“Revolution is a rough business. You can’t make it wearing white gloves and with clean hands”
Lenin
Wise’s (ex-TransferWise) origins are often described as follows: Two Estonians, a former Skype employee, and a Deloitte consultant became fed up with the exorbitant fees charged by banks for money transfers from the UK to Estonia. Fueled by their frustration, they had a stroke of brilliance – matching remittance senders and receivers within the same country. With a sauna in their office and a team unafraid to challenge the banking industry, TransferWise was born. The startup received backing from prominent investors such as Peter Thiel, Richard Branson, and Ben Horowitz, propelling it to the pinnacle of fintech for cross-border consumer transfers, surpassing a $10 billion valuation in 2021, and transferring by far more volume than any incumbent or fintech.
The foundation of PR pitches for money transfer startups centers on a relatively intuitive concept about the role of banks: they are massive institutions with bureaucratic cultures, subpar customer service, and outdated digital capabilities. Consequently, it’s only a matter of time before banks are displaced from the cross-border money transfer industry. Ironically, this premise holds. A typical bank is usually behind in service quality and pricing compared to the leading fintech startups. Furthermore, most banks don’t consider a money transfer business strategic.
Digital-dollar access: buying or holding stablecoins without transferring them internationally.
Consumer remittance: an individual sends money to another individual.
Business payment or treasury: companies move working capital, supplier payments, or FX liquidity.
Wholesale settlement: regulated institutions settle obligations between themselves.
Blockchain infrastructure: the ledger or messaging layer, regardless of the currency transferred.
Since the publication of “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008, international money transfers, although constituting a smaller portion of cross-border payments, have emerged as one of the most promising use cases for crypto.
The initial assumption was that remittance users were incurring exorbitant fees and receiving subpar service from traditional players like Western Union. The prospect of an almost cost-free and instantaneous blockchain-based solution appeared to be a much-needed relief. Additionally, it presented an opportunity for affluent individuals in Western countries to showcase their efforts toward promoting financial inclusion in developing nations.
Subsequently, many startups received funding to test this hypothesis with consumers and partner with money transfer operators (MTOs). Additionally, one country recognized this as a national priority and encouraged its citizens to explore cryptocurrency-based remittances.
After more than a decade of pilots, crypto has not displaced conventional consumer-remittance rails at meaningful, independently verified scale. Stablecoins have nevertheless become a credible back-end option in selected corridors and a useful instrument for digital-dollar access, treasury mobility and some high-friction cross-border flows. Most disclosed consumer-remittance implementations remain selective routes, subsidized programs or company-reported deployments whose scale and unit economics are not independently verifiable.
The decisive question is therefore where the full end-to-end system, including funding, FX, compliance, liquidity, payout, cash-out, support, fraud and reversibility, beats modern fiat alternatives on price, speed, reliability and scale. Public evidence remains strongest for digital-dollar access and some business or treasury use cases, and weakest for broad consumer-remittance transformation.
By 2025, stablecoins had moved from fringe remittance experiments into the product roadmaps of major consumer money-transfer providers. Western Union, Euronet, MoneyGram, Majority and Remitly announced stablecoin wallets, on- and off-ramps, disbursement capabilities or integrations into their existing cross-border networks. This is meaningful evidence of institutional adoption, although it measures announced capabilities rather than consumer usage or transfer volume.
This creates a more revealing contrast than crypto startups versus traditional incumbents. Wise and Remitly became global consumer-remittance leaders by improving the complete P2P proposition: digital customer acquisition, bank funding, compliance, FX, risk management, and local payout. They reached that scale before adding stablecoins, if they added them at all. Stablecoins are now entering some of these networks as an additional back-end rail, but none of the providers in the preceding chart has disclosed how much consumer volume uses that rail or whether it reduces the customer’s total fee and FX markup.
