Using the Internet to Lower Fees to Transfer Money Abroad

With the advent and growth of the internet, we have seen an explosion in online businesses and services. Some that have change our way of living. Some that even have changed us so much that they have rendered traditional businesses and even entire industries obsolete. Take movie rentals for example; with the digitization of film and peer to peer sharing, the film industry has had to evolves or risk failure. Now people don’y use DVDs as their primary viewing medium which has opened the doors to services like Netflix and Youtube.

Our financial system is currently going through what the film industry went through in the early 2000s. Money is changing and fast. Not only are financial markets increasing in volatility but but the transfer of cash is occurring more frequently and beyond more borders. Traditional, international money transfer were cumbersome due to the lack of efficient trade and trust networks, making it expensive and less attractive to less affluent people.

Things are slowly starting to change, but not by coincidence. Technology is evolving and international networks are growing independently of incumbent financial infrastructure. Bank are no longer the only service in town for people to send money abroad. An entire generation of internet companies based on both traditional financial model and progressive peer to peer technologies are taking foothold in the money transfer industry and it is driving prices down worldwide.

In the past one would use a bank to place a wire to send money abroad. Depending on the country, settlement of wire transactions could take up to 15 days and fees could and fees could escalate upwards of $100. Another would use a bricks and mortar money transfer company such as Western Union or Money Gram and would physically send money or remit through a branch. This for a long time was the most efficient method to send money abroad as it was cheaper and faster. Being, what were bricks and mortar businesses prior to internet, these companies were based on physical networks of branches which are still relevant today, but a new type of financial institution has emerged; The digital financial institution. These companies don’t have physical branches and thus have lower costs and tighter margins. You save money.

An Example of such companies is Payoneer.com

This is a company that has designed its entire business model on being fast, efficient and cheap. Because they are primarily a digital facing institution they they’re able to provide some of the most competitive transfer rates both on and off the internet. Traditional bank are essentially leaving the business of foreign remittance because they know they can’t compete. Traditional money transfer businesses are still relevant but less for remittance because these new digital companies are more efficient for small and more regular transactions.

Payonner.com is interesting because it is designed for the online experience. You can choose to have the recipient of your money transfer receive a pre-paid Mastercard payable in local currency as to directly give spendable credits. This eases the experience because even though it’s not always relevant, you are more likely to be near a banking machine than actual bank. They also have a seamless process for identifying you. All you have to do is enter the numbers on your local identification. These types of processes are built specifically to be international and work within as many countries as possible. The entire company and site wasn’t build for one country but all of them. Why should an international money transfer company be specialist in any country when their business is sending money to any country. They need to equally know them all.

Trust is an obvious factor when sending money anywhere so I recommend building a relationship with a company to do your transactions. Choose a few different companies and start with smaller transaction to build that relationship but know that newer type of businesses are changing the experience of sending money abroad. In your research, I say give them a chance.