Sending money abroad has always been a frustrating and often expensive process. The involvement of middlemen, manual paperwork, and hidden charges, made the process all the more complicated. Luckily, recent developments have now enabled individuals, as well as companies to transfer cash in a reliable, cheaper and faster way.
The Role of MTOs
Money Transfer Operators (MTOs) are companies that aren’t usually banks but are engaged in international money transfer. They do so either by using their internal system or via another international banking network. Their value-added international money transfer services have completely revolutionized the process of overseas money transfer.
Why Has There Been a Growth in Online Remittances?
Studies have shown, that in recent years, costs of remittances have been falling as a result of stiff competition. World bodies as the UN and G20 pay a lot of attention to the remittance services market because of the role it plays in the overall economic development of emerging markets, and the services being popular with low-wage workers working abroad. The healthy competition and the drive to lower the fees for remittances has put considerable pressure on banks, as they charge a substantial fee for international remittance.
Money is generally sent from economically developed countries to developing nations. Hence, the USA and India send and receive the most money, respectively. The strong growth of the industry in the last few years shows that the remittance market hasn’t yet reached its mature phase and will grow considerably in the time to come.
How Is the Money Transfer Market Growing?
Heavy pressure from major international organizations as the UN and G20 to lower the cost of remittance for users has placed major online money transfer service providers under scrutiny to lower prices. This includes TransferWise, OrbitRemit, Remitly, TransferGo, and Xendpay among the notable. They, along with new money transfer companies, use the fee as a differentiator to position themselves against banks or other incumbents. That is not all! These companies have their entire business model based on digital platforms, thus allowing them to lower fixed costs and offer consumers quick turnaround times. Moreover, these companies have now started offering additional services as virtual bank accounts, prepaid debit cards, or even payroll services for businesses, thereby offering consumers more choice and utility.
The best thing about international money transfer companies as TransferWise, OrbitRemit, Remitly, and others, is that they work on razor-thin margins. They do not have a branch infrastructure and thus offer only electronic money transfer option. All these companies have successfully established themselves and have built up an efficient technological operation for processing money transfers, balance reconciliations, and KYC checks. They’ve thus created a niche for themselves by lowering money transfer costs and making the service more widely available to the masses around the globe.