Money Transfer on the Cusp of Something Big?

June 30, 2010

Get ready for "unprecedented technology innovation" in the money transfer sector. That's the message Aite Group, a Boston-based research and advisory firm that spends a lot of time analyzing trends in the payments space.

"The money transfer industry has reached a tipping point," says Gwenn Bezard, research director at Aite and author of a new report, Money Transfers: The Tipping Point. 

"After a decade of strong organic growth that gave money transfer companies breathing space in the middle of fierce pricing pressures, the great recession finally altered the dynamic." he adds.

"The prospect of continuing pricing pressures in a slow-growth market means that all participants will need to step up their games to succeed. Most likely, those forces will unleash technology innovation on an unprecedented scale," Bezard says.

Money transfers are often a preferred payment instrument among the unbanked. Not surprisingly, the market took a dip last year, on the order of 7.1% according to Aite. This year money transmitters can expect remittances to grow a meager 1.0%, jumping to 4.6% in 2011.

In the meantime, the Aite report suggests that several factors will lead to significant technological innovation on a scale never before witnessed in the business. Among them: increased pricing pressures, a slow down in organic growth, new competitors and a loosening of exclusivity agreements.

Amomg adults living in Asia, Africa and Latin America, 2.2 billion (62%) are unbanked