While the global payments market has witnessed significant change over the past decade, one consistent trend has been the declining cost of sending money internationally.
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The level of competition created by an increasingly crowded market of payments providers, combined with improvements in cross-border payments technologies, has led to a sustained fall in the cost of sending remittances.
This has dropped from an average of around 10% (of the total amount being sent) in 2009, to less than 7% by the end of 2019. With more providers continuing to enter the market, including major players like Santander’s PagoFX and SamsungPay, fees are expected to be driven down further.
Remittance providers can’t compete on price alone
For the typical customer – whose priorities are simply avoiding hefty foreign exchange fees, while ensuring their money reaches its intended recipient quickly and safely – increased competition in the remittance market is good news.
But for traditional remittance providers, it’s becoming ever harder to build a loyal customer base, especially if all they have to offer is low fees. The unfortunate truth is that if a customer comes to a provider because it’s offering the best price, they’ll leave for the same reason if they find somebody cheaper.
Many remittance providers have realized that in order to build customer loyalty, they need to offer a portfolio of services beyond simply sending payments. In fact, in such a commoditized and competitive market, any small or medium-sized provider who isn’t offering services other than remittances should be quaking in their boots.
The rise of the e-wallet for business
That’s why many companies that have traditionally served only a retail customer base are now turning their attention to the business market, where there is greater scope to create value-added services that can build customer loyalty.
Many of these companies have evolved into e-wallet providers, enabling their business customers to not only send payments, but also to receive funds and hold and convert balances in different currencies.
Currencycloud is supporting this evolution by providing the infrastructure that allows businesses – via e-wallets – to make and send payments and hold balances within a single ecosystem. Our solution is called Currencycloud Spark.
Many payments platforms focus almost entirely on pay out flows, and offer a poor user experience for business customers collecting funds. However, with Currencycloud Spark, financial institutions can offer multi-currency accounts to their business customers to collect, store, convert and pay in more than 35 currencies.
Today’s businesses also expect complete visibility of funds at every stage of a payment. Traceability is the final piece in the global payments jigsaw. For smaller businesses in particular, it’s a major drain on resources if they are constantly having to check that payments have reached their suppliers.
That’s why Currencycloud uses SWIFT gpi, a real-time payments tracking system that enables funds to be tracked at every stage, by assigning each payment a unique code.
SWIFT gpi enables most international payments to be credited in a matter of minutes, but if for whatever reason they don’t land with the beneficiary, we can help clients quickly find these payments, and understand why they may have been held up in transit.
In the near future, we will also be rolling out SWIFT gpi as a self-service option for customers. This will be another important milestone.
We know that when it comes to international payments, businesses want transparency and visibility – but they also want control. This is why we’re delighted that through Currencycloud, payments providers will soon be able to offer this self-service tracking functionality to their customers.
Competition in the remittance market isn’t going to ease off any time soon. In fact, it is likely to become more intense.
For small and medium-sized remittance providers in particular, being able to offer the full payments package in one ecosystem – along with full visibility of funds – is the key to creating that all-too-elusive customer loyalty.
Discover how Currencycloud Spark is revolutionizing the way businesses approach international commerce, by enabling them to collect, store, convert and pay in more than 35 currencies, and learn how banks and Fintechs can take advantage to deliver a superior customer experience. Or read about how we are transforming cross-border payments tracking with SWIFT gpi.