The Trump administration's aggressive immigration and deportation policies are pressuring remittance volume just as the industry begins to brace for a 1% tax on remittances that was codified in the "One Big Beautiful Bill."
Political attacks on immigration in the U.S. are having a "chilling effect" on many consumers that primarily use store-based agents to send money, Citizens JMP managing director David Scharf said in a July 15 research note.
"Deportations have ramped up in recent months and reached a run rate of approximately 550,000 per year," Scharf said. "While this rate would set a record, it still represents a very small share of the total foreign-born population in the U.S., and would represent less than 5% of the current foreign-born population if this rate continues for four years."
Western Union remittances, by the numbers
Western Union, for example, logged a slowdown in North American consumer money transfer volumes and revenue through both retail and digital channels in the second quarter ended June 30. Transactions dropped 6% compared with Q2 2024, and revenue was down 11% in the same reporting period.
By comparison, North American consumer money transfer revenues dropped 6% year over year in the quarter ended March 31, according to a William Blair analyst note.
Headwinds from immigration and the
"We saw a slowdown from the U.S. to Mexico in both the retail business and the digital business," Western Union President and CEO Devin McGranahan said during the company's recent quarterly earnings call with analysts. "As you know, the U.S. to Mexico corridor is the largest corridor out of the United States by [almost 300%]. And so that is a powerful driver. We did not see a material shift from retail to digital. We saw aggregate volume demands in both channels go down."
That impact has been volatile each month, McGranahan said, noting that June was "much better" than April, but April was "much worse" than February.
"Was April the low point? I don't know," McGranahan said. "What I can tell you is increases in activity, increases in visibility and increases in media attention all seem to have a negative correlated effect on our customers' willingness to particularly walk into a retail location."
Still, Western Union is sending nearly 100,000 transactions to Mexico, he said. "It's just not growing 10%, 12%, 15% like it has been the last couple of years."
The transactions that are being made have a higher principal transaction amount of about 5%, Chief Financial Officer Matthew Cagwin said.
It is still unclear what effect, if any, the Trump administration's policies will have on legal immigration or self-deportations, JMP's Scharf said.
Preparing for new remittance taxes
Western Union is also preparing for the 1% remittance tax included in President Trump's
Notably, banks that have an account relationship with their customers will not be
"[The exemption] eliminated their need to worry about this requirement because most of the wire transfer activity, or the transfer activity that they do, they're doing with someone or doing on behalf of someone that has an account relationship with them, and so that really … relieved them of the requirement," Ferris said.
Western Union estimates that less than 20% of its total revenue is tied to retail cash-based transactions, McGranahan said.
That exposure could be reduced to 15% or less of Western Union's global business if debit card funding rates improve and a catalyst to bolster Western Union's digital business in the long-term.
"We see the new remittance taxes as an opportunity to accelerate our digital transformation and grow both the digital and wallet businesses in the United States," Cagwin said. About 30% of Western Union's consumer money transfer business is through debit cards.
