As the global COVID-19 pandemic intensifies demand for digital banking, Africa-focused, app-based remittance company Sendwave as thrown in the towel and has agreed to be bought buy WorldRemit Ltd a UK based online money transfer firm
The $500 million deal is composed of both cash and stock options, according to Bloomberg. The merger is reportedly valued at more than $1.5 billion.
WorldRemit Chief Executive Officer Breon Corcoran said the company is betting that the pandemic-fueled shift to digital banking will become permanent. “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.
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“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.
This acquisition will see WorldRemit strengthen its foothold in Africa. Sendwave, backed by startup incubator Y Combinator, allows customers in North America and Europe to send instant payments to friends and relatives in countries including Uganda, Ghana, Nigeria, Senegal and East Africa. Sendwave will continue to operate as an independent business and retain its management, employees and key partners, the companies said.
One would think that a company like SendWave would be flourishing during these pandemic times when people are relying more on digital transactions. This was not true for SendWave as the World Bank confirms that people were sending less money overseas. They have predicted 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 figure will recover to $470 billion next year.
According to Bloomberg, SendWave and WorldRemit have increased their joint revenues by more than 50% to $280 million in the 12 months ending in June compared with a year earlier.
