A new competitor enters the crowded African money transfer market.
Xoom, the money transfer company bought in 2015 for $890m by the American leader in online payments, Paypal, now serves 33 African countries from about 30 European markets.
- Through partnerships with Ria Money Transfer and African banks, Xoom allows people to send money online to 150,000 withdrawal points in Africa or to transfer funds directly to bank accounts—for now the latter is only available in Egypt, Morocco, Nigeria, Nigeria, Rwanda, South Africa and Uganda.
- Recipients can retrieve cash almost instantly; it can be delivered directly to their door or their phone in the form of mobile credit (this is only available 11 countries).
“We offer a safer service and a more affordable price,” says Julian King, vice- president of Xoom.
The transfer company states it costs €1.49 (or 0.3%) to send €500 from France to Morocco. TransferWise and MoneyGram charge €9 and €3.99 respectively for the same amount.
However, neither the option for bill payment nor cash delivery is available in African countries, although these services are marketed by Xoom.
A market that is competitive and dynamic
Rather than revolutionising the sector, Paypal’s subsidiary appears to be another competitive player in an already competitive and dynamic market.
- One of Xoom’s biggest competitors and predecessors is the British company WorldRemit, created in 2010 and which is expanding services and partnerships in Africa. Since September 2018, it has allowed inter-African transfers to companies.
- In June, the company expanded its services to include wage payments in Ghana, Kenya and South Africa. In mid-July, it joined forces with Cash Plus in Morocco, where it now has 2,000 withdrawal points.
Telecoms operators, such as Orange and Safaricom, are also venturing into the inter-African transfer segment, with offers sometimes better adapted to local needs. Safaricom’s Text and Treatment solution allows, for example, to pay for emergency transport for patients in Tanzania and Lesotho.
Missing a strategy on inter-African transfers
Surprisingly, Xoom and PayPal do not seem to have a specific continental strategy.
Paypal’s headquarters in California refused to provide precise figures on its African presence and activity.
When asked about the possibility of transferring foreign currency between countries on the continent in the medium term, King remains evasive: “We will look closely at how we can bring value outside North America and Europe. We hope to be able to offer something within the inter-African markets.”
Bottom line: This is astonishing caution, given that 80% of African migration takes place on the continent and that the sub-Saharan region alone represents an estimated market of $46bn dollars for the sector.
This article first appeared in Jeune Afrique.