This posting is found in Outlook and speaks to the cross-border remittance space. We have often commented about x-border in these pages as well as in ongoing member research, given the high profile of such transactions in recent years. Much more innovation has been occurring in the space due to technology enhancements (blockchain, instant payments, etc.) as well as the ongoing commentary from the World Bank and other global entities around the cost of these transactions, particularly as it relates to P2P transfers.
As many will know, remittances are generally defined as P2P transfers, while other use cases are B2C (payroll, insurance payouts, etc.), C2B (bill pay, rent, etc.) and B2B (goods and services). The total of all these use cases is estimated by some to be in the range of $150 trillion annually, although the author seems to ascribe this value to remittances only, which is likely a wording issue. Remittances are a fairly small portion of overall cross-border value transfers, but nonetheless gain lots of attention due to individual consumer cost. In any event, the author makes the point that fintech generally improves the overall throughput and experiences for these transactions, which has been an ongoing trend now for years. The author points out certain corridors of value transfer. As use experiences beyond P2P continue to evolve, we will keep you posted.
‘Fintech companies and cryptocurrencies are revamping the way technology is used. Often, such transactions are high in volume but low in value. “In many cases, the formalities, paperwork etc., required for a ‘transaction type’ are the same irrespective of the amount. Hence, the large-value transactions become lucrative while the lower-value transactions become cumbersome for the bank (to process). Technology helps banks automate many of these processes and converts the ‘dislike’ into ‘like’ for such transactions. Moreover, the ability to transact 24×7 and across time zones is a huge benefit from a customer experience perspective,” says Contractor.’
‘Global cross-border remittance is a growing opportunity, with payments volumes expected to cross the $156 trillion mark in 2022. However, new use cases are emerging every day. For example, a dentist importing a dental chair from Germany is also a cross border transaction. Travel, education and healthcare-related cross border transactions are some segments that are seeing high growth, says Contractor. Banks would require technology to cater to this growth, something that fintech companies provide, he adds.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
