UK-based online money transfer company, WorldRemit, has reached an agreement to acquire Sendwave, a prominent remittance firm with a primary focus on the African market, in a deal valued at over $500 million. This strategic acquisition is largely attributed to the accelerated demand for digital banking services globally, a trend significantly bolstered by the ongoing COVID-19 pandemic. The transaction is anticipated to conclude in the fourth quarter of 2020, contingent upon the successful procurement of all necessary licensing and regulatory approvals.

Reports from Bloomberg indicate that the acquisition's value, comprising both cash and stock, surpasses $500 million, and the combined entity of WorldRemit and Sendwave is projected to be valued at more than $1.5 billion. Financially, the two companies demonstrated robust performance in the 12 months ending June 30, having collectively facilitated approximately $7.5 billion in transfers for their clientele and generated a combined revenue of $280 million. This financial achievement signifies a remarkable 50% year-on-year growth in revenues, as reported by both firms.

Sendwave, established in 2011 and backed by Y Combinator, has concentrated its operations on facilitating money transfers from Europe and North America into various African nations, including Nigeria, Ghana, Senegal, and countries across East Africa. The company recently marked its entry into Asia's remittance market by adding Bangladesh to its list of receiving countries. WorldRemit, founded in 2010 and supported by investors such as Accel, TCV, and Leapfrog – with Accel and TCV being early investors in Facebook Inc. and supporters of other prominent brands like AirBnB, Spotify, and Expedia – expanded its presence in Nigeria in 2019. This expansion included establishing 1,800 cash pick-up locations for international money transfers, following a partnership with Paga earlier that year to enhance its service availability in the country.

WorldRemit foresees a permanent elevation in digital banking adoption. The company projects that the combined operations will hold more than 100 send licenses, encompassing every U.S. state. Furthermore, the network of countries from which money can be sent is expected to expand to over 50, while the number of receiving countries will correspondingly increase to more than 150. Breon Corcoran, CEO of WorldRemit, emphasized this shift in an interview, stating, “what we saw immediately after lockdown orders is a real acceleration toward digital. 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.” This perspective underscores WorldRemit's conviction that the demand for digital financial services will continue its upward trajectory.

However, the global pandemic presents a dual impact on the remittance landscape. While it has spurred the adoption of digital banking, it has simultaneously led to a decrease in the overall amount being transferred internationally. This reduction is largely a consequence of widespread pay cuts, job losses, and other economic hardships inflicted by COVID-19. The World Bank forecasts a general decline of approximately 20% in global remittances. Specifically, remittances to low and middle-income countries are projected to decrease to $445 billion in 2020 before showing an increase to $470 billion in the subsequent year.