Worldremit, a cross-border payments company, has announced its intention to acquire a US-based and Africa-focused remittance app, Sendwave.
Although the actual amount of this deal is yet to be known a Bloomberg publication states its worth more than $500 million. According to a press release by WorldRemit, it was said to be a stock and fund based deal which is set to be concluded in the fourth quarter of this year.
What is Sendwave?
Sendwave is an African-focused fund remittance app by a US-based company, Chime Inc.
This app company was founded in 2014 by Drew Durbin who found it difficult to send money for an NGO he was running in Tanzania then teamed up with Lincoln Quirk to build a solution for that.
The startup’s first focus was Kenya before subsequently serving customers who wanted to send money to Nigeria, Ghana, and Senegal and their mission is to make sending money to Africa as easy and affordable as sending a text
Do you know WorldRemit?
WorldRemit is an online money transfer service allowing people around the world to send money to their friends and family abroad. The company was created in 2010 by Somali migrant Ismail Ahmed while studying at university in London, who first recognized the opportunity to make money transfers cheaper and improve the experience of sending money.
As at now, WorldRemit serves over 4 million customers. Through our digital services customers can send 90 currencies to 150 countries, across almost 8 thousand corridors.
Following the close of the deal, Sendwave will continue to operate independently. Similarly, it will retain its brand, management, employees, mobile applications and key partners.
WorldRemit Chief Executive Officer Breon Corcoran said the company is betting that the pandemic-fueled shift to digital banking will become permanent. In his words;
“What we saw immediately after lockdown orders is a real acceleration toward digital,” with the rate of new account activations more than doubling this year, he said in an interview.
“This is a fast-growing part of the broader payments space and, increasingly our businesses will be viewed as more akin to Venmo or Paypal,” he said.
And here’s a tweet from WordRemit that made it know to the world;
Why is this partnership necessary?
According to the World Bank, while the pandemic has pushed more people to bank digitally, it says they are sending less money overseas. The organization is predicting a 20% decline in global remittances this year because of the economic crisis stemming from the pandemic.
Decreasing wages and employment opportunities for migrant workers who typically send money back to family and friends are projected to drag down remittances to low and middle-income countries to $445 billion this year. The World Bank estimates that it will recover to $470 billion next year.
“Both WorldRemit and Sendwave share a common purpose: allowing customers to easily and cost-effectively send financial support to families, friends, and businesses in other countries,” said WorldRemit CEO, Breon Corcoran.
“WorldRemit has one of the broadest and most accessible networks for money transfers globally. Combining it with Sendwave, which offers instant, no/[low]-fee and fully digital payments from North America and Europe to Ghana, Nigeria, Senegal, and East Africa, addresses customer needs for fast and secure digital payments – especially given today’s travel restrictions and economic turmoil.”
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Results of the acquisition so far
WorldRemit and Sendwave have increased their combined revenues by more than 50% to $280 million in the 12 months ending in June compared with a year earlier, as their customers conducted about $7.5 billion in transfers, the companies said.
Corcoran said WorldRemit would continue to look for acquisitions and has no current plans for an initial public offering.
Hopefully, these two companies who have started their collaboration to expand their services to make fund transfer to African countries will yield the best result as predicted at the end of the fourth quarter of 2020.