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Western Union Leads Global Digital Remittance Market
The global remittance market will approach the $1 trillion mark over the next five years. Providers of money transfer transactions are positioning themselves to vie for a part of that pie. Western Union, the leader in the space, is not resting on its laurels and is changing to meet new challenges.
What Are Global Remittances?
Global remittances are the money transfers people make across borders as gifts or financial help. This includes money sent by workers to their families in other countries. It also includes money sent for purchases when conventional means are not available.
A migrant worker in the United States can send money to their family in Montenegro. Alternatively, a consumer in Angola can purchase an item from a retailer in Canada without needing a credit card. If you don't have access to conventional banking means, global remittances allow you the ability to financially interact with others.
The Company's History In Remittances
Western Union started changing the world in 1851 as a telegraph service provider. The company's know-how as a telecommunications service made the transition to money transfers an obvious choice. Western Union first gained the ability to facilitate transcontinental communication in 1861. Ten years later, the company began wiring money for its customers.
Since the late 19th century, Western Union has acquired hundreds of companies and furthered innovation in both telecommunications and remittances. The company's remittance market share continues to grow as Western Union invests in digital technology that will bring money transfers into the future.
During the 2008 financial crisis and in 2020, due to the pandemic, remittances took a significant hit. However, the decline in both cases was temporary. People are once again sending money across borders to their friends and relatives.
Several players are entering the market intending to capture a greater share of the cross-border payments. Financial institutions are adopting information technology capable of making money transfers faster and more secure.
Western Union boasts a clientele of over 150 million people. These customers span over 200 countries and include 130 currencies. This means that there are many moving parts to account for. Currency fluctuations and market volatility require a successful remittance business to be lightning fast. Anything else can compromise its profitability as well as customer trust.
Imagine sending $100 to Romania expecting your family to receive 400 Leu only to have them get 350 due to time lag. This would not leave you happy as value is lost due to friction.
The Future of Global Remittances
Most of the world's remittances are still in the form of cashm this includes cash-based intermediaries, checks, and even sending cash in the mail. These methods are often time and fee-intensive and open the customer up to potential losses.
A sustainable model of global remittances is one where digital transactions take center stage. Global payment solutions are growing fast and remittance company apps and web services will be interfacing with big tech in order to achieve synergies. Don't be surprised to see some of your favorite social media websites offering on-platform integration of money sending apps.
Western Union is partnering with Google to provide US users access to money transfers through Google Pay. If you're in the United States, you can enjoy peer-to-peer money transfers which will expand worldwide by the end of 2021.
Solutions to Real Problems
The global financial system is sometimes too sophisticated for the consumers' interests. Sending money from one financial institution to another can mean several business days in wait time, wallet-smashing fees and clerical errors. While Western Union has been a highly-rated leader in money transfers, the company is looking to boost its efficiency and pass the savings on to its customers.
Millions of people throughout the world remain unbanked. It is either difficult or even impossible for them to obtain access to banking services. The boom in smartphone use offers the opportunity for anyone with access to an internet connection to enjoy the benefits of digital remittances.
With almost 9 million website users in 2020, Western Union is taking the frustration out of money transfers. By offering an architecture that any user can access via a mobile app, peer-to-peer remittances will continue to rise.
The company is opening its global remittance platform to third-party financial institutions. This means that more corridors will open and different options will become available. Money transfers are getting to the point where you will have multiple avenues for sending your funds and will be able to select the quickest route with the smallest fees.
Alternatively, the recipient of your funds may have limitations as to how they can accept the money. Having multiple paths available gives you the flexibility to send your family much-needed money regardless of their proximity to a specific outlet.
For example, if you are sending money to elderly relatives, their ability to commute to a bank may be limited. Instead, they may choose to receive the funds through a digital wallet or a Western Union physical location.
If, on the other hand, you wish to send money to a college student pursuing their education abroad, a different pallet of options arises. Receiving the funds can be as simple as using Google Pay or routing the funds to a bank account.
Peace of Mind
When sending money, there can be a little uneasiness in the mind of both the sender and the recipient. Will the money get there? Can the funds arrive soon enough? How much will you have to pay for the remittance service?
Having a digital, real-time service that allows users to track their payments alleviates the stress. Western Union has provided peace of mind for its hundreds of millions of users throughout the years with their conventional services. Now, by growing its digital payment ecosystem, the company can provide its users with greater control over their transactions.
Digitization of Global Remittances
Western Union is at the helm of the digitization of the global remittance market. By leveraging its network of partners and its first-mover advantage in technology adoption, it will remain the global payment solutions leader for years to come.
This article does not necessarily reflect the opinions of the editors or the management of EconoTimes