The way money moves through society and across borders is constantly changing. From checks to wire transfers to credit cards and ATMs, the evolution of payment is ongoing. Over the past decade, online transfer services have burst onto the scene, offering savvy consumers a new way to move their money.
Companies like Currencies Direct, Revolut and MoneyGram attract users with low fees and faster international payments, as well as the promise of initiating a money transfer from a mobile app in seconds.
Many online transfer services are based in the UK, competing for business in the increasingly lucrative remittance market. International travelers, workers sending money back home to family, overseas investors, those making tuition payments or support payments for children studying abroad — these consumers are all looking for low commissions and a better currency exchange rate, and online P2P services are happy to provide.
According to estimates, the P2P remittance market could be worth as much as $600bn.
Online money transfer services are always looking to innovate or update their offerings to keep customers coming back. While new technology can help providers broaden their range of consumers, picking up new users can be costly and marketing costs can quickly escalate. This helps explain some moves to consolidate throughout the industry, such as PayPal's recent acquisition of Xoom. The regulatory climate also helps drive consolidation, as cybersecurity concerns have prompted calls for companies to do more to protect and store customer data.
Although online providers are an attractive option for many people who make regular international money transfers, big banks still control the majority of the market.
“Money transfer transactions make up only a small portion of the activity of the big high street banks, yet the banks still account for 65% of private money transfer payments," says Mark Horgan, Chief Executive of Moneycorp, a UK firm that specializes in international payment services to individuals and businesses.
