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Covid-19 has changed our vision of life. People around the world had to alter their lifestyles to cope with the pandemic. Many around the world opted to go cashless, and their local economies have taken on a new complexion due to this trend. Consequently, remittances had to take a new approach, as well. Due to the shutdown of services, the beneficiaries struggled to visit the banks or an ATM to receive money. But they had bills to pay. 

And to address this issue, Money transfer services had to develop new ways to facilitate their customers - A new, better, and affordable innovation - Cross border bill pay.

Bank transfer - A Non-affordable option.

The number of international immigrants has risen to 272 million – 3.5% of the entire world's population as documented by the world economic forum. Most of these immigrants are from developing countries and are responsible for carrying the weight of the household. They regularly send financial aid to support the day-to-day activities back home. However, most international money transfer operators either charge a very high rate or take days to hit the bank account. 

On average most companies and even public banks charge a 7% international transaction fee, which can go up to 25% to some African countries. The high cost may have several reasons such as:

• A limited number of global players: Only a handful of companies dominate the remittance flow, especially when it comes to high-risk zones and remittance corridors. 
• Lack of Accessibility – the companies have to set up several physical sites for easy access. Especially for cash transactions, they need to maintain a considerable cash reserve at both the source and destination of the transactions, which drains significant revenue for logistics and operations.
• Compensating With Security – Handling cash is a risky business. Lack of convenience hurts both - the consumers as well as the organizations providing them services in remote locations. And maintaining hard cash creates another issue, be it from a transportation or storage point of view.
  

The spring and subsequent fall waves of the pandemic did not help the cause. Through bank transfers, the sender (immigrant or emigrant) and receiver (or beneficiary) both have to go through a certain waiting period. Right from transaction getting processed to finally getting deposited in the beneficiary's bank account, the whole process can take 7 to 10 days, which could be the difference between a timely full payment or someone defaulting on their dues. This issue, generally faced in a bank transaction, was addressed by the IMTOs who gave rise to tons of hidden charges, causing a significant dip in money received. It did solve the problem of delay but gave birth to another, and that is one of the biggest reasons why banks are still considered trustworthy!

People prefer simpler, faster, and secure money transactions

The problem statement for FINTech society was that they had to come up with a new reliable way to secure and fast money transfer. And then, the idea of 'cross border bill payment' was coined. People across Africa, Asia, and Latin America are already switching to e-commerce, mobile apps, and eWallets. The shift was more visible during 2020 with the pandemic around.

Against all the World Bank predictions, the global remittance market did not drop but instead appears to have  tipped towards the new technology and simpler methods. As stated by McKinsey, cross-border payment revenues are predicted to reach $1.9 billion by the end of 2020. Many countries like India, Brazil, Indonesia are growing markets on online payment systems. It is anticipated that by 2022 cross-border eCommerce would expand their presence into more than 29 countries across the regions of Africa, North America, Latin America, Asia Pacific, and the Middle East. The ease of cross border bill pay is one of the reasons for this growing trend.

Cross border bill pay = Peace of mind     

Most of the money coming as remittance is used to pay for key merchant bills such a cable, or utility. Now with cross-border bill pay, payments can be made electronically by the immigrant (directly in near-real-time) who was waiting for up to weeks to get their money delivered. One won't have to worry about the full payment to landlords, for bills or school fees. With simple mobile apps, transfers are made directly without a hassle. 

Many service providers claim to offer the lowest fee, but the overall cost can get quite large when foreign exchange fees are added. Try to use the service which offers the lowest fee taking exchange rates into account, i.e., no hidden charges.

Security is another key factor with money transfer through smartphones or other devices. One has to be 100% sure of the transactions being secure by the service provider's features. Two-way authentication, password protection, and strong encryption among devices are a few methods to keep payments secure.

Most companies offer user-friendly mobile apps. These apps not only track the payment but also keep your finances in check. Connected to the bank accounts, the sender and receiver get an email notification or SMS ensuring the transfer.

This new, affordable, and easy money transfer has also caught the eyes of big giants like Google, Facebook, and Apple. These companies are also trying to set up their own money transfer systems. Which should act as the precursor for bill payment services.

This idea, just like any other disruptor, is in its infancy and will evolve over time. But it is undoubtedly here to stay, should it get embraced by the masses and promoted by the states and big Financial giants.