Many challenges have confronted companies and migrant senders this year, including the proposed tax on remittances, deportations, and a decline in migration. In 2025, most of Latin America and the Caribbean registered the highest growth rates in money transfers over the past twenty years. 2025 also points to an increase in transactions deposited into bank accounts, as well as growing market competition, marked mainly by Western Union’s acquisition of Intermex, the growth of digital competitors, and increased investment by other companies.  

The coming year presents new challenges, some related to the consequences of 2025. 

A wave of deportations and a decline in migration 

The year started with a series of government policies prioritizing a surge in deportations of migrants living without legal authorization and increasing border enforcement. The impact on remittance senders has been substantial. For the first time in decades, the vast majority, if not all, of those deported lived in the US for more than 4 years and sent remittances. Immigration enforcement also led to a decline in irregular entries, which accounted for 90 percent of migrant entries since 2017. For the Dominican Republic, Jamaica, Mexico, and El Salvador, irregular entry is lower than 50 percent of total migration.

A proposed tax and other regulatory issues

The most direct policy impacting migrants and the remittance industry was the inclusion of a 1 percent tax on remittance cash transactions, which was passed in the summer of 2025 with the Big Beautiful Bill and could affect at least half of remittance senders.

Our research points to key data issues, including that 80 percent of migrants have a bank account, fewer than 40 percent are paid in cash, and just over 45 percent continue to use agent locations to send money. Migrants may have an account and a money transfer application, yet close to half have opted to remit in cash. In fact, there is no correlation between those paid in cash and those who remit in cash. The question remains: how many of those migrants who remit in cash will use their accounts or prepaid cards (close to 1 in 10 own a prepaid card) to send money electronically rather than pay the 1 percent tax, which translates into US$4?

The effect of the tax will result in a combination of decisions shaped by:

• Shifting cash transfers to digital transactions by tying their accounts to a money transfer application;
• Shifting cash transfers to use their debit cards or acquiring prepaid debit cards to send money;
• Sending less money to their families to compensate for the loss of funding (evidence shows that a 1 percent cost in sending money decreases remittances by US$32);
• Using non-regulated intermediaries: ‘mules’, crypto wallets, hawala (In a survey in 2017, 30 percent would choose that method. Now times have changed, and it seems unlikely).

Overall, for the sake of argument, given the large number of account holders, one assumption could be that at least one-fourth of cash senders would shift to digital transactions. However, other regulatory challenges remain on the horizon, including pressure from the US Treasury’s FinCen to scrutinize transactions over US$2,000 sent by specific individuals who may not have work authorization in the United States. 

Closing 2025 with 8 percent growth or higher

Accompanied by these developments, 2025 registered one of the highest remittance growth rates. Except for Mexico, remittances to Latin America and the Caribbean increased significantly. In nine countries that originate more than 90 percent of all flows to the region, remittances will total US$158 billion. The only country that registered negative results was Mexico. 

The decline in Mexico reflects differentiated realities facing nationals from this country: the number of migrants who stopped sending remittances (over 4 percent of all migrant remitters) was three times higher than the number who started sending for the first time (under 1 percent of all remitters). In turn, without new migration increases, the volume dropped.

For all other nationalities, this growth did not result from migration, but from migrants’ risk-mitigation decisions in the event of deportation. They increased the average amount remitted by 27 percent as a precaution to send as much as they could now, in case they were unable to continue sending them after being removed from the country. As a result, the increase in remittances correlated with the total volume arriving in those countries.

Competition and account deposits on the rise

Despite these challenges, the industry has continued to make its mark, performing solidly, growing, and providing services to its customers. Three significant developments in the competitive landscape include the acquisition of Intermex by Western Union, improvements in performance by leading companies, digital or cash transfer-based services, and increases in account deposits.

The acquisition of International Money Express (Intermex) by Western Union for US$500 million, expected to be completed in mid-2026, was a key development in the industry. In turn, Western Union’s market share will increase to almost 30 percent. Meanwhile, most leading companies have exhibited significant growth in their revenue and business operations. Remitly has shown the largest market share in 2025 as users continue to shift toward digital. Viamericas’ continued growth motivated its global expansion, which was funded with US$113.6 million in financing led by Old National Bank, with participation from Bank of Oklahoma Financial, Axos Bank, and U.S. Bank. The 2020-funded Felix Pago announced a US$75 million Series B fundraise led by QED Investors.

On the back end, more companies are adopting stablecoins as part of their foreign exchange mechanisms to offer remitters lower transaction costs. Finally, consumers are increasingly sending money to be deposited into bank accounts. Just over 50 percent of transfers to Mexico are deposited, and more than 30 percent of transactions to El Salvador, Honduras, and Guatemala are deposited into an account. One key trend in the business is the consolidation of backend processing companies, Transnetwork of BTS, ApprizaPay, and Uniteller of More Money, expanding their footprint in the Latin American region. Their presence as aggregators in the payout industry for several leading companies adds an extra layer of complexity and costs in the competitive landscape.

What will come in 2026?

At least three key challenges will be marked this coming year. First, there is a potential decline in remittances or limited growth. Because declining migration and increased deportations will continue at least at the same rate, growth will depend on continued increases in the average remittance. However, migrants will face difficulties continuing to increase their principal remitted month-to-month. 

So far, they may be sending more than 15 percent of their income to their homeland. Moreover, our data analysis shows that upward principal increases exhibit 17-month cycles, and the latest cycle began in October 2024, suggesting that average remittances could slow by April 2026.

A second challenge stems from any possible pressure from state legislators to impose their own taxes on remittances, and from FinCen to push for some form of verification of work authorization in the US.

A third challenge is changes in competition due to the 1 percent tax and its effect on the sending method, which in turn will lead to fierce competition to attract cash remitters, with existing offline money transfer companies having an advantage in retaining clients by offering digital transfer options without closing their cash streams.