Global P2P remittance industry gearing up with mobile based transactions and acquisitions

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Global money remittance industry is currently valued at over USD 700 million. There are certain trends which are expected dominate remittance industry in 2016-2017. There is a steady decline in brick and mortar agent set up for cash remittances. Currently it accounts for 47% of the total remittance revenue. Instead people are moving towards faster and cheaper online transfer options. Growth in smartphone usage and advanced internet infrastructure across markets is propelling its growth. This has also resulted in decrease in remittance fees from approximately 9% in 2013 to 7.5% in 2015. Online channels have lowest fees which is currently 5.3% that is likely to bring down charges further in coming years. Major players are shifting their focus towards emerging markets to increase footprint which has fueled acquisitions. The international P2P mobile remittance market is expected to record a CAGR of 43% over the next five years.

• Global money transfer service provider TerraPay owned by Mahindra Comviva acquired UK based Pay2Global which is a regulated multinational digital money transfer platform. UK and European Economic Area (EEA) are some of the significant markets in remittance segment accounting for one fourth of global remittance flow. Pay2Global will be renamed as Terra Payment Services (UK) and extend its services to Asia and Africa as well. This acquisition will result in business expansion of TerraPay in 32 EEA markets with UK license that is likely to add considerably to revenue generation of the service provider.
• Telenor Group acquired 100% shares of Malaysia based international remittance service provider Prabhu Money Transfer earlier this year. Telenor plans to build customer base in the remittance segment through Prabhu’s advanced networks and distribution channels. There has been significant increase in mobile financial services in past couple of years which is targeted primarily at non-banking segment of emerging markets. Telenor is anticipated to stabilize its foothold in Asian market across remittance and other mobile financial services through this acquisition.
• Online payment platform PayPal acquired cross border P2P remittance service provider Xoom for USD 890 million through an all cash deal last year. Xoom also provides bill payment facility to US based consumers. Prior to this, PayPal also acquired mobile payment start up Paydiant for USD 280 million. These acquisitions depict that PayPal plans to diversify its service line into fast growing online remittance segment along with business expansion to emerging markets.

With a wide range of start-ups aiming at gaining a pie of this highly lucrative segment, there have been innovative launches across key markets. PayNXT360 expects consolidation to continue in the mobile remittance segment.

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