Foreign Currency Exchange Services in the US
The Foreign Currency Exchange Services industry was aided over the five years to 2021 by continued growth in international trade and travel. Downstream corporate clients rely on industry operators for business-to-business payment services, while downstream individuals generally use credit and debit...
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| Format: | Market Research |
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| Language: | eng |
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| Summary: | The Foreign Currency Exchange Services industry was aided over the five years to 2021 by continued growth in international trade and travel. Downstream corporate clients rely on industry operators for business-to-business payment services, while downstream individuals generally use credit and debit card processing services and currency exchange offerings. The anticipated 2.7% annualized increase in the total value of world trade has boosted demand from these major markets during the five-year period. Moreover, technological change in the form of improved debit card offerings and mobile apps has made industry services more convenient. As a result of these trends, industry revenue is expected to increase an annualized 0.3% to $778.2 million over the five years to 2021; this growth includes an expected 25.6% rise in 2021 alone. Despite a steady increase in demand during the period, cost-based competition has led profit to shrink during the period. The major reason for this decline is the spread of COVID-19 (coronavirus) in 2020, in which revenue declined 29.4% as domestic and international travel was affected.
Most industry operators are small in size and handle a correspondingly small number of transactions. Annual gross foreign currency exchange transactions exceed $500,000 for a small minority of industry operators. Location decisions of both large and small operators generally correlate with domestic population and travel trends. Accordingly, California, New York and Florida account for large portions of industry establishments, given their substantial population figures and reputations as tourist destinations. These areas are also known for as businesses hubs which also necessitates business-to-business payment services as well.
Over the five years to 2026, industry revenue is forecast to increase at an annualized rate of 10.9% to $1.3 billion. The factors that affect downstream demand levels, including trade and travel, are anticipated to continue improving over the five years to 2026. Over the next five years, industry operators are expected to continue to develop websites and apps that make it even easier for individuals and businesses to make foreign currency transaction wherever and whenever they need to. This is expected to drive the total number of transactions industry operators complete, helping industry revenue grow during the five-year period. |
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