Digital domestic money transfer transaction values will rise from $2trillion in 2020 to $3.4trillion in 2025; driven by growth of mobile money transfers, a study has shown.
With the coronavirus pandemic has come an acceleration in the adoption of digital methods of money transfer, says Juniper Research.
The use of mobile phones for international and domestic money transfer has seen particularly huge growth in recent years, alongside similar growth in mobile web browsing and m-commerce, and has proved to be a significant driver of financial inclusion in developing markets.
Juniper’s Digital Money Transfer & Remittances whitepaper says mobile transactions will represent an 89 per cent per cent share of total transaction value by 2025.
The report also found that with shifting customer expectations, existing money transfer models face an increasing threat from instant payments, with domestic instant payment transaction values forecast to grow from $524billion in 2020, to $2trillion in 2025.
Recipe for success
Juniper has identified that to compete in a congested market, mobile money transfer apps must leverage instant payment capabilities to ensure the best user experience.
It also suggests that services such as Venmo and Zelle have led mobile apps to dominance in domestic money transfer. Conversational platforms, such as WhatsApp, are primed for growth, with the successful launch of its payment feature in India and the recent green light for the roll-out of its payment solution in Brazil.
Instant payments can significantly reduce transaction speed and cost, compared with digital wallet and app-based solutions, and therefore pose a significant threat to the monetisation models of established P2P payment options which levy fees for fast transfers.
“It is critical for money transfer players to create user-friendly app experiences around their new instant payment capabilities to ensure they fully leverage the benefits, and that they remain relevant in this rapidly advancing market,” says research author Susannah Hampton.
