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Wise, Remitly, WorldRemit: How Cheap Is Cheap? (The Monito Briefing Issue #8)

Byron Mühlberg, writer at Monito.com
Jun 14, 2021
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Hello and welcome back! This week we're delving into some data from three IMTOs synonymous with low-cost transfers — Wise, Remitly, and WorldRemit — to see how their pricing differentials break down from region to region.

Then, we try to answer one important question: just how cheap is cheap in the world of cross-border transfers?

Industry Highlights

Before we get started, here's what's been happening over the last two weeks:

  • India, one of the world's largest sources of remittance outflows, has been added by Wise, which now facilitates INR transfers via UPI to 44 countries worldwide;
  • After declining by as much as 14% since 2019, cash is set to account for only 7% of in-store purchases in the UK by 2024, according to WorldPay;
  • Fresh data from the World Bank suggests that total global remittance flows in 2020 came to US$702 billion, down 2.4% from US$719 billion in 2019, with China, India, and Mexico retaining the top three spots as the world's largest recipients;
  • African cross-border payments startup Chipper Cash secured US$100 million in funding after a successful Series C funding round, paving the way for further expansion into the continent.

Wise, Remitly & WorldRemit: A Regional Pricing Snapshot

It should go without saying that the pricing of even low-cost money transfer operators differs dramatically from region to region. Therefore, where one operator may appear to have an expensive total global cost, it may be comparatively cheap on a regional scale:

Data from hundreds of thousands of searches on Monito's comparison engine in April and May 2021 provides a snapshot into this reality, reflecting an interesting glimpse into how Wise, Remitly, and WorldRemit segment their pricing regionally when measured by the total percentage cost of sending 1,000 USD. These trends are, however, a non-exhaustive analysis of search trends on Monito and should therefore not be construed as indicative of market dynamics at large.

Wise

Long hailed as one of the world's most formidable transfer operators at the price point, Wise currently processes cross-border bank transfers from 25 currencies to a total of 55 others across all regions of the globe.

In terms of total cost per 1,000 USD, these transfers were particularly low-cost for transactions to the Asia-Pacific, Europe, and North America, despite Wise not being the cheapest operator on a numerical majority of transfers to these regions:

Remitly

A specialist in low-cost digital remittances, Remitly operates a large network of global cash pickup locations and partnerships with extensive coverage in Latin America, South and Southeast Asia, Africa, and Eastern Europe in particular.

This diversity was reflected in Monito's data, where even for bank deposit transfers (where Remitly is traditionally less competitive) the service was cheapest on a majority of comparisons and offered transfers with a total cost per 1,000 USD of less than 0.50% for transfers destined for the Asia-Pacific, Europe, Latin America, and North America

Unsurprisingly, Remitly's regional pricing reflected a considerably more competitive environment when it came to cash pickup services:

WorldRemit

WorldRemit — which distributes cash remittances through an extensive global network of cash agent locations — saw its regional pricing fall more frequently into the 'Cheap' and 'Average' price rankings instead of the 'Very Cheap' or expensive counterparts. At the price point, this meant that a majority of WorldRemit transfers fell between 0.50% and 4.00% of the transaction value per 1,000 USD sent.

Naturally enough, despite more often being cheaper on cash-based transactions, WorldRemit's pricing for these transfers was far more often to be 'Average' or 'Expensive':

Looking at Wise, Remitly, and WorldRemit together, some intriguing trends emerge:

  • Low percentage cost: No operator offered 'Very Expensive' transfers to any region, i.e. the total cost per 1,000 USD of all transfers with Wise, Remitly, and WorldRemit remained at all times south of 4.00% of the transaction value;
  • Asia-Pacific: The region remains an expensive destination for Wise and WorldRemit, but less so for Remitly. (This data is supported by the fact that Remitly was the cheapest operator for 35.73% of searches to the Asia-Pacific between March and June 2021, compared to Wise's 16.18% and WorldRemit's 3.24%);
  • Africa: The region remains the most regularly expensive for receiving bank deposits with all three transfer operators, around a third or more of all bank comparisons costing between 1.5% and 2.5% per 1,000 USD sent;
  • WorldRemit pricing: WorldRemit is more likely than Wise or Remitly to offer a higher percentage cost per 1,000 USD to transfer via bank or cash to all receiving regions. However, WorldRemit is fairly regularly the cheapest operator for transfers to Africa (on 93% of available searches on Monito.)

How Cheap Is Cheap?

Zooming out, a broader search trend becomes clearer still.

By looking at which cost category (e.g. 'Cheap', 'Average', etc.) the cheapest operator on regional transfers where Wise, Remitly, and WorldRemit were available over the same period, we can obtain a clearer view of just how cheap it is to send money to each region.

In the case of Wise, for instance, it seems clear that pricing differentials are more competitive where total transaction costs are 'Cheap' or  'Average' rather than 'Very Cheap', suggesting that Wise is more competitive to destinations where its prices are higher and faces greater competition the tighter the margins get:

Honing in on Remitly, pricing can be seen to be very competitive, with Africa being the only major destination to which pricing was usually 'Very Cheap' while still not frequently being the cheapest service of all on Monito. (Also worthy of note is that Remitly was available on some 40% fewer searches for bank deposits than was Wise.)

In the case of Remitly's cash pickup services (where it tends to be more dominant on the price point), the service was even more often the cheapest operator, especially to destinations where its pricing ranks as 'Very Cheap' or 'Cheap'.

For bank comparisons on which WorldRemit was an available transfer operator, the trend appeared similar, albeit with WorldRemit seldom coming out on top, and the cheapest operators more frequently landing within the 'Cheap' to 'Average' 0.5% to 2.5% total percentage cost categories:

Only on cash comparisons did WorldRemit shine, frequently offering 'Very Cheap' transfers. What's more, the data suggest that Africa is one of WorldRemit's most promising money transfer corridors, where the service is competitive and 'Very Cheap' on a significant majority of Monito comparisons. However, the sample size remains small, and the extent of this trend is yet to be seen.

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