People have always moved around the world to improve their work prospects, and this has never been truer than in today’s global marketplace. With mass migration, millions of people are currently working abroad and sending money back home – causing the money remittance industry to explode.
A remittance is – quite simply – a money transfer made by a foreign worker back to an individual in their home country. Incredibly, money transferred this way to developing countries is now nearly on par with the amount given in financial aid. In 2014 remittances to developing countries totaled a staggering $436 billion, out of a total of $583 billion worldwide.
But let’s face it, despite these staggering figures, brick-and-mortar services are on the decline. The proliferation of smartphones has made online transactions and transfers much easier, convenient, and cheaper. Of course, this global shift towards digital and mobile presents technological challenges for the industry. BUT, it also presents business opportunities!
In my opinion the next opportunity lies within social media. Cross-border payments via various social media platforms like Facebook, Twitter and WhatsApp. These platforms have potential to evolve to offer local currency payment APIs – simplifying the purchase experience, improving payment flows, and making it easier to price goods globally. This logic could then be extended to facilitate money transfer across Facebook users, backed up by the rise of platforms like PayPal and crypto-currencies such as Bitcoin.
According to the World Bank – “90% of money transfer happens between friends and families” – who are the most likely to be connected on social media. This connection between send and receive presents huge potential for social-media-based money transfer. It seems like a win-win situation for social media players – an additional opportunity to monetize their consumer base.
The days of the traditional market leaders like Western Union and Money Gram seem to be numbered. As more and more money transfer companies forge partnerships with social media players and peer-to-peer (P2P) payments see increased focus – the future of money transactions lies within these platforms… If you ask me, we already have SnapChat, so why not SnapTransfer? Watch this space!