We are talking on our platform Golden systems about state-of-art-remittances technology. There is no doubt that global remittances have proved to be the lifeblood of many families. However, global remittance services are expensive because they come with a range of fees when they are converted from one country to another, which both senders and recipients often fail to achieve.
According to the World Bank, global transfers’ average fee is about 7% of the funds sent. This is more than double the UN Sustainable Development Goal (SDG), which is 3% to give you a point of view.
Why is remittances a costly issue?
There are many reasons for the high costs: banks consider remittances to be a high-risk sector. Secondly, international transfers require multiple credit and debit transactions through accounts that transfer funds from the sender's country to the future in the other country.
Many factors increase the costs of conversions such as:
Foreign exchange margins
The difference between the exchange rate in banks and the price quoted by the bank
Processing fees per transaction
Committees of multiple intermediaries involved in the process.
The non-banking giant, Western Union, MoneyGram, Ria Money Transfer, and others dominated the banking market. These companies formed a huge network of 1.1 million agents worldwide.
Compared to banks, which offer non-bank transfer services competitive offers. However, the cost involved in building and maintaining dealer networks is high and is usually compensated by charging consumers additional fees. Whether it's through banks or non-bank transfers, sending money across borders is very expensive.
However, with rapid developments and using the latest remittance technologies, FinTech.
FinTech: Works on the speed and effectiveness of remittances in terms of cost and accessibility over the years. There has been significant growth in some of FinTech's international money transfer companies. The emergence of these companies and others in the field of financial technology has changed the techniques of international remittances. Users around the world prefer to use FinTech's money transfer services over any other services.
What factors made FinTech so popular?
Faster than banks: One of the biggest advantages of using FinTech solutions for international transfers is speed. The bank can take a few days to transfer money, but FinTech takes much shorter time. Besides, it allows users to choose a quick delivery method option that speeds up the transfer process.
Less expensive: Many FinTech companies process free transfer requests for a few selected areas. Not only that but refrain from charging additional fees such as adjustment fees, cancellation fees, and other hidden fees. Consequently, the total cost has been reduced.