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 required one Amazon for books, one Spotify for music, and one Netflix for entertainment. After more than two decades since the founding of Xoom and over a decade since the launch of Wise (formerly TransferWise), the cross-border money transfer industry still does not know which fintech company will be such a disruptor. However, a decade of keen observation in this fiercely competitive space gives us a reasonable understanding of which ones still have a chance, which ones don’t, 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 about Western Union’s role in international remittances could make us think that the company has been a successful monopoly of this space forever, but, now, with the arrival of some disruptive innovation (“P2P”, “Bitcoin-blockchain”, “Social”, “Mobile”…), there is a real danger of its imminent demise. In reality, Western Union’s subsidiary, Western Union Financial Services Inc., began providing international money transfers in the mid-80s when deregulation allowed a previously domestic service to expand internationally. By the mid-90s, Western Union’s coverage included major remittance destinations like China. In those first ten years of its money transfer business, Western Union (renamed “New Valley” in 1991) had plenty of upheavals going near or into 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:
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 experiencing exorbitant fees and subpar services 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.
Despite this, the adoption of cryptocurrencies for remittances is lower today than a decade ago. Using crypto for international money transfers remains a pilot or pay-per-play. More importantly, nobody can articulate an in-depth case of using private, public, or government crypto instead of or on top of Swift + local real-time rails.
In contrast, non-crypto fintechs such as Wise and Remitly have emerged among the global leaders. What factors have contributed to the disappointing start for crypto, and will this innovative technology have a more significant impact in the future?
Innovation Adoption: 3 Cases
Consumers and businesses possess trillions of disposable income that they eagerly spend on various products and services, regardless of whether they are beneficial. For instance, consumers collectively spend around a trillion dollars annually on alcohol, junk food, or tobacco. Introducing truly innovative technology is an even easier 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 pilot stage, Nvidia’s annual sales of AI chips have already reached $50 billion. To achieve similar success, blockchain technology only needs to address one of the three following use cases:
Are you sending money from USA to Philippines? Want to get the most pesos for your dollars or receive most dollars in Philippines? Not sure which provider is the best, cheapest or fastest? Should your funds be received in pesos or dollars? YOU came to the right place! We will cover all most important topics:
Money Transfer to the Philippines: current state and key trends
Pesos to dollar exchange rates and timing
Top money transfer providers
Receiving money transfer in pesos or dollars
Sending larger money transfer amounts
Choosing the best receiving method
Finding the best way to send money
Please note this post is specific to the Philippines. If you are looking for general knowledge of how to best send money, please review this other SaveOnSend blog post first.
Before we get started… Great news if you are a consumer sending money from the USA to the Philippines: it is currently one of the most competitive corridors from the USA, attracting more providers and larger investments than many other destinations. You are in luck with a variety of choices and lavish promotions which don’t exist for some other destinations. So you could make a relatively safe assumption that when transferring money to the Philippines with any top provider, you will get a reasonable price and service. Overall, the cost of sending money has been declining worldwide, with providers’ margins dropping 30% just in the last decade:
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