The company usually employs a markup-based revenue model.
Disclaimer: This analysis is based on publicly available information and industry trends and should not be considered complete or definitive. It does not represent Sendwave’s proprietary strategies or offer financial advice. However, we can infer the frameworks they might use by examining their services and offerings.
Growth is a beautiful thing to see.
10-year-old international remittance service, Sendwave, connects North America and Europe to Africa, Asia, and the Americas with its app-only product and user-friendly rates.
This article will examine what their revenue model might be and its impact on global remittances.
Company Profile
Here’s a closer look at Sendwave’s company profile:
| Name | Sendwave |
| Website | https\://www.sendwave.com |
| Founding date | 2014 |
| Founder(s) | Drew Durbin and Lincoln Quirk |
| Key people | Mark Lenhard, Annette Oppong, Eric Huynh |
| Employees | Approximately 200 |
| Headquarters | Claymont, USA. |
| Industry | Finance Services |
| Business Type | International money transfer |
| Key Services | Money Transfer |
| Competitors | Cleva, TapTap, LemFi, WorldRemit. |
| Contact options | In-app chat and International support lines. |
What has changed since 2014?
Sendwave was founded in 2014 by Drew Durbin and Lincoln Quirk to simplify and lower the cost of money transfers. Initially serving Kenya, the platform soon expanded to Nigeria, Ghana, and Senegal, focusing on building trust within diaspora communities through grassroots efforts like word of mouth and local events. What began as a small operation quickly grew into a global leader in cross-border transfers.
By 2020, Sendwave’s reputation for affordability and reliability led to its $500 million acquisition by UK-based fintech company WorldRemit. The deal enabled Sendwave to scale its operations while maintaining its brand, management, and core values. Operating independently post-acquisition, the company expanded its global footprint and enhanced its technological capabilities, cementing its position in emerging markets.
In 2023, Sendwave introduced Sendwave Pay, an FDIC-insured bank account and debit card, offering users expanded financial tools. This made Sendwave the first major remittance provider in the US to integrate such services, reflecting its shift from a simple money transfer app to a broader financial platform.
Today, Sendwave operates in 130 countries with over 5,000 payment corridors, serving millions worldwide. Despite its growth and innovation, the company remains committed to its founding mission: reducing barriers to sending money while adapting to the evolving needs of its users.
How is Sendwave likely generating revenue?
Below is a low down of how the company makes money:
1. Exchange Rate Markup
The cornerstone of Sendwave’s revenue model lies in applying a small spread on the mid-market exchange rate for currency conversions.
- How it works: Instead of charging a fixed fee, Sendwave embeds a margin within the exchange rate. For example, transferring USD to Kenyan Shillings (KES) shows a slight difference between the mid-market rate and the rate offered by Sendwave, with the recipient receiving slightly less due to this margin.
- Markup Range: Depending on the recipient’s currency and country combination, the markup generally ranges from 0.88% to 5%, with most transactions clustering around 2-4%.
- Impact: This allows Sendwave to scale across markets while keeping costs low for users.A large number of transactions makes up for the small fee added to each one.
2. High Transaction Volume
Sendwave’s focus on diaspora communities and remittances ensures a steady stream of users sending funds regularly to family and friends.
- Revenue Estimation Example: If Sendwave processes $10 million daily at an average markup of 1.5%, it generates $150,000 in daily revenue from exchange rate margins alone.
3. Strategic Partnerships
Sendwave collaborates with financial institutions, banks, and mobile money platforms to facilitate payments.
- Commissions: These partnerships might include profit-sharing agreements or referral fees, especially for facilitating mobile wallet transfers and cash pickups.
- Example: Partnering with local mobile money services like M-Pesa or bKash allows Sendwave to tap into established networks, reducing infrastructure costs while sharing revenues.
4. Expansion into Value-Added Services
Sendwave has started offering value-added services through Sendwave Pay, including:
- Sendwave Pay Debit Card: Allows users to transact globally and reimburses international transaction fees.
- Interest Earnings: Users earn up to 0.51% APY on balances held in their accounts. This indicates potential interest spreads or revenue from invested funds.
- Fee Reductions for Usage: Users gain slight improvements on exchange rates and transaction fee reductions, incentivizing them to store and use funds within the Sendwave ecosystem.
5. Cost-Effective Operating Model
The mobile-first approach ensures minimal overhead costs. Users also benefit from low barriers to entry and fast, reliable services, enhancing adoption.
Hypothetical Revenue Breakdown for Sendwave
To illustrate Sendwave’s potential monthly revenue based on transaction volumes, fees, and exchange rate margins for transfers between the U.S. and various African countries:
| Amount (USD) | Fee (USD) | Exchange Rate Spread | Rev (10k Txn) | Rev (100k Txn) | Rev (1m Txn) |
| $1,000 | $0 | 1.5% | $150,000 | $1,500,000 | $15,000,000 |
| $5,000 | $0 | 1.5% | $750,000 | $7,500,000 | $75,000,000 |
| $10,000 | $0 | 1.5% | $1,500,000 | $15,000,000 | $150,000,000 |
Where:
- Amount (USD): Transaction amount processed.
- Fee (USD): No fee charged; Sendwave generates revenue via the exchange rate spread.
- Exchange Rate Spread: 1.5% (assumed for calculation; this can vary depending on the country and transaction).
- Txn: Number of transactions processed (e.g., 10k = 10,000 transactions).
- Rev Xk (₦): Revenue generated from the exchange rate spread for the corresponding transaction count.
Breakdown:
For 10,000 transactions:
- Min Revenue: USD 150,000 (at 1.5% margin)
- Max Revenue: USD 1,500,000 (at 1.5% margin)
For 100,000 transactions:
- Min Revenue: USD 1,500,000 (at 1.5% margin)
- Max Revenue: USD 15,000,000 (at 1.5% margin)
For 1,000,000 transactions:
- Min Revenue: USD 15,000,000 (at 1.5% margin)
- Max Revenue: USD 150,000,000 (at 1.5% margin)
Insight:
With Sendwave processing large numbers of transactions, this breakdown suggests the company could generate up to $150m in monthly revenue from its exchange rate margin alone, assuming high-volume, international transfers across key corridors such as the U.S. to Ghana, Liberia, or other major African countries.
This is a hypothetical guess of how much the money transfer business could be making. It may be making less or more.
Why Sendwave’s business model works
- Customer-Friendly Pricing: Users perceive the service as “fee-free,” which appeals to cost-conscious senders while masking revenue generation through exchange rate markups.
- Scalable Infrastructure: By leveraging partnerships and technology, Sendwave avoids the high operating costs typical of legacy competitors like Western Union.
- Focus on Diaspora Communities: The steady demand for cross-border transfers from these communities ensures consistent transaction volumes.
Conclusion
Given Sendwave’s model of charging no upfront fees, it’s clear that the company relies on transaction volume and exchange rate margins to generate substantial monthly revenue. This is particularly advantageous in markets with high remittance inflows, where Sendwave’s easy-to-use and transparent service helps build trust with users.
