Digital P2P remittances from overseas workers will be worth $225 billion this year, rising to $300 billion by 2021, according to Juniper Research.
The analyst company says that online and mobile payments sent to home countries by workers will account for 36% of the total remittances of $600 billion this year, and will increase to 44% of all remittances by 2021.
Juniper's report, "Digital Money Transfer & Remittances: Domestic & International Markets 2018-2022", said that the increase in digital P2P payments will be driven by the launch of new payment services from traditional transfer providers and digital only players.
The research found that traditional money transfer operators are expanding their digital footprint and, indeed, benefitting from their much delayed expansion into digital payments. Juniper forecasts that the combined market share for the top four money transfer operators will continue to increase over the next 4 years, reaching 39% of total formal remittances by 2022.
Meanwhile, digital-only challenger players such as TransferWise and Xoom are witnessing slow but increasing market share and revenue growth. Juniper estimates that the combined market share for digital disruptors such as TransferWise, Xoom, Remitly and WorldRemit, in terms of formal remittance transactions processed, will increase from 2.5% in 2015 to 12% in 2018.
The growth is further supported by the fact that there are now 6.36 billion mobile phones in the world, but only 1.7 billion ‘unbanked' adults without access to formal banking services.
As of October 2017, there were 274 mobile payment services available globally, with over half of these in Sub-Saharan Africa
Domestic digital P2P money transfer usage is also expected to grow, with the number of users is expected to reach 2.5 billion this year, concentrated in China & the Far East, Middle East & Africa and the Indian Subcontinent.
The report also found that blockchain will have a
significant role to play in the future evolution of transaction settlement
solutions, with almost 1 in 3 of the proposed use cases for blockchain
revolving around settlement and payments. Savings enabled by blockchain
solutions will be passed on to consumers and enable transactions at or below
the 3% average cost of remittances targeted.
Research author Nitin Bhas added: "This will result not only in more ‘grey' remittance transferring to official channels, but also a net increase in remittance flows, helping to boost economies which are in part dependent upon remittances from migrant workers."