November 19, 2014
LTP9 is the proprietary leaderboard framework from Let’s Talk Payments representing the 9 leading companies in various payments & commerce related categories. It provides a quick reference, a snapshot of companies in the category with (a) the highest impact, (b) the largest market momentum and (c) significant product focus for each of the carefully selected categories across the payments ecosystem.
With the release of our second LTP9 leaderboard, we are distilling this information to address the key question: ‘Which are the most noteworthy US companies in the ‘International Remittance’ category within the payments & commerce industry?’ LTP9 answers this question by synthesizing the distributed, and sometimes incomplete, information from a variety of sources, direct and indirect, and presenting it in an easy-to-use format, exactly in a way that our audience would benefit from.
After successfully releasing the first ever leaderboard analysis of the Fraud and Authentication segment of the payment industry, Let’s Talk Payments announces its second LTP9 leaderboard analysis of another important and attractive category in the payments domain – INTERNATIONAL REMITTANCE.
Today we are also releasing the second LTP9 Canvas report for this second segment - International Remittance.
This report provides a detailed working process for selecting the LTP9 companies based on the analysis of 125+ companies. The information and analysis is backed by extensive research, several interviews and industry experts’ feedback put together by the LTP team.
International Remittances for 2014 are estimated at $581 Billion with United States accounting for the top remittance–sending country with an yearly average of 24%.
Drivers for the Online Remittance Market:
More Convenience and Lower cost: Online transaction fees of 5-6%, expected to come further down to 3-4% with mobile payments, are currently 10-11% in the cash-to-cash remittance method. This cost benefit is driving the migrant population to adopt new technology thus avoiding the inconvenience of physically going to the traditional brick and mortar outlet. The anxiety and safety concerns of traveling within urban centers with large sums of cash finds an immediate solution in online international remittance process resulting in an attractive consumer proposition.
Increased Access to Financial Services: There has been increasing awareness around the financial inclusion and engagement of the underbanked community. With that attention, more non-profits, start-ups, and traditional as well as non-traditional financial service providers are coming up with solutions for this demographic. Credit unions are targeting a lower-income customer demographic, including the unbanked, and companies like Zest finance and LendUp are developing new technology that could spur further adoption of financial services by underbanked Americans. As this underbanked customer relationship develops with service providers, it will lay the groundwork of familiarity and comfort in completing financial transactions in different ways, with remittances being a prime example.
Increasing Migrant Population: The rate of growth of the remittance market has been observed to be 4-5 times that of the rate of migrant population in the past two decades. The international migrant population increased 1.4 times between 1990 and 2010, from 156 million to 215 million and the flow of remittances in the corresponding period increased 6.4 times from $68 billion to $463 billion. With the rising global migrant population and US accounting for the highest migrant population share, a significant growth in this sector is expected.
Maturing of Immigrant Communities: According to the Migration Policy Institute, the overall number of U.S. children with at least one immigrant parent has continued to rise from 8.2 million in 1990, to 13.1 million in 2000, to 17.4 million in 2012. That 17.4 million accounted for 25 percent of all children in the U.S. So an increasing number of children of immigrants have grown up during the rise of technology and the Internet. This forms the basis of the ecosystem around them in which they have grown where performing online money related activities including remittances will be a natural progression for them.
Changing Technology Landscape for Payments: The industry has traditionally been dominated by big players such as Western Union and Moneygram, which utilize networks of remittance agents in brick-and-mortar stores to make and receive payments. But the increasing viability of online remittances has enabled the smaller brands and upstarts like web-only Xoom to effectively compete online with legacy companies. With Companies like Regalii, Remitly and many more ventures in online and mobile based remittance, the change in industry landscape looks promising.
The following infographic illustrates the international remittance value chain (excerpt from the report):
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