Why have cross-border money transfer startups become so popular recently?
Cross-Border Payments
Asked by Question Bot04/Dec/20141 answer
1 Answer
F
Faisal Khan
Answered 04/Dec/2014
Remittances or (cross border) Money Transfer has always been a hot field. It has been steadily growing strong each year (despite the downturn of 2008) and forecast for the next couple of years looks solid.
Traditionally, money transfers were controlled by correspondent banking and large MTOs (think Western Union, etc.)
With the advent of more automation in Banks and payment networks, the ability to have a web (or Internet) based money transfer system today makes a whole lot of sense, versus the traditional agent model (which by the way is still a rock solid model).
New startups in the money transfer vertical are taking advantage of the automated banking and payment networks in the beneficiary countries (think primarily developing countries) and their revenue models are based on the lucrative markups on transactions from developed to the undeveloped world.
For example, if one develops an app/setup for remittances from US to Bangladesh, with a cookie cutter approach, you can then easily sell such services (with slight regional modifications) to countries like India, Pakistan, Nigeria, Egypt, Vietnam, Morocco, etc.
The game changer in my opinion is the Internet access to Banks and Payment Systems in the beneficiary countries that allows such start-ups to do business with special emphasis on the ubiquitous nature of being able to route payments to different mediums and payment instruments.
Traditionally, money transfers were controlled by correspondent banking and large MTOs (think Western Union, etc.)
With the advent of more automation in Banks and payment networks, the ability to have a web (or Internet) based money transfer system today makes a whole lot of sense, versus the traditional agent model (which by the way is still a rock solid model).
New startups in the money transfer vertical are taking advantage of the automated banking and payment networks in the beneficiary countries (think primarily developing countries) and their revenue models are based on the lucrative markups on transactions from developed to the undeveloped world.
For example, if one develops an app/setup for remittances from US to Bangladesh, with a cookie cutter approach, you can then easily sell such services (with slight regional modifications) to countries like India, Pakistan, Nigeria, Egypt, Vietnam, Morocco, etc.
The game changer in my opinion is the Internet access to Banks and Payment Systems in the beneficiary countries that allows such start-ups to do business with special emphasis on the ubiquitous nature of being able to route payments to different mediums and payment instruments.