By 2028, the market valuations of Western Union, and whatever is left of MoneyGram, in any form, will be half of what they are today. Also, remittance companies doing business in/into Africa which do not prioritize the use of stablecoin will see massive erosion of value. I expect most African economies to enable comparable local stablecoins which will get integrated into global exchanges, and exchangeable with local fiat, and once that happens, remittance 3.0 will begin.
Remittance business has been built on two core costs: transaction and distribution costs. The originating transaction cost has since dropped from $36 per every $200, to now $5 per every $200. Some ecosystems have even removed transaction costs focusing on currency arbitrage which goes well below 2%.
But that 2% will go by 2027 as local stablecoins evolve to sync with current global ones like USDT, USDC and BUSD. When that happens, your typical remittance companies will fade as most will be disintermediated. The distribution cost is a non-factor these days since you can pay from anywhere into local bank accounts, distorting the old fees paid to gatekeepers in the banking sector.
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The future posits an era where frictions will disappear in remittance, and the winners of this sector in Africa will be pioneers of stablecoins. If you are looking for a startup idea, I just shared one. Of course you need to have liquidity and reserves to ensure your stablecoin is in sync with fiat all the time, and that means, you need big pockets to execute this.
Nigeria Naira’s Stablecoin and Urgency for Global Integration with Fintech and Remittance Firms
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