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COVID-19 prompts biggest peak in money transfers since records began for many digital providers
The trajectory of the money transfer and remittance industry is an interestingly polarising one of late, with many variables leaving the sector on a proverbial tipping point. A new report from MoneyTransfers.com finds the industry’s direction very much weighs in the balance.
In April this year, The World Bank predicted the sharpest decline of remittances in recent history. They projected that global remittances were to decline by almost 20% in 2020 due to the economic crisis induced by the COVID-19 pandemic and lockdown measures emplaced by countries around the world.
We’ve seen the biggest drop in activity since the great depression, which is why such a prediction from the World Bank should not come as a surprise.
However, MoneyTransfer.com have found that for some companies within the industry, notably online companies such as PaySend, TorFX, Currency Direct and CurrencyFair – who all target different customer segments in the money transfer market – all posted record-breaking activity in March 2020 as lockdowns descended across the world. At Paysend, for instance, March and early April saw an increase in both users and transfer activity by more than 15%. TorFX Managing Director Nigel Fox said that March was the “busiest month since the company was founded in 2004,”. Moreover, CurrencyFair CEO, Paul Byrne, also remarked on his company’s “record-breaking March’ as ‘transaction volumes were up 30% compared to original forecasts,”. Elsewhere, Marc Morley-Freer, Global Head of Private Clients at Currencies Direct said that of the Currencies Direct customers surveyed, 84% said their money transfer needs “were the same as before the crisis,” with the virus not seemingly not impacting the company.
Moreover, data released by Statista appears to further supports this initial trend, with projections adjusted with COVID-19 in mind, found that remittance transaction value will rise to $89 billion this year, compared to $79 billion in 2019. It’s projected to continue to rise to $107 billion in 2021.
Jonathan Merry of MoneyTransfers.com stated, “We saw unprecedented activity in the run-up to the lockdown and even during the early few weeks of April. This wasn’t just us, but our partners as well as other leading digital platforms. I think there were multiple factors at play here – one being an influx of new users, unable to make their usual cash transfers at physical stores due to lockdown measures, forcing them online. The other being that once online, these new users were able to see just how competitive the rates were in comparison to traditional brick and mortar operators as well as the ease of service. This experience could well have shifted user behaviour in favour of online services and ultimately, continue to be the trend even as lockdown measures start to relax over the coming months.