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Friday, July 19, 2019

How Blockchain will Drive Mobile Money Transfer Growth

Fintech vendors will continue to target more international financial service applications. The World Bank estimates that official money transfer flows to low- and middle-income countries reached $529 billion in 2018 -- that's an increase of 9.6 percent over the previous record high of $483 billion in 2017.

Global remittances, which include flows to high-income countries, reached $689 billion in 2018 -- that's up from $633 billion in 2017. In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, to become their largest source of external financing.

Money Transfer Market Development

According to the latest worldwide market study by Juniper Research, the volume of domestic money transfers via mobile phones will exceed 203 billion in 2024 -- that's up from 130 billion in 2019. Domestic person-to-person (P2P) payments will drive this growth, accounting for 80 percent of all domestic transfers in 2024.

According to the Juniper assessment, domestic transfers are being driven by increasingly easy mobile payment systems. In developed markets, digital wallets have made P2P payments far simpler, with services including PayPal, Venmo and Cash App enabling low cost, fast and secure payments for a rapidly growing number of users.


In developing markets, mobile money provided by telecom network operators is a key enabler of financial inclusion; enabling the unbanked to enter into the wider digital economy. The research also found that the rise in social payments is driving growth in the mobile P2P channel.

Payments via Venmo have a strong social element, which has boosted its popularity with millennials. The introduction of Libra by Facebook will further leverage social features, boosting the potential of social payments in a vast addressable market. However, government regulators are likely to scrutinize the terms and conditions of the blockchain implementation by Facebook.

"Social payments are highly appealing to younger users, as they enable simple and effective digital payments to displace cash. However, data security concerns about mixing payments and social networks will impact consumer attitudes among older users," said Nick Maynard, senior analyst at Juniper Research.

Outlook for Money Transfer Market Growth

Largely due to the ‘red envelope’ phenomenon in China during the Chinese New Year, Chinese transactions will account for 68 percent of the total volume of domestic mobile transfers in 2019.

Alipay and WeChat Pay have become a crucial part of the process and will drive future growth in this market. However, China’s share of the overall transaction volume will gradually fall; accounting for a reduced 57 percent by 2024.

Growth is fastest in Africa, while network operator-driven mobile money solutions are boosting financial inclusion at a rapid rate. Overall, one area where money transfer is rapidly evolving across the globe is the utilization of blockchain technologies.

While distributed ledger applications are viewed as highly progressive in some sectors of traditional financial services, the applications of blockchain for money transfer use cases are more likely to expand within the global networked economy.