Financial Performance Examination of Western Union, Ria, and MoneyGram during Q3 of 2020
In the rapidly evolving world of international remittance, three major players – Western Union, MoneyGram, and Ria – are seeing significant growth in their digital arms, while their traditional cash-to-cash segments are on a decline.
The third-quarter reports of these companies reveal a surge in growth rates, fuelled by the increasing adoption of digital services and the rising demand for cross-border remittances. This growth is predominantly coming from banks and smaller traditional remittance or payment providers, drawn by the convenience, speed, and lower costs offered by digital platforms.
A majority of these digital transactions involve debit card pay-ins and cash pay-outs, with approximately 70% of transactions still relying on cash pay-ins. Despite this, the economics of digital transactions are holding up well, with less pricing pressure than anticipated.
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The shift towards digital is not without its challenges, however. The World Bank's latest forecasts for the sector may not be as optimistic as the current quarterly earnings suggest. Agent exclusivity is also reducing as more retail chains open up their locations to competition, a trend that could potentially impact the business of these companies.
One such impact is evident in the case of Walmart, previously a significant player for Ria, which has seen a 40% decrease in business this year due to competition. Similarly, large retail chains like Kroger are opening up their locations to competition, which could further influence the business dynamics of these companies.
Interestingly, a large portion of the new digital customers for Western Union and MoneyGram are first-time customers to the company, indicating a successful shift towards attracting a new customer base.
As the remittance sector continues to evolve, it will be intriguing to see how these companies navigate the challenges and capitalise on the opportunities presented by the digital revolution.
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