The global 20% drop would have been the biggest in recent history, with long lasting impact in recipient countries. Multiple studies have shown that remittances are a vital source of income for developing countries, helping families to access healthcare, education, food, and other basic needs. And as foreign direct investment fell in 2019, with a further 35% drop expected in 2020, remittance flows are only becoming more important as a source of external financing providing a lifeline for families in need.

The projected decline in remittances during COVID-19 not only looked at employment, but it also considered the way traditional remittances have worked for a long time. Most people are used to going down the road to a local remittance shop to send money back home. But during lockdowns, that shop would be closed, and you probably weren’t allowed to go outside anyway. Millions of people across the world faced this problem, but we didn’t see the drop as projected by the World Bank.

That’s because amidst all this hardship, something good did happen. The way our economy has had to change kickstarted the growth of digital remittances.

Sending money online finally takes off

Both traditional companies like Western Union and MoneyGram as well as Fintechs have all seen significant growth in their digital business. Just ten years ago, things were very different and digital solutions were hardly discussed. Western Union and MoneyGram were still largely cash-based operations and digital money transfers only accounted for about 2% of revenue and transactions. Fintechs that we know today like TransferWise were only just getting started on building a purely digital business serving online money transfers.

As newer players entering the space started building their services with a digital-first approach, the market for sending money online began to grow dramatically. That initiated slow and gradual change on the traditional side of money transfers as companies like MoneyGram started to invest in digitizing their services. Just three years ago, MoneyGram operated websites in just three countries. Today, they operate digitally in over 70 markets. This has given them and other traditional players that have made the same investments in going digital the ability to respond to the shift in demand for digital money transfers during COVID-19.

MoneyGram reported that 28% of all its money transfers in April 2020 were digital, with Western Union reporting digital money transfers accounted for 32% of all its transactions. The digital-first players in the space all reported year-on-year growth in new customer acquisition ranging from a 100% to even 150%. Even though traditional cash transactions did drop significantly in line with World Bank predictions made earlier this year, the uptick in digital money transfers seems to almost counter that decline.

While cash pick-ups are still very popular in receiving markets, the shift to digital is starting to take shape. Looking at some of the bigger receive markets such as India and the Philippines, many people prefer payments to be made into bank accounts as an alternative to cash pick-ups. In some of the larger markets in Africa such as Nigeria, Kenya and Ghana, pay-out methods using mobile has risen in favour over cash. For Kenya specifically, what made a big difference was that Safaricom’s mPesa mobile money service increased the maximum send amount from 70,000 KES to 150,000 KES.

Digital money transfers are here to stay

Once COVID-19 subsides, will people go back to cash transfers over the counter? Not likely. Of course, some people will but the majority is expected to continue using digital services for sending money. Once the new habit has formed of simply going to a website or mobile app to send money in just a few taps, with the added convenience of seeing all the exchange rates and fees upfront and increased transparency, a true long-lasting change has taken place.

If anything, the change was long overdue as the younger generation moves in and the older generation moves out, the money transfer space needs to offer the digital experience consumers today expect. It needs to be convenient, fast, transparent, flexible, low cost, and, above all else, customer centric. That’s exactly what we’ve built with our money transfer platform.

We understand everyone has different needs, so we’re offering various methods to send money using cards, cheques, bank transfers and mobile airtime top ups. And if you want to do something even more meaningful, like pay for someone’s bills or daily necessities, you can do that right from our platform.

Using a digital-first approach, we’re changing the way money transfers work creating a better experience for everyone around the world. Our goal is to make money transfers more meaningful for people living in between countries. That means looking closely at what people really want and need, and then building the rights services that add real value.