Remittances are an unusual paper-based service, requiring highly regulated licenses, costly handling fees and are usually based on small, individual transfers. Remittances also appear to stay stable during market fluctuations — including the financial crisis of 2008. Moreover, the digital remittance industry is growing rapidly thanks to modern technological developments. Online and mobile payments bypass a large part of the regulatory framework and costs involved, which has led to an increased number of start-up money transfers on the market.
Payment methods have been evolving for some time now. Most of these innovations are aimed at streamlining the method of money transfer by making it safer and reducing waiting times. Digital money transfer solutions have been at the forefront of improving money transfer solutions. Not only are they used in the business world, but it is also very popular in the informal sector.
Individuals, companies, and governments spend a large amount of money on conventional payment forms. This means that they have to cope with the high cost of payments and the waste of time. The costs involved tend to reduce their growth and ability to do business. The adoption of a digital money transfer solution is therefore vital for making payments quickly and efficiently, while at the same time reducing overall costs.
Security is another reason to adopt digital remittance solutions. Websites or applications used to access online money transfer platforms use the most advanced encryption methods. It means the robbery and lack of money are nearly unheard of. When you are worried about losing money or having issues like getting your financial activity monitored, organizations must use a site that is certified using high-security criteria.
The growth in digital remittances will probably focus more on allowing for faster payments through secure transfers. To ensure the security infrastructure around digital money transfers and payments, a comprehensive enforcement system is essential. Over the years, governments have also put in place stricter regulatory frameworks to ensure that the digital remittance ecosystem is not only convenient but also safe and secure.
The digital remittance industries have always been based on productive partnerships, and collaborations in the cross-border payments sector continue to play an important role. The premise for collaborations is the ability of international money transfer organizations to deliver brand recognition, industry knowledge, compliance framework, and extensive customer base on a scale, while fintech companies deliver advanced technologies and agility. In addition, technological advances would also enable small and medium-sized enterprises to increase their footprint in the money transfer and remittance sector, due to a cost-effective and sustainable cross-border payment model.
Customer expectations must determine the rate of growth in remittances. In recent years, the market for digital money transfer has received acceptance among consumers in low-and middle-income economies. Rising incomes and rapid urbanization are vital factors for the importance of digital remittances. The convenience of digital payments is mainly due to the penetration of smartphones and mobile apps. In many cases, domestic economic trends have also played a major role.
The trends for 2020 against developments in recent years have catalyzed the Fintech ecosystem. According to the PwC report on the 'Role of emerging technology in India's fintech market,' the next wave of growth will be driven by the funneling of fintech innovations to meet customer demand. When the payment universe expands, customer experience is becoming the main strategic distinguishing factor.
The effect of the coronavirus pandemic on vulnerable individuals is already enormous. In this context, the need for secure digital solutions – especially in the field of financial services – has become paramount. The opportunity to access such funds during times of crisis will make a difference for those who rely on remittances from abroad. Fintech firms in the digital remittances industry have a crucial role to play in facilitating financial resilience to the underserved and ensuring that cross-border transfers remain not only feasible but also secure, in times of increasing uncertainty.
According to the UN, remittances remain a lifeline for the families of migrant workers. One in nine people worldwide dependent on funds sent home from abroad. According to Marques, remittances account for significantly higher economic contributions in the receiving countries than official development aid – up to 7 times more in some places, such as Nigeria.
In addition to providing families with funds to purchase basic needs, digital remittances can be used to cover tuition and education fees, household bills, capital expenses for small businesses, payments to business partners, and so on. Especially in the sense of social distancing and locking measures, access to digital remittance services has had a transformational effect on the underserved.
The fintech firms can be the key to jumpstart the economy in the face of COVID-19. Several early-stage fintech companies have rapidly rotated their financial delivery models to adapt to the effects of nationwide lockdowns. From innovations in insurrection technology, e-commerce, and marketplaces, to financing for small businesses and digital infrastructure, innovators are fighting the pandemic from the frontlines.
Although governments have traditionally relied on bigger companies and conventional financial firms to fund loans, they are now supporting fintech companies who are digitally and almost painlessly skilled at lending and can access underserved communities in ways that banks cannot. Foreign digital remittance service providers were originally removed from the list of critical services during the lock-down regime in Zimbabwe. However, the WorldRemit team advised the Central Bank of Zimbabwe on the Directive to include international remittance providers as part of an amended policy that would allow these services to continue.
The digital remittance market is gradually becoming a well-established industry. The number of options currently available has only increased dramatically for a period of time. Online payment solutions are a significant advancement in the remittance market, one that helps consumers, receivers, and companies alike.
Free Valuable Insights: Global Digital Remittance Market to reach a market size of USD 33.9...
However, this development itself is ongoing and will have a significant impact on international trade, financial regulations, and digital security. This area will undergo many changes in the coming years, particularly as competition between start-up money transfer companies and traditional financial institutions increases.