Digital payments are becoming the cornerstone of the cross-border, international digital money transfer and remittances market “with numerous disruptor MTOs (Money Transfer Operators) making strong progress,” the Juniper Research team noted.
Juniper Research has explained that cross-border transfer has evolved from being “solely a sphere of migrant economies to fully fledged corridors, where new actors emerge presenting novel solutions to challenges involving such transactions in terms of access, cost, and speed.”
As such, we are now witnessing “the emergence of new technologies and/or applications of them in this particular context, with blockchain, stablecoins and CBDCs (Central Bank Digital Currencies) being important disruptors in the market.”
Juniper Research also mentioned tha international digital money transfer and cross-border remittances are tied “to migrant population flows globally and are endemic to economic growth via their contribution to the recipient country’s GDP, as remittances can be broadly defined as funds transferred from migrants, and such funds are spent in the recipient country.”
This is of course, in essence, “a P2P (Person-to-Person) transaction and does not involve other types of international digital money transfer (ie, B2B).”
Juniper Research considers the definition of the IMF (International Monetary Fund) to “be comprehensive when describing international remittances.”
According to the IMF, remittances are “derived mainly from two components: compensation of employees and personal transfer.”
International digital money transfer, “on the other hand, is
closely related to remittances. However, it also includes P2P and B2B transfer between jurisdictions regardless of the nature of funds being transmitted.”
Therefore, the scope of this research “includes P2P and B2B international digital money transfer, although the latter will not be its focus.”
The common patterns of criticism “around current practices, schemes of international digital money transfer, and cross-border remittances, include restricted access, lengthy compliance checks, high costs, and operational availability.”
Therefore, current market trends “aim to provide solutions to these shortcomings, and enable more consistent and secure flow of funds between the populations of the host and recipient countries.”
Some of the solutions towards these shortcomings, “such as
blockchain and stablecoins,” are proving to be viable.
As explained in the Juniper Research report, cryptocurrency and blockchain technologies “allow for direct P2P money transfers worldwide via web-based exchanges, with greater advantages such as instant settlement, lower fees and elimination of intermediaries.”
Blockchain or distributed ledger technology (DLT) is considered by industry participants to be vital in “the money transfer and remittances space as it enables end-to-end visibility and bidirectional messaging and settlement component employed in blockchain solution; ensuring that the transaction is validated on the blockchain before the funds are transferred across the ledgers of transacting parties.”
The research report from Juniper pointed out that the “use of digital currencies provides a means by which token-based payments can be transferred instantly, on a P2P basis, regardless of value and without third-party intermediaries in the settlement process.”
The value of digital money transfer & remittances transactions will “increase by 41% over the next four years, up from $4.5 trillion in 2028.”
As stated in the comprehensive research report released by Juniper Research, this steady growth is largely attributed “to the significant adoption of digital money transfer in developing regions, through solutions such as mobile money, and the impact of instant payments in developed markets, such as the EU.”
Underpinned by a robust scoring methodology, the new Competitor Leaderboard ranked “the top 15 digital money transfer platforms, using criteria such as the completeness of their solutions, geographical spread, and future business prospects.”
The top 5 vendors for 2024:
- Huawei
- Visa
- Mastercard
- Comviva
- PayPal
The leading players scored particularly “well on their breadth and creativity of offerings, but the report cautioned that to stay ahead, vendors must develop solutions that operate on a PaaS (Payment-as-a-Service) approach.”
To enable this, money transfer platforms need “to develop stronger API offerings, which will allow third parties to integrate payments seamlessly into solutions such as superapps.”
The Juniper Research report concluded:
“Money transfer vendors need to prioritise innovation in this fast-moving space. Alongside developing a PaaS approach, providers should consider taking advantage of stablecoins, an asset or fiat-backed cryptocurrency, to improve factors such as stability, transparency and speed.”
