As the world grapples with the economic fallout of the coronavirus pandemic, money transfer companies are feeling the pain. The global remittance market is projected to lose $110 billion in 2020, a massive reduction from 2019’s estimated total of $689 billion. This dramatic decrease can be attributed to several factors, including limited access to physical locations, reduced demand, and an overall decrease in disposable income. Let’s take a look at why these companies are losing their grip during this economic slowdown.
Reduced Demand and Disposable Income
A major reason that money transfer companies have seen such a dramatic decrease in usage is due to the decreased demand for services as well as a decreased amount of disposable income. With many businesses closed or operating at reduced capacity due to lockdowns and other safety measures, people have less money available for discretionary spending on things like remittances. Additionally, travel restrictions have put an end to many migrant workers who used remittance services to send money home. This has had a significant impact on the industry as remittances account for over 10% of GDP in some countries.
Limited Access To Physical Locations
Another factor that has contributed to the decreased usage of these services is limited access to physical locations due to government-mandated lockdowns and social distancing measures. Many people rely on traditional brick-and-mortar locations when sending money abroad; however, with many of those locations closed or only open for limited hours, many people have had to find alternative ways of getting their funds across borders. This shift has led more people towards digital solutions such as mobile apps and online banking services which can offer more convenience but also come with risks such as fraud or identity theft.
Increased Competition From Online Solutions
The emergence of digital solutions has also had an adverse effect on traditional money transfer companies. As more people turn towards online solutions such as mobile apps and online banking services, there is increased competition in the market which means that companies need to step up their game in order to remain competitive. Companies need to offer better customer service and make sure that they are offering competitive rates if they want to stay ahead of their competitors in this new digital landscape.
In conclusion, it’s clear that money transfer companies are feeling the effects of the economic slowdown caused by COVID-19 pandemic. With reduced demand, limited access to physical locations, and increased competition from digital solutions all contributing factors in decreased usage rates, it will be interesting to see how these companies adjust their strategies in order to remain competitive moving forward. It is likely that we will continue seeing shifts towards digital solutions such as mobile apps and online banking services as customers become more comfortable with them over time; however, traditional brick-and-mortar locations still play an important role for those who prefer face-to-face interactions when transferring funds abroad . It remains unclear what changes will occur going forward but one thing is certain – money transfer companies need to be prepared for anything if they want stay successful during these uncertain times .