XOOM EXPANDS GLOBAL REACH: PayPal-owned digital remittance firm Xoom is partnering with Ria, a Euronet-owned legacy remittance provider, to offer its customers access to a cash pickup service at 150,000 of Ria’s locations. Users can initiate a transfer using Xoom online or on mobile, and the recipient can retrieve the transfer in cash at a pickup location. This partnership expands Xoom’s reach in Eastern Europe and Africa.

The Europe to Africa remittance corridor is popular. Other players are targeting similar regions: UK-based digital-first remittance provider Azimo just announced a partnership with Interswitch Group, an African payments company, to enable instant money transfer from 23 European countries to customers in Nigeria. Nigeria is Azimo’s largest market and, with total remittances to the country reaching $22 billion in 2017, expanding its reach in the region through this partnership can allow Azimo to further capitalize on the growing corridor. And Western Union recently opened an office in the Ivory Coast, where it’s been operating since 1995 and already counts 1,600 locations. That demonstrates a trend among remittance providers that are targeting the same regions.

Xoom can use this partnership to further build out its growing service. 

  • Xoom has been working to boost volume through several initatives. Earlier this year, Xoom increased its transaction send limits to $25,000 per transaction for more than 50 countries, including Canada, India, and the UK. Raising that transaction limit enabled Xoom customers to initiate fewer remittance transactions and ultimately save money by sending more in one transaction, while growing volume on the network. This partnership expands Xoom’s reach to more than 130 countries globally, with its network reaching 70% of the countries in the world. Providing more options can ultimately allow Xoom to onboard users looking to send money to those regions, which can boost its volume.
  • It can continue to leverage PayPal’s massive network to grow. PayPal acquired Xoom in 2015 and integrated the service directly into its app, which has given Xoom a boost in transaction volume. The remittance player saw a 50% increase in transactions in the first two years after being acquired by PayPal, which outpaced its user growth and indicated that, as the firm matures and scales, it will continue to grow organically as well.

Xoom growing its network could ultimately benefit PayPal. PayPal’s margins took a hit in Q2 2018 from growth in its peer-to-peer (P2P) payments. The segment — which includes services like Xoom and P2P app Venmo — saw a 50% annual increase in volume to reach $33 billion. That represents 24% of the firm’s volume, which is three percentage points more than last Q2. That’s not great for PayPal’s bottom line, because P2P services are often hard to monetize. But if Xoom’s volume picks up from this expansion, and it continues to pursue other expansion efforts, the digital remittance service could grow to comprise more of that volume, which could help make P2P more lucrative for PayPal. Because Xoom has some associated fees, PayPal is more easily able to monetize it than some of its other money transfer services, like Venmo. And as digital remittances popularize as consumers look for more convenient and less expensive ways to send funds — digital remittance services cost customers nearly halfas much as legacy remittance services, on average — Xoom could be well positioned for ongoing growth.



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