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TransferWise: Rebel, What is Your Cause?
Tale of Two TransferWises
“Revolution is a tough business. You can
– Lenin
TransferWise’s origins are usually described like this. Entrepreneur from Estonia, who was the first Skype employee, got tired of paying huge fees to banks for transferring money from UK to Estonia. So he came up with a brilliant idea of matching remittance senders and receivers in the same country. TransferWise was launched with an office sauna and employees who don’t mind getting undressed to take on banks, evil entities with no value for consumers. The startup got funding from crème de la crème of investors like Peter Thiel, Richard Branson, Ben Horowitz, becoming the only “unicorn” in consumer cross-border transfers with $1.6B valuation:
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Western Union: permanent leader of international money transfer?
“… 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 mid 80s when deregulation allowed a previously domestic service to expand internationally. By mid 90s, Western Union’s coverage included major remittance destinations like China. In those first ten years of its money transfer business, Western Union’s parent (renamed into New Valley in 1991) had plenty of upheavals going near or into a bankruptcy. After changing hands 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 with 20% decline in price since IPO, dwarfed by the overall market:
MoneyGram: whack-a-mole of money transfers?
“…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
MoneyGram and Western Union are usually mentioned in the same breath as “monopolies” of international money transfers. But when considering MoneyGram’s valuation in late 2016, it was not only tiny in comparison to Western Union’s but with a revenue multiple far below of any competitor:
At that point, MoneyGram was valued at less than six months of its revenue. Rather than a fluke, since IPO in 2004, MoneyGram had a four-year streak of being nearly worthless and dropping again in value to $350 million by October 2016:
There was a clear disconnect between MoneyGram’s image as a slightly smaller Western Union sibling and a recurring hopeless view from investors. Was that the curse of “silver medal”?
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Money Transfer to India: Review and Tips
Are you NRI or POI transferring money from USA to India? Want to get the most rupees for your dollars? Not sure which provider is the best, cheapest or fastest? YOU came to the right place! We will cover all most important topics:
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Current state and key trends for sending money from USA to India
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Rupee to dollar exchange rates and timing
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Top money transfer providers
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Finding fastest and cheapest vs. better and best money transmitters
Please note this post is specific to India. If you are looking for general knowledge of how to best transfer money, please review this other SaveOnSend blog post first.
Before we get started… Great news if you are a consumer transferring money from USA to India: it is currently the most competitive corridor from USA, attracting much more competition and larger investments than any other destination. You are in luck with variety of choices and lavish promotions which for many other destinations simply don’t exist. So you could make a relatively safe assumption that when transferring money to India with any top provider you would get a reasonable price and service.
But we are recommending trying providers with the cheapest price – this way, you are not just helping more your family but also supporting India’s growth. By always using the least expensive method of sending money home, each 1% in savings generates additional $100MM annually for your families and India’s economy.
Xoom Money Transfer: The Disruptor That Wasn’t
“Xoom…. think Western Union without the excessive fees…”
Xoom’s 15-year history is full of missed opportunities and second chances. The child of 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 seemed clunky and wasn’t attracting much usage. The shift of remittances online was expected imminently, so creating an online-only provider with a better user experience was a no-brainer.
Banks And Money Transfer: Sleeping Giants?
“The dogs bark, but the caravan moves on.”
– Arab Proverb
The premise of money transfer startups’ PR pitch revolves around a relatively intuitive notion when it comes to the role of banks: they are sleeping giants with bureaucratic culture, awful customer service and backward digital capabilities, so it is just a matter of few years before banks will be disrupted out of cross-border money transfers, also known as “remittances.” Paradoxically, this premise is not wrong. Moreover, most banks don’t view money transfers as strategic business or care which flavor-of-the-month startup is bragging about their imminent disruption. However, while some of those remittance startups would disappear in few years, the leading role of banks in this space will remain forever. How could that be?
Does Bitcoin/Blockchain make sense for international money transfers?
“I think we will know when bitcoin has reached prime time when it is transferring more value each day than Western Union or Money Gram…”
Bitcoin money transfer is usually discussed in either sensational or downright misleading way. There is a significant category of Bitcoin or, currently more popular, blockchain stakeholders and observers who seem to be completely vested in this innovative product’s awesome potential and are unable to entertain a deviating opinion. This very smart and capable, but, unfortunately, close-minded group believes that Bitcoin cancels a need for regulation and would soon destroy Visa, Western Union and “banks.” Articles written for and by such audience are easy to find, and we will not link to them to avoid enabling such either outrageously ignorant or deceptive opinions.
Rational view of Bitcoin/Blockchain for sending money
In this context, we are always grateful to find discussion about Bitcoin/Blockchain for remittances which attempts to be more objective. Here are some examples: Bootstrappers guide to bitcoin remittances, Tackling bitcoin price swings OR
Money Transfer to Philippines: Review and Tips
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:
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Money Transfer to Philippines: current state and key trends
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Pesos to dollar exchange rates and timing
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Top money transfer providers
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Receiving money transfer in pesos or dollars
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Sending larger money transfer amounts
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Choosing the best receiving method
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Finding the best way to send money
Please note this post is specific to 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 USA to Philippines: it is currently one of the most competitive corridors from USA, attracting more providers and larger investments than many other destinations. You are in luck with variety of choices and lavish promotions which don’t exist for some other destinations. Continue Reading
Transfer Money Internationally: Review and Tips
When asking about “the best” way to transfer money, we realize that it is a very subjective question. The reason for that is simple: we are as consumers are quite unique in our behavior when it comes to handling money. Mexicans don’t behave like Indians and Chinese are very different from Filipinos. But even within each ethnicity, there are multiple distinct behavior patterns. One manager of an Indian restaurant has accounts with multiple digital providers and compares prices before each transfer while his colleague next door prefers to send cash via a Western Union agent next door.
But let’s start with a “big picture” – there are 250 million consumers worldwide who regularly send money home and that number keeps growing fueled by ever expanded migration:
Source: http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/4/661301460400427908/MigrationandDevelopmentBrief26.pdf
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Money Transfer Startups: race against time?
“High fees, large incumbents, and a $400B+ market are under attack by a slew of remittance startups.”
– CB Insights, February 26, 2015
The best feature of being a startup during a bubble is TIME. Investors, usually impatient folks, are doing much better and encouraging startups to focus on growth rather than boring corporate stuff like “revenues” or, even worse, “profits.” Why bother with positive cash flows when investors are stuffed with money and more are available with a quick WhatsApp message? This is especially true when considering such seemingly easy and huge market as international remittances: $0.6T in size, ruled by one, hopefully, incompetent, colossus:
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