The rise of globalisation has been accompanied by a big growth in migrant workers. We can think of places like Dubai with may international migrant workers in the building and construction sector. There are examples everywhere, large global cities have better opportunities and many people pursuing careers work abroad to take advantage of better job opportunities. It's become very common to work abroad for a while and see the world.
The payments people send home from abroad are called remittance payments . There are lots of different options for sending money. Directly sending money between two banks in different countries can be expensive, you have transfer fees and exchange rates to pay.
There has long been a view that blockchain based and other innovative web based electronic payments systems would and could offer a competitive advantage in remittance payments, allowing people to move money across borders at lower cost.
The crisis brings some interesting changes to market conditions. Firstly air travel is likely to be a rarer event going forward. We may also see changes in behaviour of the migrant labour force in terms of their willingness to stay abroad or take jobs abroad in the future.
If people are less willing to travel, we may well see more of a shift to "international work at a distance".
For many cash will be tighter than before, but business must go on, "the machine can't stay stopped"... a few key questions that many people may be asking going forward...
We can't answer all the questions in this segment, but the efficiency question is a good one to start with.
There are many options for remittance payments, here we look at some of the more popular options that exist for remittance.
The conventional way of transferring money to someone in another country is to make an international bank transfer from your bank to their bank. The issue with this is that the fees tend to be high, and companies have arisen to provide more cost effective alternatives.
| Company | Product overview | Date founded |
|---|---|---|
| Western Union | Online transfer, in shop transfer. | 1851 |
| Moneygram | Online transfer, in shop transfer. | 1940 |
| MoneyCorp | Online transfer, in shop transfer. | 1962 |
| TransferWise | Online transfer only (phone app and web app) | 2011 |
| Remitly | Online transfer only (phone app and web app) | 2011 |
Western Union has been around a long time, and is one of the most common remittance payments methods. People can transfer money even without a bank account in store. It also has an online presence. Transferwise and Remitly are more recent online only offerings. They brought very competitive pricing from the different ways in which they operate. The healthy competition has meant all platforms tend to offer good online prices that are generally cheaper than bank transfers. It's worth comparing and checking though... where you are sending the money too can really make a difference on the different platforms.
| Company | Product overview | Date founded |
|---|---|---|
| BitPesa | Online transfer and text and email payments | 2013 |
| WeSwap | Online transfer only (phone app and web app) | 2013 |
| Revolut | Online transfer only (phone app and web app) | 2015 |
Blockchain enabled systems are a much more recent addition. They are not yet mainstream but offer a strong competitive edge in niche markets. In parts of the world where the traditional banking system is not strong, the blockchains can often be the cheapest (and sometimes only) solution. The underlying infrastructure required is a mobile phone and open source software. It's a great solution because of the low infrastructure requirement, and minimal need for staff or training to provide these systems.
Web and phone applications provide a glossy front end to payments over the blockchain, the users don't even really need to know that blockchain is used. BitPesa has a very strong presence in central Africa, and is leading the way in terms of innovation in Fintech in that emergent market.
