For many families living in developing countries, the money sent back home by their migrant relatives is a lifeline. Remittance sustains one in every nine people globally. Also, on a larger scale, international remittances have become a prime contributor to the GDP of many low and middle-income countries (LMICs).
Is global remittance expensive?
There is no doubt that global remittance has helped many families out of poverty and contributed to the economy of many developing countries. Despite all that, international money remittances are still expensive as they come with a few hidden charges, which both the sender and the recipient often fail to realise.
According to the World Bank, the average global remittance charges imposed is approximately 7% of the amount transferred. This fee is more than twice the United Nations Sustainable Goal (SDG) target of 3%. This charge results in billions disappearing annually in the form of transaction fees and hidden costs for remittance.
Why is global remittance so expensive?
Let us look at some factors that make international remittance such a costly affair.
One of the primary reasons behind the high cost of remittance is that banks consider remittance a high-risk sector. Secondly, international remittance requires multiple credits and debits across accounts that ultimately transfer funds from the sender’s country to the recipient in another country.
Some other factors that also increase the remittance rates are:
• Difference between the rate quoted by the bank and the conversion rate of the inter-bank currency.
• FX spreads.
• The processing fee charged for each transaction.
• Charges of multiple mediators that are involved in the process.
Speaking of non-bank remittances, many giants have dominated the industry over the years. These giants have controlled the industry with their massive network across the globe.
As compared to banks, these non-bank remittance service providers offer competitive rates. However, building and maintaining a vast agent network is costly, and they cover this cost by levying additional charges on the consumers.
Whether through banking or non-banking channels of remittance, transferring funds to another country is expensive. However, a solution to this problem emerged, which is Fintech.
Fintech: Making global remittances more effective
Over the years, there has been a significant growth of Fintech international money remittance companies. The emergence of such companies has revolutionised the remittance industry, making the process more convenient and accessible. Many factors played into the rising popularity of the Fintech companies, the most prominent factors being the high speed of transfer at lower fees.
Also, before the advent of Fintech, people were utterly dependant on banks or expensive forex brokers for international transactions. However, Fintech has wholly ended the bank’s and forex broker’s monopoly over global remittance. Furthermore, before Fintech getting favourable exchange rates was a challenge. However, with Fintech in the picture, things took a complete turnaround. Fintech provided competitive exchange rates to their customers, which were very close to the current market rates.
Favourable exchange rates and low fees aside, Fintech also provide multiple payment options to their customers. Customers can make international transfers via their smartphones or on a call by speaking to the currency brokers. If the customer wants, they also can hand over the cash at a physical location. With multiple methods to choose from, Fintech has made lives easy for many migrants who remit regularly.
Fintech’s contribution to the remittance industry does not end here. These companies have set a new benchmark for transparency in the remittance industry. Whether they are sending or receiving funds, the customer is always in the loop with real-time updates. Apart from ensuring transparency, Fintech companies also maintain top-notch security by carrying out transactions via a secure tunnel.
Fintech has been a game-changer in the remittance sector. It has redefined the process of global remittance. With state of the art technology, Fintech has made international money transfer cost-effective, secure and swift. With more technological advances, the role of Fintech in the global remittance sector will increase, making cross border money transfers nothing but a common practice.
Why choose us?
You can send money to your friends and family with just three simple steps with ATL Money Transfer. You no longer have to overpay for your international transactions, as we offer favourable exchange rates and low fees. Send money to over Sixty countries and more than Fifty Thousand cash pick up locations globally.
To know more about us and our services, visit www.atlmoneytransfer.com or write us at firstname.lastname@example.org.