Can Small Money Transfer Operators Survive?

As a small money transfer operator, that is operating out of a physical brick and mortar store, it is becoming increasingly difficult to do business and compete with the giants like Western Union, MoneyGram and Ria. Even more so, the OMTOs (Online Money Transfer Operators) are even more aggressive when it comes to offering a better price, stellar customer service, and aggressive marketing campaigns. How does a small mom & pop money transfer company compete? Can they really survive this onslaught?


Hello my name is Faisal Khan and I’m a banking and a payment consultant and I’m answering your questions. A question that came into my mailbox is small and medium money transfer operators that are most likely opening one shop or a couple of shops physical MTOs, money transfer operators, what chance of survival do they have in the overall scheme of things.

The answer is it’s a difficult time for them. It is very difficult for them because the market is now slowly going towards what is called OMTO, online money transfer operators. Businesses that were physical in nature where you walk into a corner neighborhood store and you could send money, they are facing competition, they are facing increased pressure from de risking banking, banks are closing their accounts down. They are facing compliance pressures, they’re facing pressure for having additional technology for purposes of KYC, they are facing prefunding pressures which is a huge issue. If they want, if they have customers that want to send money to 20 different countries, you essentially have to prefund your account in 20 different countries in order for that to happen. So the mom and pop stores that are operating MTOs or are, you know, small in small states and small towns are facing pressure eventually.

I think the writing is very clear on the wall. They will go out of business. They will go out of business and it’s just a matter of time. Some of them are gravitating by offering a check cashing or doing some other sort of services like selling calling card minutes etc. which they were already doing but at the end of the day you have to understand that this is a dying model. Very few businesses will exist. Most of them will go under because of bank and de risking because of access to limited capital and because of very limited resources and technology and human resources and technology especially I.T. and more importantly compliance costs are getting higher and higher every day. So they will just not be able to function in a competitive manner.

So, if you are a money transfer operator that is facing such I would look out on how you can alliance yourself with larger partners. There are many networks that are now springing up that are making alliances of all these independent operators who are now basically forging themselves together to offer the same power of the network that the big guys do. So maybe there’s one operating in your area, if not maybe you can make one and bring all the people together but, it is a competitive landscape at the moment.

I hope I was able to answer the question. If you have anymore, please feel free to ask and I’ll be happy to answer them. Until next time, take care.

This page was last updated on September 1, 2022.

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