As the money transfer space becomes increasingly crowded in the US, UK, and Europe, many companies look east for more room to grow. China and India both contain enormous e-commerce and remittance markets that are rife with global payment opportunities; however, these markets also pose unique challenges to entry.
Growing E-Commerce Markets
With $750 billion USD in online marketplace sales last year, China boasts the largest e-commerce market in the world. Goldman Sachs Research expects this number to double by the year 2020 because of wide-scale improvements in inventory and fulfillment infrastructure, as well as increases in the number of China’s online shoppers.
While not yet in the big leagues with China or the US, India houses the fastest growing online retail market. The country’s population of internet users hovers around 450 million. Analysts predict that e-commerce sales in India will reach $64 billion USD by 2021, which represents a five-year compound annual growth rate (CAGR) of over 30 percent. This prediction takes into account anticipated constraints on growth, such as government controls, the reduced availability of venture capital, logistics difficulties, and slow upticks in the number of online shoppers.
Loosening of Money Transfer Controls
In reaction to the slowing of the Chinese economy and the downward movement of the renminbi last year, Chinese regulators tightened controls on capital flowing outside of the country, as well as on foreign currency exchange. For example, citizens exchanging renminbi for other currencies faced stricter ID checks from banks. While the new measures aimed to tip the scales toward inbound investments, they instead led to the opposite effect as foreign investors got spooked by the additional red tape. China is now loosening its grip on the less productive controls, and the renminbi has recently recovered.
The Reserve Bank of India (RBI) is undertaking a big push to encourage digitization of retail payments, and it is planning to release new guidelines on mobile wallets by the end of the 2017-18 fiscal year. These guidelines will let mobile wallet providers conduct cross-border inbound remittances, as long as they’re KYC (know your customer) compliant. In addition, the maximum amount of money in each wallet can never exceed 50,000 rupees.
Any business that wants to operate a digital wallet service in India requires a Prepaid Payment Instrument license (PPI is the technical acronym for a digital wallet). According to the RBI’s latest annual report, the number of non-bank entities that obtained such a license increased to 55 during the prior fiscal year. In light of these recent efforts, the RBI expressed confidence about achieving its goal of 25 billion digital transactions by next June.
There are signs that India’s global payment or remittance market is picking up speed as well, such as the increase in money transfer capabilities between India and Nepal. Back in 2009, the RBI had launched the Indo-Nepal Remittance Scheme, which allows Nepali migrants to send up to 50,000 rupees at a time to relatives and friends back home. Some service providers are just now taking advantage of this legislation. Eko, an Indian payment company, and itzcash, an Indian mobile wallet, recently expanded their respective global payment / remittance service to Nepal in partnership with Prabhu Money Group, a top remittance company that is registered in Nepal.
Advancements in Money Transfer Industry Intelligence
All of the interest in China and India from global payment giants is a good sign that they’re the places to be. But it also means that the longer newer players wait to establish themselves, the harder it will be to gain ground. Fortunately, services like FXCintel help position money transfer providers for success with the latest industry analytics and insights.
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