Mobile payment market size in international remittances is increasing strongly, driven by innovative fintech companies

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The global formal remittance market is estimated by the World Bank to be valued at US$ 375 billion, of which over three quarters flows into developing countries. Remarkably, geographic branch and ATM penetration is lowest in developing markets while mobile subscription growth rates are at the highest level. Mobile payment has eased the mechanism of moving cash across borders through improved access and cost over traditional money transfer business offered by international bank transfers and services from organisations as Western Union and Moneygram. International mobile remittance services have led to a noteworthy growth in global remittance activity in the past two years.

A number of fintech companies are trying to promote the development of easy-to-use technological innovations to reduce remittance transaction costs and thereby reach rural communities. WorldRemit, an online service started in 2010, let people send money using a computer, smartphone or tablet. Money can be received as a bank deposit, cash pick-up, mobile money, or mobile airtime top-up. The company allowed people to send remittances digitally from more than 50 countries and receive money in over 115 countries.  Consequently, by the end of year 2015 saw 20 percent of all global mobile money transfers through WorldRemit.

Realizing this, many telecom operators that conceptualized mobile money services across the developing world have floated their own international remittance programs. In East Africa, the local carrier MTN has partnered with Vodafone recently to allow their customers to transfer money on each other’s' networks across the region. Also the French telecom giant, Orange, promoted plans for  international mobile money transfers across several West African countries, and planned to extend the service  by early next year to France that is home to a large diaspora of immigrants. In November 2015, PayPal also forayed into international remittance market by acquiring Xoom, a mobile money transfer provider. Considering increased proliferation of mobile money transfers globally, in April 2016, the company announced its plan to expand Xoom’s services to 13 new recipient countries from the 37 countries at the time of acquisition.

Recently, Israel-based fintech start-up Neema partnered with MasterCard to help considerably reduce the cost migrant workers from the Philippines, India, Nepal and Sri Lanka pay to send money home. With monthly fee model, it has no transfer or foreign currency exchange fees.  Neema’s model is based on a monthly fee of $10 where the customer will receive two MasterCards with no additional payments or commission fee. One card is for their own use and the other card is sent to their family abroad to use. The card allowed their family to withdraw money from their account for activities such as paying bills, shopping online and making in-store purchases. Neema’s mobile app enables the migrant worker to monitor the use of the two cards they will receive.

Interestingly, to thrive in this robust mobile money transfer offerings amongst innovative fintech companies and mobile money operators, Western Union has partnered with 13 mobile money providers across 12 markets to provide greater value to customers.

PayNXT360 believes that greater innovation and collaboration amongst mobile operators, fintech companies, banks and money transfer operators will help to reduce the cost of the global remittances and provide improved ease and security to the customers.

To understand market size and forecast of P2P international remittance through mobile payment across 40 countries, click here.