• Digital's share of the global remittance industry is still fairly small — but growth is extremely fast at digital-first startups and legacy companies.
    • We estimate that digital-based remittances accounted for 6% of the Money Transfer Operator (MTO) market in 2014 — MTOs specialize in remittances. 
    • Xoom, a digital-first remittance company, grew 53% in 2013 and 30% in 2014.
    • Western Union has seen digital's share of total revenue double in the past two years.
  • One startup is beating the incumbents in digital: Fourteen year-old Xoom makes more revenue from electronic channels than 75 year-old MoneyGram, the second-largest remittance company in the world. But Xoom is still small in terms of the total MTO market.
  • Digital-first remittance startups follow a number of different models — most focus on sending digitally and receiving in cash. This allows them to lower costs by not having to pay commission agent costs. In addition, they have created more efficient fraud monitoring tools and prioritized user-friendly products.
  • Startups have undercut fees in some markets: Startups are undercutting incumbents' fees in certain corridors, however, legacy firms have matched prices in many major corridors. This strips away one of the biggest advantages a startup could hold in remittances, because fees have such a big impact on what remittance company a customer chooses. 
  • The incumbents can breathe easy for now: Legacy firms' businesses are already responding to threats posed by digital by lowering fees and adjusting business strategies. However, they face lower margins if they continue to compete with startups on pricing. 
  • There are outside factors that could overhaul the entire industry: Bitcoin, the blockchain, and social media companies could all upend the remittances industry by offering alternative transfer platforms. 


Every year, migrants send hundreds of billions of dollars back to friends and family in their home countries, usually through a bank or a Money Transfer Operator (MTO). MTOs specialize in these cross-border transactions, referred to as remittances. MTO-based remittances have long been dominated by cash, which requires a global retail network — physical locations where individuals can hand over or pick up funds.

MTOs have spent decades, even centuries, building out these networks. The top three MTOs – Western Union, MoneyGram and Ria – operate a combined 1.1 million agent locations across 200 countries. Scaling out these networks is a major barrier to entry in [...]