payments are made digitally.
Of course, businesses remit money for different reasons to retail customers — paying foreign suppliers, funding cross-border business ventures, and, increasingly, paying the salaries of location-independent employees. Their requirements may also differ significantly, depending on the industries and the countries in which they operate.
But there are similarities, with businesses largely wanting the same things retail customers do from money remittance services: security, reliability, accessibility, and cost-effectiveness. Digitalisation, and digital-first providers, can help offer these benefits to businesses and consumers alike. But there are caveats.
The challenges of the growing money remittance industry
Digitalisation is a broadly positive step for money remittance, giving more people access to services once dominated by physical currency, and offering greater security, convenience, and personalisation at lower cost. However, there is a danger of going too far the other way and excluding consumers who can't use digital services.
This may be because they're unbanked or underbanked, pay and get paid predominantly in cash, or find themselves in circumstances that make using these services impractical. Even in places where access to banking services, transaction fees, and de-risking aren't an issue, sending and receiving money digitally may simply not be practical for some consumers.
For example, the Migration Policy Institute explains that people who send remittances are more likely than the general population to work low-income jobs that are paid at least partly in cash.
Digitalisation won’t slow down, but remittance businesses must be wary of marginalising already vulnerable people even further, and ensure their services are available to a broad variety of consumer needs.
For a full breakdown of the challenges facing money remittance businesses, read The top trends in money remittance.
Payment platforms can drive evolution in money remittance
Adapting to the changing money remittance landscape is easier said than done. Businesses must understand the practical realities facing consumers, keep abreast of evolving payment preferences, and navigate the nuances of regulation in the regions they serve.
Thankfully, the right payment provider can help businesses overcome these obstacles, removing the effort from the payment process and allowing them to be more proactive.
This is because the right provider will handle the complexity of payments, processing transactions quickly and efficiently, while also offering more choice to consumers, from debit and credit cards, to digital wallets, direct bank transfers, as well as emerging technologies such as eCash.
As for helping money remittance businesses be more proactive, certain providers, like Paysafe, will assign a dedicated account manager who will collaborate on their growth and optimisation strategy, helping them address the causes of payment declines, as well as identify new opportunities and gaps in coverage. The provider should also be able to help them cater to different regions, enabling customers to remit money to recipients all over the world.
While the landscape for money remittance may be changing, the opportunity is vast. With the right tools in place, businesses can adapt, grow, and succeed in the long term.