The fintech industry has become one of the fastest-growing sectors globally today because many young companies have changed how things used to work before. This growth has seen companies like Square and PayPal become some of the biggest companies in the United States. The two are worth more than $319 billion and $120 billion respectively. They have millions of daily active users. So, are online money transfers becoming easier in 2021?
The pandemic impact on money transfers
2020 was a difficult year for many industries. Many companies, especially retailers, hotels, and tourism companies went out of business. Most airlines received rescue funds from the government. Online money transfer companies, on the other hand, thrived as more people turned to them for payments.
For example, companies like PayPal and Square added the most users in their platforms like Venmo and Cash App. Similarly, global payment platforms like Wise, PaySend, and OFX reportedly added millions of customers into their platforms.
At the same time, many banks reported a surge in digital money transfer solutions. Services like wire transfers and other bank-to-bank payments rose.
This happened as more people avoided crowded banking halls and money transfer agencies as they worked and spent at home. Also, many companies in the sector inked deals to facilitate these transactions.
Online transactions becoming easier
With the ability to transfer online easily and quickly, there are several types of online money transfer services. There are online wallets like PayPal that help people to send funds to their friends and relatives. These funds can be withdrawn directly to a bank account or a mobile wallet.
There are services like Wise and WorldRemit that prioritize speed and transparency in the transactions. These firms show the customer the real exchange rate, cost, and the total amount that the recipient will receive. They remove the opaqueness that used to exist in traditional options where companies used to take advantage of hidden fees and exchange rate benefits. Most importantly, using money transfer comparison companies has helped bring transparency into the industry.
There are also peer-to-peer money transfers like PayPal’s Venmo and Square’s Cash App that are being used to send billions of dollars every month.
At the same time, traditional money transfer companies like Western Union and MoneyGram are also making a huge shift to digital. Indeed, while their traditional money transfer products are slowing down, their digital versions are booming. This trend will likely continue in the near term.
Cryptocurrencies have also simplified the money transfer industry. Popular crypto products like Bitcoin, Monero, and ZCash have made it relatively easier, safer, and faster to send money globally. This has been helped by the general acceptance of these currencies.
What next for online transfers?
The shift to online money transfer methods is here to stay since millions of people have experienced the ease of these transactions. At the same time, competition in the industry is heating up as older companies like Western Union compete with newer startups like AirWallex and Azimo. This healthy competition will lead to better services and lower costs of sending money. Further, as cryptocurrencies become more popular, we will likely see more adoption by these online money transfer firms. Some companies like PayPal and Skrill are already allowing their customers to send these currencies.
Online money transfers are being easier as more companies enter the industry. As mentioned, this trend will likely continue. Also, we expect potential mergers and acquisitions as bigger companies like banks look for more areas to find growth.