Cross-Border Money Transfer: A Nightmare Solved by the Internet
Money Transfer Improvements Are Coming
We live in a world where people are in motion, from country to country, often in search of better and better-paying work. An upshot: there is a lot of cross-border money flows. The World Bank estimates that in 2015 international migrants alone sent home US$601 billion. That is more than the GDP of Sweden, Argentina, or Taiwan, just to put a perspective on this.
There are many other reasons to send money across borders such as gifts to friends.
The market is mammoth.
Don’t think that because of its size cross-border payments are a well-oiled, smoothly operating process. Complaints - by both senders and recipients - are epidemic. Talk about high volume hate.
Know this: fixes are coming. But first understand exactly why big changes are desperately needed.
The biggest grumbles about cross-border money movement focus on costs - sending money over national borders amounts to shifting bits and bytes but many mainstream FX providers charge expensive rates. Transaction fees can be as much as $30 on a small, cross border transfer handled by an average bank. Use a reputable FX company and the fee may drop to $5 - $15 but the transfer takes a week. What good is that if you need cash overseas instantly.
That time delay is even more baffling a computer sends email globally in seconds. Why can’t it send $100 at the same speed? Of course it could. It’s just that the system isn’t set up for it.
Once upon a time the old way made sense. It was the only way to move money from Sydney to Manila. Charges were high because a lot of old infrastructure was in place such as storefronts. Delays were lengthy because how long did it take a stamped letter to cross borders? Days, right? Ditto for money transfers.
But that was then. This is 2016, over 20 years into the new world ushered in by the Web where everything happens in an instant.
The good news: there is a stampede of would-be disruptors, generally start-up companies, frequently born out of technology innovators, not financial services. They approach the cross-border industry convinced that a revolution is in sight.
Disruption is already within grasp, at least when it comes to moving money between developed economies. If you want to move money between Australia and the Philippines or maybe Hong Kong, know that doing it fast - via disruptive, low-cost companies - is within reach.
Right now, the solutions that seem most probable are the ones that marry new technologies with elements of traditional financial services. Some players talk about digital only cross-border transfers - shifting digital currency Bitcoins with a few mouse clicks. While that will work for a technically-sophisticated elite, will it work for the person working in a fast food kitchen sending $100 here and there to their family in Manila? And even if it works for the sender, will it work for the recipient?
The solutions that win will take average banks out of the equation but these solutions that prevail will have easy to use platforms.
This will be technology that real humans can understand and use.
Very soon, when a person needs to do a cross-border transfer they won't think of a bank. They'll want to do business for better service at lower prices.
Know this: big changes are coming to almost about every nation. The only question is when.
The time is here to disrupt how money crosses borders. That will mean lower costs - and more money in the pockets of service users.
Want to know more?
Sign up to Flash FX where costs will be significantly lower than what average banks and the existing cross-border services charge.
And with features such as tracking your transferred money at every stage of its movement, which other companies can only dream about.
Join the revolution: it’s waiting for you.