Remittances are a vital source of support for millions of people relying on funds they receive from loved ones abroad. With money transfers made by migrant workers now representing the largest source of foreign income for many developing countries, these types of cross-border transfers are likely to keep increasing.
Recent research by Visa shows that an estimated 800 million people receive money from family or friends abroad, and in 2021, "global remittance inflows reached a new record of $733 billion, of which $605 billion went to low and middle-income countries."
The ability to send money abroad is more important than ever; and remittance companies that want to tap into the lucrative world of cross-border money transfers will need to deliver them reliably and at a low cost.
So, what is the best way to grow a remittance business in 2023 and beyond?
Despite the growing need for remittances, many money transfer operators (MTOs) struggle to survive in the highly competitive market. It is a challenge for any MTO to navigate ever-changing consumer needs and mounting pressure to reduce fees.
This comes as emerging technologies continue to democratize fund flows. Faster and cheaper foreign money transfers can now be accessed by individuals and smaller businesses, whereas previously, they were only available to large banks, enterprises and governments.
More so, with low barriers to entry and switching costs, the power dynamics have tilted in favor of the consumer, which is why fees are on a downward trend. With fees falling to all-time lows, MTOs must look at new ways to differentiate themselves from competitors by offering new services that will increase customer loyalty, such as payroll services, virtual bank accounts, and prepaid debit cards.
For money transfer operators, it’s now vital to have a digital-first infrastructure that ensures fast, versatile, cost-effective transactions to any region that depends on reliable remittances. More so, remittances must be optimized to extract maximum value for recipients.
To do so, MTOs must look to partner with a payments service provider (PSP) that can offer a sophisticated, end-to-end remittance solution. One that will enhance operational efficiencies, expand global reach and provide tailored payment experiences for consumers, to name a few.
Here’s what a superior remittance service looks like with Checkout.com:
Read more: What is international remittance
Digitalization and new technologies such as blockchain and artificial intelligence will continue to shape cross-border payments and the remittance industry. Money transfer operators must partner with established and proven payment service providers so they can respond to payment trends and global events.
Checkout.com supports leading remittance brands such as Wise and TransferGo, helping them gain an edge in a fast-changing industry. Serving as a gateway, processor, acquirer, issuer and fraud manager through a single API integration, Checkout.com can help any business grow across borders and improve customer experience and revenue.