PayPal is flexing its muscle in the online remittance space through its Xoom acquisition, looking to take a bigger share of the money transfer industry as it increasingly heads online.
Xoom, which PayPal snapped up for just under $1bn last year, just pushed out into 11 new countries including Kenya and Haiti with another two coming soon. Now available in 52 countries, new markets for Xoom will include Finland, Haiti, Kenya, Nepal, Nigeria and Estonia. Xoom users can now send money from the US to users of the mobile money transfer service M-Pesa in Kenya and the firm is also integrating with other mobile wallets and financial services including Barclays, UniTransfer in Haiti and Bank of Everest in Nepal.
With such a tiny fraction of the $600bn global remittance market happening online, the opportunity for digital players to gain significant ground is great. Fragmentation, high costs and waiting times mean technology has an important role to play in galvanising, speeding up and bringing down the costs of international payments traditionally processed via networks of brick and mortar agents.
PayPal stayed relatively quiet about its Xoom acquisition in the firm’s earnings call last week, in terms of hard numbers at least. However a note on Xoom’s website says it has more than 1m customers and processed around $6.9bn in payments during 2014. Overall, PayPal posted profits up 28% to $452m, with 4.5m new active customers taking its total to 184m and $81bn in total payment volume.
Meanwhile there are clouds over a different part of the business, namely the company’s phenomenally popular social payments service Venmo. The service is reportedly under investigation from the Federal Trade Commission to find out whether it is or has been involved in deceptive or unfair practices. Venmo, which lets users send each other money to pay for things like shared meals, road trips and housemate bills, processed $3.2bn in Q1, up 154% year on year.
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