The international money transfer market has seen over the US $550 billion transferred each year to different parts of the world. On average, the Compound Annual Growth Rate (CAGR) of this market is about 10.4% and has been growing steadily from the year 2000.
The United Nations and the G20 countries have been pushing for lower remittance costs and to some extent, this has borne fruit. Since 2008, transfer fees have been declining year-on-year. Currently, the average cost of an international transfer is 7.21%.
The United States is the country sending the most money, US$148 billion in 2017. India is on the other side of the divide as the country that receives the most money, US$68.97 billion in 2017.
The Remittance Market Players
The remittance market has attracted a lot of players. Some of them offer mainstream banking services alongside money transfer services, others are purely money transfer operators and mobile payment services. On the basis of product, money transfer online service providers can be split into three:
- Banks Digital Remittance
- Online Money Transfer Operators
- Mobile Money Transfer Services
Let us dig in and see what each of these remittance service providers brings on the table.
Banks Digital Remittance
Apart from their traditional role of taking deposits and issuing credit facilities, banks have taken up another role, facilitating money transfers. Through international wire transfers done on paper instructions or through online banking platforms, these institutions have been upping their stakes in the money transfer industry.
Some of their solutions include flexible transfers through ATM, mobile and internet, foreign exchange alerts for registered customers and many more. However, in terms of speed and cost, banking institutions are not as attractive. They take anything between 3-5 days to deliver money and their fees and exchange rates are unfavourable.
Senders and recipients must have bank accounts to be able to transact. In rural areas where most people are unbanked, sending money through wire transfers can be a challenge.
Online Money Transfer Operators
Fintech companies have taken over the remittance service market. On every transfer corridor from Singapore to Ghana to the Philippines to the United States, money transfer operators are dominating the transfer market.
They take advantage of speed, technology, and lower fees to build a customer base for themselves. You do not need a bank account to send or receive money through online money transfers.
Case Study: Ria Money Transfer
To understand the modus operandi of online money transfer operators, it helps to look at one of the most active money transfer providers, Ria Money Transfer. Ria began as a shopfront in New York in 1987 and now has grown into a multinational company that serves 150+ countries in more than 60 currencies through a network of 389,000 locations globally.
Sending money on Ria is simple. They have easy-to-follow steps backed by a strong and knowledgeable team of customer support representatives.
Step 1: Determine the amount to send, the country, and how you would like to pay for your transfer. You can decide to use a debit card, credit card, bank transfer, or pay in cash at a physical store. You can use the price calculator on the site to see the total transfer cost.
Step 2: Choose your payout options – Ria unlike most providers has three payout methods. The funds can be deposited into the recipient’s bank account, delivered at one of the 389,000 Ria cash pickup locations, or delivered at the recipient’s home in select countries. Currently, the home delivery service is available in Armenia, Hungary, Morocco, Vietnam, the Philippines, and the Dominican Republic.
Step 3: Enter the recipient’s details: Here you input the recipient’s first and last name as it appears on their government-issued ID, provide the phone number, and email address.
Step 4: Account Signup-If you are new on Ria, you need to sign up for an account before you can initiate the transfer. The entire process including identity verification takes a few minutes to complete.
Step5: Let Ria money transfer handle the rest of the process. You can track the transfer through the website or if you used the Ria Money Transfer app, you can use the same platform to track the transfer.
On average, it takes 15 minutes to send money via Ria if you pay for your transfer using a debit or credit card and the recipient picks the cash at an agent location.
Mobile Money Transfer Services
Mobile money transfer services are growing in popularity either in partnership with banks, money transfer operators or mobile to mobile transfers. The transfer is sent instantly to the mobile phone of the recipient. The only conditions are that the recipient should have a registered and active account with the carrier or provider of the remittance service.
According to a 2018 industry report, there was a total of 272 mobile money deployments active in 90 countries globally. The registered mobile money accounts totalled 866 million up 20% compared to 2017. A typical mobile money customer moves a little over US$200 a month and about US$1.3 billion is processed daily by the industry.
Of all money transfer online providers, money transfer operators are the most dynamic, innovative and widespread. Ria Money Transfer occupies a prime position in the industry as the second-largest money transfer provider in the world.
