Analysis of Second-Quarter Earnings for Western Union, Ria, and MoneyGram in 2020

In the rapidly evolving world of international money transfers, Remitly continues to make its mark. The Seattle-based fintech company has seen significant growth in recent times, with its high retention rates attributed to the nuances of its product around price, speed, and usability.

However, Remitly is not without its challenges. The emergence of banking as a service and increased competition are potential hurdles the company must navigate. Notably, Western Union and MoneyGram, two giants in the industry, have also been experiencing changes.

Western Union reported a 45% drop in Latin America's consumer-to-consumer (C2C) revenue in Q2, while its C2C transactions volume rebounded in June and July. On the other hand, Westernunion.com saw an increase of 45% in its average monthly active users compared to Q2 last year. Simultaneously, MoneyGram recorded a 106% year-on-year growth in digital transactions for Q2 2020, but its money transfer revenue declined 10% year-on-year in the same quarter.

Ria, another competitor, focused on expanding its agent locations, which rose 13% to 435,000 in this quarter. Meanwhile, Ria's digital transactions initiated through the website or mobile app grew 98%.

Remitly, too, has been expanding its offerings. The company has extended its product to include an immigrant bank account in the US, partnering with Greendot to facilitate cash pay-ins for this service. This product extension redefines Remitly's total addressable market.

Despite the challenges, Remitly has served three million customers and witnessed a customer growth of 200% between May 2019 and May 2020. This growth has not gone unnoticed, with PayU, a focus on high growth markets, leading the latest round of investment in Remitly, expressing belief in the team's potential.

The CEO of Remitly, Matt Oppenheimer, emphasizes the importance of trust in the remittance industry, a factor that seems to be paying off for the company. As the industry continues to evolve, it will be interesting to see how Remitly navigates the challenges and builds on its success.