World Bank says $690 billion remitted globally
Square (SQ) and PayPal (PYPL) compete in many areas, from making business and consumer loans to processing payments for merchants. But there’s one major market in which PayPal has thus far avoided a direct challenge from Square: the international money transfer market.
PayPal runs a global money transfer business called Xoom, which has been quietly expanding. Last year, PayPal launched Xoom in Canada, one of the world’s largest remittance markets. According to PayPal, people in Canada make more than $24 billion in global remittances annually.
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Worldwide, the remittance market is worth hundreds of billions of dollars. According to World Bank data, global remittances reached $689 billion in 2018 and could grow to $715 billion in 2019.
Tech companies go after global remittance dollars
The global remittance market has long been dominated by the likes of Western Union (WU) and MoneyGram (MGI), but technology companies are starting to enter the space. In addition to PayPal, Facebook (FB) also has been linked to plans to enter the international money transfer business.
In an apparent attempt to survive the disruption from tech companies, MoneyGram recently sought to merge with Alibaba’s (BABA) Ant Financial in a $1.2 billion deal, but the White House blocked the deal due to national security concerns.
A $700 billion opportunity in waiting
Square has only just begun to expand internationally, and the global remittance market could be viewed as an opportunity in waiting for the company.