October 4, 2014
I hope Google is listening.I hope Apple Pay will one day enable cross border P2P. I hope someone someday will solve my global remittance problem. I can understand the pain of numerous software consultants working in New Jersey,trying to send cash to their family in India. The available meoptions require you to either wait for a few days, are complex and/or are pricey. The classic de-facto method is to use money transfer companies like MoneyGram or Western Union or try a bank to bank transfer. I met a very senior payments expert who told me that he has been giving a signed cheque book to his parents to do so. How dated does that sound to you? Personally, I am not satisfied with the Service and the functioning of above methods. Let me try to share my concerns as a millennial who just joined the workforce in the US:
Money Transfer Companies have expertise in transfer of money from a defined source to a defined destination. Such institutions have a network of service centers/Offices across the world and now also have web-based systems. Here’s some of their Pros and Cons:-
Pros:- Fast, Reliable and require almost nothing from the recipient except an ID
Cons:- Expensive (hurts badly); Needs availability of a office nearby at the recipient side.
If you worked hard to earn your money, then the service charges will probably put you in a state of depression.
And what about electronic transfer from your US bank account to an offshore bank account (in this case India)? e.g. Transfer from BOFA to HDFC account. Seems simple enough? Well, it is, but the only constraint is that the recipient needs to have a bank account. The biggest disadvantage is the sluggishness of the channel - in some cases it takes more than couple of days for the recipient to finally get the money, even after paying $45 in fees (let alone the lack of control over the exchange rate)
Reluctantly, I have to choose the lesser of the 2 evils - one of the only two inadequate non-mobile-friendly methods. The issue does not really seem to be the technology available to make this better or the lack of entrepreneurship or innovation in this area. The issue is primarily that of regulation. India does not allow true mobile remittance from abroad. However there are some great examples such as Gcash in Philippines, Singtel in Singapore, and Western Union itself has mobile remittance capabilities in countries where it is allowed. For me, a mobile app that I can use to transfer the amount in one go could be the ideal solution, especially if it’s also cheaper that current options.
Global Remittance market has seen strong growth with India and China the biggest receiver countries as seen in the chart below.
Can mobile wallet based remittances really revolutionize money transfer across borders? Are the countries like India going to risk their security (due to illegal use) by allowing mobile apps for inward remittance. Do you think we would ever be able to transfer money quickly and cheaply to India.
May be Bitcoin is another answer to this with some exciting applications coming up such as BitPesa. Elizabeth Rossiello, BitPesa’s founder and CEO, said: We’re looking to bring the price [of sending remittances] as close to zero as possible. BitPesa does not charge a transfer fee, but levies a 3% foreign exchange margin on each transaction. Another notable one is Buttercoin which is believed to looking at the most lucrative corridor for remittance the US - India one. Their model is to open a local Bitcoin exchange in each country.
Have you faced problems with international money transfer/remittance? What do you do today? Any suggestions?