The Best PSP Remittance Start-ups
The global remittance industry is worth $550 billion, and it’s projected to grow to $692 billion by 2020. With a declining U.S dollar value, getting money from America to foreign countries will be more expensive for those who depend on cash transfers. This leaves payment service providers, or PSPs, to offer many other options, including wallets, credit cards, and online payments, viable alternatives when carrying out cross-border transactions.
What is a PSP Remittance Start-up, and Why is it Important?
Some services allow you to send money safely and efficiently to loved ones living overseas. The fact that remittance start-ups have started to appear in the market indicates rapid growth for “foreign exchange companies.” The biggest reason these foreign exchange companies are growing rapidly is that they’ve been able to offer lower fees and more convenient services than the banks.
A recent report from Resona Bank showed 2,000,000 account holders at foreign exchange companies with a total of over ¥20 trillion in deposits between 2009 and 2014 (around $182 billion). Competition among large players such as SBI Remit has made it so that transfer costs and easier banking-like features are becoming universal.
The demand for these services is still rising. The number of companies trying to get a piece of the pie is also increasing exponentially. The risk of fraud is extremely high when sending money overseas, so it’s important to take your time to find a safe service. This is crucial for first-time users since the cost of fraud is so high.
How does the Global Remittance Industry work?
The global remittance market is dominated by a few large players with massive amounts of capital. The largest player in the market, Western Union, has a monopoly on over 200 countries. These companies have become very efficient at what they do, and their pricing structure reflects that. They can leverage economies of scale because they have such a large volume and have built up a trust level with the customers. Hence, while the average cost is relatively low, the actual cost per transaction is much higher because of so many transactions. Also, these companies have partnerships with the major banks in most countries which allows them to take advantage of branch network discounts on sending money.
The importance of PSPs in cross-border transactions
The global remittance market looks very different when including money transfers between bank accounts (Local Remittances) — it’s a completely different story. Over 700 billion dollars are being transferred from one country to another in just local transfers. Such a discrepancy is because many people have a bank account with a bank in someone else’s country. The lack of competition has meant that these banks have not been able to pass on the savings they’ve achieved by operating at high volumes.
PSPs dominate this market in terms of volume, but many countries don’t have enough PSPs to be really competitive. Most PSPs offer relatively poor remittance rates since the infrastructure to handle these transactions is expensive.
An excellent example of a PSP that has started revolutionizing the market is Azimo, from Poland. They’ve managed to do this by becoming a P2P bank. They don’t have any branches, so their capital requirements are much lower than the big banks. Because the regulations of any single country do not bind them, they’re able to offer competitive rates. Still, it allows you to send money all over Europe and even China for free if you have an account with them.
They use new technologies like blockchain for efficiency and to provide a better user experience. These new technologies help reduce the cost of transferring money in a way that’s not possible with conventional banks.
Explore some of the most promising PSP remittance start-ups
1) Azimo — is a Polish company that started operations in 2011 to make international transfers easy and fast. They charge nothing on deposits from debit cards for European residents and have no fees if you bank with them.
The Azimo app allows you to pay bills, saving you time and money since most banks charge you a fee to pay bills on top of the money transfer. They also offer you the ability to speed up your transfers with their fast-track option for just 10 euros ($11) which can cut your time in half.
This feature is handy if you need the money before it arrives since most banks take 3 days to complete an international transfer. They’ll match the best offer from their wholesale network of over 160+ banks and money transmitters.
2) TransferWise — founded in 2011 and is still a British company. It’s one of the most successful PSPs. It has managed to make it from an idea to a multi-million-dollar profit with almost no outside investment. The founders realized that the traditional international transfer systems were slow, expensive, and opaque, so they developed a way to offer more transparency into the process of money transfer.
They only charge 0.5% for currency exchanges, and they don’t have any hidden fees or charges for international transfers. To save even more, you can use their free peer-to-peer option, which is basically a P2P network that connects people who want to send money with someone in another country and save both parties money.
They’ve managed to stay true to their mission of making international transfers cheap while offering the same level of security as conventional banks. They’ve partnered with MasterCard, so you can use your credit card to send money and schedule monthly payments if you want. They also offer recurring payments, so you can send a set amount every month.
They provide their services for free to bank customers of some of these banks but charge a nominal fee of $0.99 to non-customers or those who wish to use a different bank. They also allow you to send money with your credit card and have recently partnered with MasterCard so that their customers can do this for free!
3) WorldRemit — is a British PSP based on the idea that technology can enable anyone, anywhere, to transfer money from one place to another. Their goal is to make the process cheaper and more efficient while also making it easier for people who don’t have access to banks or other financial services in their area.
They’re able to offer a quick and cheap service thanks to their own technology, including a web app that uses the latest encryption technology and customer identification. They have a mobile app that you can use to send money. You can buy WorldRemit gift vouchers at over 150,000 locations around Europe – including pharmacies, supermarkets, service stations, and convenience stores which means you really don’t need bank accounts to make transfers with them.
Conclusion:
There’s a wide range of reasons you may need to send money abroad: from paying bills if you live abroad and work locally, to giving gifts to your relatives on holidays.
In this post, we’ve taken a look at the newest start-ups in this field. As you can see, there are many ways to go about it, depending on what you want from your provider. You can choose any of these PSPs and benefit from their low exchange rates, customer-cantered services, or even from directly sending money to a cashier at different stores. Yes, it’s that easy! The main thing is that you don’t have to deal with banks and let them make a fortune off your hard-earned money.
All you have to do is go and choose the one that suits your needs the most – there are plenty of them out there!
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