Despite (mostly) seeing revenue increases year-over-year, leading remittance companies saw declining growth across their consumer money transfer segments in Q1 2022. Key headwinds included a slump in the payments market, the impact of the Russia/Ukraine war, rising inflation, supply chain issues and Covid-19 travel restrictions in Asia.
This slowing growth is reflected in the latest World Bank figures, which project 4.2% YoY growth in low and middle-income countries in 2022, compared to 8.6% in 2021. The Russia-Ukraine war is unsurprisingly one of the most significant drivers. While Ukraine is expected to see a 20% rise in inbound remittances, outbound remittances from Russia are likely to see a sharp drop, impacting flows to Central Asian countries in particular.
While the World Bank projections suggest there is likely to be continued upheaval across the year, several of the major money transfer companies saw a contraction in Q1. MoneyGram saw a slight decrease in growth at -0.4% (down from 1% in Q4 21), which the company attributed to the dollar strengthening against the pound and euro. The company’s recent acquisition by Madison Dearborn Partners (expected to close in Q4 22) will likely have a major impact on future revenues.
Western Union saw C2C revenues decline by 4.9% (an even bigger dip than a 0.9% decline in Q4 21). The company put this down to ‘softness’ in retail money transfers, as well as the impact of suspended services to Russia and Belarus. New CEO Devin McGranahan wants to acquire more omnichannel customers, which he says have been significantly more valuable than retail or digital-only customers.
Euronet’s money transfer segment, which includes its Ria and XE divisions, saw growth of 4.34%, down from 9.56% in Q4 21. The segment’s fairly healthy quarter was marred by fewer transactions from Asian countries that faced significant impacts from Covid-19.
Remitly hasn’t seen the lofty growth of Q4 21 (69%), but continues to see relatively large growth compared to other major remittance players at 49%, which the company says has been driven by strong customer acquisition and retention. Latin America-focused Intermex, meanwhile, saw 21% growth (just below 22% in Q1 2021) as it continues to prioritise retail money transfers.