Innovation Adoption: 3 Cases
Consumers and businesses possess trillions of dollars in disposable income that they eagerly spend on various products and services, regardless of whether those products and services are beneficial. For instance, consumers collectively spend around a trillion dollars annually on alcohol, junk food, or tobacco. Introducing genuinely innovative technology is an even more straightforward proposition. Financial services and insurance companies allocate a trillion dollars annually to technology spending alone. Apple generates $200 billion just from iPhone sales. While generative AI is still in the early phase, Nvidia’s annual sales of AI chips have already reached $150 billion. To achieve similar success, blockchain technology only needs to address one of the following three use cases:
For disruption to occur, it only takes one determined startup with a long-term vision spanning two or more decades. The disruptive force of innovation only requires one Amazon for books, one Spotify for music, and one Netflix for entertainment. After over two decades since Xoom’s founding, the first fintech in this space, two fintechs ended up ahead of the pack. More than a decade of keen observations in this fiercely competitive space has given us a reasonable understanding of what made Wise and Remitly so far ahead of others, and why some fintechs are no longer around.
“… long, sorry decline has left the 140-year-old company a shell of its former self. Today, it is fighting for its very survival. Western Union fell victim to technological advances…”
Reading current reporting on Western Union’s role in international remittances could lead us to think the company has been a successful monopoly in this space forever. Still, with the arrival of some disruptive innovations (“P2P”, “Bitcoin-stablecoin”, “Social”, “Mobile”,…), there is a real danger of its imminent demise. In reality, Western Union’s subsidiary, Western Union Financial Services Inc., began offering international money transfers in 1982, following deregulation. By the mid-90s, Western Union’s coverage included major remittance destinations, such as China. In those initial years, Western Union (renamed “New Valley” in 1991) experienced numerous upheavals, coming close to or even entering bankruptcy. After changing hands a few times, the money transfer subsidiary was resurrected as an independent entity in 2006. Western Union’s stock performance has been highly volatile ever since, dwarfed by the overall market:
“…to date MoneyGram has refused to open a meaningful dialogue with us, leaving us no choice but to make this proposal public…”
Euronet CEO’s letter to employees, December 13, 2007
In the past, MoneyGram and Western Union were often referred to as the “monopolies” of cross-border money transfers. However, MoneyGram’s valuation was significantly smaller than Western Union’s and had a multiple below that of any competitor at that time.
MoneyGram’s valuation had been erratic since its IPO in 2004, even reaching near-zero levels in 2019 and 2020, until it was finally acquired by a private equity firm, Madison Dearborn Partners, in 2023:
Throughout its history, MoneyGram has stood out as the most irrational player in remittances, defying the stereotype that incumbent financial services companies are too conservative. The only explanation for such behavior could be the curse of an eternal “silver medal.”
Do remittance startups have a fundamentally different cost structure vs. incumbents? What are the primary customer acquisition channels for money transmitters? What can explain remittance startups’ massively higher relative valuations vs. established providers? If you are interested in such questions, this article is for YOU.
Xoom’s two-decade-plus history is full of missed opportunities and second chances. The child of the so-called “PayPal Mafia” and protege of Sequoia Capital, Xoom was founded in 2001 to disrupt cross-border remittances. At that point, Western Union already had a website where customers could initiate and track money transfers, but it was clunky and saw little use. The shift to online remittances was expected imminently, so creating an online-only provider with a better user experience was a no-brainer.
What is the difference between Xoom and Wise’s models? Do startups like Remitly or WorldRemit have a chance to gain a winning market share? What are the different ways money transfer providers mislead consumers? Why has MoneyGram’s valuation been much lower than that of other players? Will Bitcoin/blockchain destroy Western Union? Why do some nationalities use cash agents while others prefer online? Is the banks‘ remittance business really being disrupted? What are the differences in operating models across x-border money transfer businesses?…
If these and other such questions interest you, you have come to the right place. Thank you for visiting our blog! First, let’s clarify who this blog is for, why we started it, and what to expect.
“The end may justify the means as long as there is something that justifies the end.”
Leon Trotsky, Their Morals and Ours
So you built a mobile app for international money transfer, got seed funding, engaged a few hundred early adopters, and are now ready to go after those outdated, bureaucratic, price-gouging incumbents. How hard could it be? But a year goes by, and your cumulative revenue has barely scratched $100K. The dream of new office digs and sharing a success story with schoolmates is being delayed, while investors are becoming more inquisitive about the timing of the “hockey stick,” all because those strange migrants keep clinging to their existing providers.
Well, don’t fret, we have gathered 5 “best practices” for nudging those close-minded consumers to embrace your service. Most of the cool FinTech kids are doing this and even some incumbents and banks sample them at times, so it must be perfectly legal and not too immoral… at any rate, it is for consumers’ own good, right?
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