How the Money Transfer App Industry is Set to Grow in 2021 and 2022

The money transfer industry has been relatively strong in the past few years. This is evidenced by the resilience of the industry amid the coronavirus pandemic and the strong performance of companies in the sector. We will look at how the money transfer app industry is set to accelerate in the next few years.

Money transfer industry growth during the pandemic

In April 2020, the World Bank Group released a relatively dark prediction of the money transfer industry. In the report, the experts predicted that remittances would drop by 28% in 2020 as the world dealt with the pandemic. They argued that the pandemic would lead to a substantially high unemployment rate in developed countries. This would, in turn, hurt many migrant families who are the leading senders of funds to low and middle-income countries.

To some extent, the World Bank was right. The pandemic pushed the unemployment rate in most countries to record highs. In the United States, the unemployment rate rose to almost 15%. Similarly, in Europe, the rate rose to more than 10%.

However, the report was wrong on how deep the remittances would decline. In a separate report, the World Bank said that the overall remittances dropped by 8% in 2020, helped by the massive stimulus package in developed countries. In total, foreigners sent more than $540 billion to low and middle-income countries.

Money transfer companies did well

The strong performance of the money transfer industry was seen clearly in the corporate sector. For one, companies like Square and PayPal recorded strong growth of their businesses. Square runs the popular Cash App business while PayPal runs the eponymous platform, Venmo, and Xoom. Similarly, traditional companies like Western Union, MoneyGram, and Euronet recorded strong growth of their digital platforms.

Other companies in the money transfer app industry like Wise, WorldRemit, PaySend, and Remitly also added millions of customers. For example, Wise raised more than $319 million from investors in a deal that valued the firm at more than $5 billion. The company is expected to go public in London in 2021. Similarly, Wise acquired SendWave in a $500 million deal while Remitly raised $85 million at a $1 billion valuation. In May, PaySend raised $125 million in a deal that valued the company at more than $700 million.

Money transfer apps to grow

The money transfer app industry is expected to record substantial growth in 2021 and 2022. For one, the world economy is expected to grow rapidly during this period. According to the IMF, the global economy is expected to grow by 5.5% in 2021 and by 4.2% in 2022. This strong growth will be because of the overall vaccination process and the overall increase in demand.

Therefore, the customers who downloaded and used money transfer apps in 2020 will likely continue using them in the future. According to the World Bank, remittances are set to rise by 2.6% to $553 billion. This will likely benefit companies in the sector. Another report by Facts and Factors estimates that the digital remittances industry will soar from $14.6 billion in 2019 to more than $35 billion in 2026. Therefore, these companies are set to record strong growth in the next few years.