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The Market for Money Transfers: Ranking of Remittance Service Providers in Latin America & the Caribbean

By Kim Scott
December 14, 2012

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On Friday, December 14, The Dialogue released its new report, “The Market for Money Transfers: Ranking of Remittance Service Providers in Latin America & the Caribbean,” which reviews trends in market competition among remittance service providers, focusing on ten country corridors in Latin American and the Caribbean from the United States.  

The event featured Manuel Orozco, director of the Dialogue’s Remittances and Development Program, who outlined trends in remittance market competition. Representatives from leading money transfer companies – Daniel Ayala of Wells Fargo Bank, Paul Dwyer of Viamericas, Mario Trujillo of Dolex Dollar Express, and Eugenio Nigro of Xoom Corporation – offered commentary. 

The Dialogue report ranks remittance service providers, serving ten country corridors from the United States to Latin America and the Caribbean, based on twelve indicators that are of particular relevance to the money transfer industry.  These corridors represent a 75 percent share of the $69 billion global market for money transfers.  Rankings are based on extensive research of nearly 50 remittance service providers representing 90 percent of all remittance flows from the United States to Latin America and the Caribbean.  

A convergence in competition in the remittance industry is indicated by the changes that have taken place since the last scorecard report in 2010, Orozco explained.  While the number of leading remittance service providers has decreased, the total number of providers has increased along with the breadth of services offered.

The panel represented four different models of remittance service providers, as Paul Dwyer, CEO of Viamericas, highlighted.  Viamericas uses agents, Dolex has a hybrid model working through both agents and branches, Xoom is an online service, and Wells Fargo provides remittance services as a bank.

Daniel Ayala, head of Wells Fargo Global Remittance Services, discussed the impact of complying with the Dodd-Frank Act Section 1073 on banks engaged in the remittance industry, stating that “the new regulations have definitely slowed us down significantly.”  

Mario Trujillo, CEO of Dolex, highlighted the role of remittance service providers in serving customers who do not have bank accounts.  He also described the burden of frequent regulatory audits performed by different stakeholders, suggesting quarterly audits as more efficient.

The panelists also discussed the role of technology in the remittance industry.  “The internet is not the future of remittances,” said Eugenio Nigro, vice president of Business Development for Latin America at Xoom.  Instead he sees mobile devices as the technology that will most impact the industry in the near future.