Remitly Aims to Attract Small Businesses with Peer-to-Peer Payment Tool

Remitly is seeking small and mid-sized business customers as a new revenue stream, offering a peer-to-peer tool for international payments. The company had 8.5 million quarterly active users as of Q2, up from 6.9 million last year. Remitly is investing in competitive pricing and targeted marketing to attract high-amount senders, with marketing expenses increasing 9% to $158.3 million for H1. The company is also developing a "membership" offering with a broader suite of financial services and cashback benefits.

Seattle-based Remitly, a prominent player in the cross-border payments sector, is ramping up efforts to attract small and mid-sized business (SMB) customers. The company, founded in 2011, has been traditionally focused on consumer remittances but is now shifting its strategy to capture the growing SMB market. This move comes amidst increasing competition from stablecoins and established money transmitters like Western Union and MoneyGram.

As of the end of the second quarter, Remitly reported 8.5 million quarterly active users, a 22% increase from the previous year's 6.9 million users [1]. To cater to SMBs, Remitly has introduced a peer-to-peer tool that allows businesses to pay vendors, contractors, and employees internationally. This new service has already drawn thousands of SMB customers since its launch during the second quarter, with transactions averaging about twice the size of those from typical consumer customers [1].

The company is investing heavily in competitive pricing and targeted marketing to attract and retain these high-amount senders. Remitly's marketing expenses increased by 9% to $158.3 million for the first half of the year, representing about a fifth of its total revenue of $773.5 million through June [1]. Vikas Mehta, Remitly's Chief Financial Officer, indicated that the number of customers sending more than $1,000 increased by 45% for the quarter compared to the same period last year [1].

Additionally, Remitly is developing a "membership" offering that will include a broader suite of financial services and cashback benefits. While the buy now, pay later (BNPL) financing and digital wallet services are currently available, more details on the membership offering are expected in September [1].

Remitly faces both legacy and emerging competition. The company is embracing the opportunity presented by stablecoins, which are increasingly being used for international payments. Remitly has partnered with Circle and Bridge to allow customers to store and receive payments from stablecoins [1]. Despite these challenges, Remitly reported a significant improvement in its financial performance, logging a net income of $6.54 million in the second quarter, up from a loss of $12 million in the year-earlier period, with revenue surging 34% to $411.8 million [1].

References:
[1] https://www.paymentsdive.com/news/remitly-cross-border-payments-smb-supplement-digital/757290/