Warsaw, 28 June 2021

Remittance market expected to grow

The value of the global money transfer market reached over USD 700 billion in 2020. The COVID-19 pandemic did not cause as much of a significant slump in transfers as experts initially predicted, and in the following years the industry should grow at a rate of several percent annually. However, the market is facing a lot of challenges, including how to offer multiple ways of sending and receiving funds, lowering transaction costs, and increasing the security of transfers.

According to World Bank data, the global money transfer market in 2020 was worth over USD 700 billion. In turn, Allied Market Research forecasts that this market should reach a value of over USD 930 billion in 2026, with a compound annual growth rate (CAGR) of 3.9 percent. The digital remittance industry alone has growth prospects at a rate of 13.3 percent annually to reach over USD 42 billion in 2028 (Grand View Research). The economic situation should be driven partially by economic migrants who leave their homelands to find better-paid jobs and want to financially support their families back home.

According to the World Bank, the countries that received the most remittances last year were India (USD 83 billion), China (60), Mexico (43), the Philippines (35) and Egypt (30). Looking at the statistics of individual regions in the world, remittances grew in Latin America, South Asia, the Middle East and North Africa. Weaker performance was recorded in East and Central Asia, the Pacific region, Europe and sub-Saharan Africa.

The money transfer market is looking promising. The number of expats in the world is constantly growing, access to mobile services is also increasing, and online financial transactions are already standard in most regions. Digitally sent money has many advantages, which is being realized by the governments of many countries while promoting non-cash transactions. As long as money transfers become cheaper, more secure and available via many digital tools, these services will reach millions of users

Says Evgeny Chamtonau, CEO of Spoko.app.

The pandemic did not end up having as much of a negative impact on the global remittance market as initially expected. The detrimental impact of COVID is estimated to have been weaker than during the most recent major economic crisis, which ended in 2009. The market is expected to return to growth this year, with remittances to less affluent and middle-affluent countries expected to increase by 2.6 percent in 2021 and by 2.2 percent in 2022.

Users of the money transfer market still see potential for development, e.g. in unbanked people who do not have access to banking services. According to World Bank data, in 2017 it was 1.7 billion adults.

Still many challenges facing money transfers

Money transfers can be a potential area for manipulation, which is why reputable companies in this field place particular emphasis on ensuring the best security procedures with regards to user data verification (including KYC - Know Your Customer procedures) and the transfers themselves.

Users expect flexibility above all. They need a simple solution that allows them to choose the right payment method for instant money transfer, regardless of the country of sending or receiving the funds. Our app offers expats an opportunity to use local payment methods that are most convenient and familiar to them. It is also important to gradually reduce transfer costs as they are still often very high. Every year, expats who send money to their families on a regular basis give away significant sums, which should change

adds Evgeny Chamtonau.

According to data from FTI Consulting, almost half of Europeans prefer local payment methods. Looking at individual countries, in the Netherlands, Sweden, Finland and Poland, the most popular are payments made through bank accounts, while in Germany, Spain and Italy, users prefer digital wallets (eWallet).

Access to technology is associated with increasing competition, and this can help meet another challenge - high transfer costs. Although the trend is declining - according to the World Bank, transfer commissions have fallen from an average of 14 percent in recent years to 6.5 percent, there are still some companies on the market that charge a dozen or so percent commission on transactions. On the other hand, there are companies that offer commission-free transfers to selected countries. This includes Spoko.app when it comes to transfers to Nigeria, Ukraine, Brazil and Turkey to help users send money to their families.

The future of transfers

Could anything new happen on the money transfer market? Cryptocurrencies, which are increasingly used in transfers, can be a breakthrough. However, until they are widely accepted as an official method of payment and become equal to money, this area will not be able to develop at a faster pace.

One thing is certain. More and more transactions are being made fully online. Cash is still used, but its importance is slowly declining, especially in developed countries, where digital economies are being created with ecosystems of cashless transactions. Technological development and access to mobile solutions is where we are headed, and this will drive the global transfer market.

About Spoko.app
Spoko.app is the global Financial disruptor, which is providing instant money transfers around the world. Spoko.app is changing the market of instant international money transfers. It is one of the fastest growing companies in the financial industry worldwide. Spoko.app wants to help millions of people around the world send money in a simple, convenient and secure manner. Regardless of the country from which users want to send money, with Spoko.app they can always do this in their preferred way – using local payment methods. The Spoko.app operates transparently and its users know immediately what the transaction costs are. The charges and exchange rates offered by Spoko.app are among the lowest on the market. Spoko.app is also a trusted partner of financial institutions and telecommunication companies, and can provide solutions to them which enhance their core offering.