IntaSend provides cross-border remittance and mass payout services for businesses making payments to freelancers and remote workers. From security to convenience, fintech like IntaSend has paved the way for faster and better cross-border remittance operations. In this blog, we will share more on cross-border remittances, and our perspectives, and provide a guide on what to look for when choosing a cross-border remittance provider.
Even though it might sound easy, international money transfer is not an easy process. You need to worry about highly regulated licenses, different fees, etc. In terms of statistics, remittance is expected to be valued at $726 billion for the year 2022 - it will only go higher from there. During Covid-19 remittance didn’t fall that much from $719 billion in 2019 to $702 billion in 2020. From 2021, the worldwide remittance regained lost ground, very quickly.
If we look at the remittance industry, the growth in the past decade is tremendous and technological developments have played a huge role in that. Traditionally, there were many regulatory frameworks and different costs that came along with remittance. As soon as mobile payments became a thing, remittance became much easier, leading to many different money transfer companies opening up in the past decade.
Earlier, Western Union was the only money transfer company in the business but now it faces huge competition from companies like IntaSend, Remity, Transferwise, and Worldremit. With increasing competition, customers now have more options to choose from. So, it is essential to understand cross-border remittance and mass payout.
How does Cross Border Remittance Work?
Sending cross-border remittance to different countries involves a lot of mechanisms and parties that act as intermediaries between the payee and the recipient. Due to these intermediaries, the fees that are incurred as a result of sending remittances are hugely affected.
To mention a few types of fees, think of currency conversion fees, tax fees of the respective country, and several service charges. There are many domestic and international parties that work together in order to make cross-border remittance a reality. If even one entity stops working, the whole flow will break down and you won't be able to send cross-border remittances.
For better understanding, let’s look at an example. Whenever a transaction starts, there are two banks involved, one is the correspondent bank and the other is the respondent bank. In this case, each of these banks has its branches across the globe. As soon as the funds are released from the sender's bank, they reach the branch which is present in the remittance receiver’s country. From there on, the amount is transferred to the receiver's bank.
Banks are working with different payment service providers that help them easily tackle certain processes such as tax issues, currency conversions, and transaction fees. This ultimately slows the whole process of remittance. The process can only be short if fewer entities are involved in this.
Let’s take a look at some changes that can create a seamless cross-border payments flow.
- Real-Time Payments: Such applications are going to be game-changer since they offer the transparency that customers and businesses have been concerned about. The ability to track your transaction and check the status gives users the comfort of being in control. Further, users want to know if they are paying for extra costs they are not informed about.
- Time Factor: It is a known fact that cross-border payments take weeks to be processed and successfully completed. The whole cycle should be brought to days rather than weeks. Many businesses, especially SMBs, rely heavily on getting their payments on time. Having cash flow is basically a necessity for most SMBs and the reduction in time to clear foreign remittances will genuinely help such businesses instead of being a hurdle in their growth and financial prosperity.
- Customers want better service and solutions that are adaptive enough to keep up with their changing needs. Whether it's retail or corporate, users definitely prefer platforms that are integrated with different solutions that can provide them with more options and easy access. Similarly, users that look for cross-border payment providers, want different payment options, transparency, and less cost.
- Providing customers with different methods and secure transactions has become the norm. Users need to get an ecosystem that enables them to have a smooth experience, visit their transaction history, audit and reconcile their transactions.
- Let’s talk about integrations - the most needed feature when it comes to the global remittance system. Different integrations add value to the user experience; however, it is imperative to only use integrations that are useful. The last thing you want is to spam users with integrations that add no value to their overall cross-border remittance experience. It is also important that users get a seamless experience regardless of the transaction origin.
- There should be more transparency for stakeholders as well. When it comes to regulations, the front end and back end stakeholders, both follow similar regulations. Front-end stakeholders are usually the tech companies that have access to the data and check the transactions following less strict compliance standards. Back-end stakeholders, however, are responsible for strict compliance standards since they deal with counterparty exposure, liquidity, and balance-sheet exposure.
Bonus - Learn how IntaSend also integrates with Bitcoin to enhance cross-border payments.
Cross Border Payments - Disruption by Fintech
Traditional international remittances involving banks have always been slower, non-transparent, and extremely expensive. There is no doubt that banks have played a huge role when it comes to dominating the international remittance market; however, cross-border payments fintech has totally disrupted the remittance industry. The downfall of traditional international remittance came when the addition of fintech technology made people realize the delays and excessive costs we’ve been putting up with in the past.
Fintech companies realized the opportunity and provided the solution for it. With that, fintech organizations grew in number and placed themselves in the heart of the cross-border payment market. Fintech came up with digital innovations that made the process of transferring money overseas simpler, transparent, secure, and cheaper.
It is hard for financial institutions to compete with fintech due to the lack of technological capabilities and agility that allows fintech to be quicker than traditional financial institutions. Fintechs offer ease of use, highly user-friendly interfaces, and platforms with useful integrations - all of which, financial institutions don't.
Fintechs use APIs that help with the integration of different interfaces and infrastructure. APIs also help in providing forex exchange (FX) rates in real-time which helps fintech to mitigate possible risks. Using APIs, FX rates can be locked on the customer’s requests.
Let’s look at the benefits of cross-border payments fintech in detail.
Risk Mitigation
Fintechs avoid and minimize risks as best as they can. The best example of this is fixed FX rates. When fintech locks the exchange rates, they are playing safe and avoiding any uncertainties that might come as a result of FX fluctuations (whether higher or lower). Further, this also helps them in better predicting their revenue and costs.
This function is known as automated trade execution. When doing business in several countries, it is important to take into consideration factors such as political climate, stability, inflation, pandemics, and the labor market. All these things can affect FX rates and can prove very difficult for fintech to tackle. This automated trade execution helps simplify such complex processes.
Cross-border payments fintech provides organizations many benefits in the stock market as well. Using fintech, organizations can easily use option contracts that allow the buyer to buy or sell the asset at a predetermined price while the contract is valid. Also, current investments are hedged through fintech in order to hold customers’ profit or cost and safeguard it from FX fluctuations.
Vendor Data Management
Fintech allows vendor data management which ultimately helps in reducing the cases of fraud. Businesses nowadays have become dependent on fintech to securely send their cross-border payments to recipients within a reasonable time. This gives companies the chance to manage all vendors’ bank account data and spend time doing something more useful.
Payment frauds usually occur through changes in bank account information which is why companies need to be vigilant and ensure that they are not exposing themselves to unnecessary risk. In case you have a vendor change the bank account details, the first course of action would be the fintech verification. It will make sure that the payment route is accurate and that it is set up in a way that will minimize extra fees (for example, correspondent fees).
Fintechs have become the need of the hour for businesses. Since many companies are targeted for payment fraud. Some manage to escape these fraud attempts while others fall prey to them. It is also a fact that scammers are becoming more and more innovative in their work. They somehow manage to find ways to break into the companies’ payment systems. Fintechs security helps prevent such attempts.
Greater Speed and Visibility
Cross-border payments fintech (and banks and other payments processors) has increased the speed and integrity of cross-border transactions. This way, the payments can be settled within one day and quicker too, in some instances. This provides transparency regarding the stage that any given payment is in, along with any routine fees to be deducted along the delivery channel.
Cross-border payments fintech has empowered organizations to trace their international payment as if they were tracing a package via UPS. Its increased focus on efficiency helps organizations process cross-border payments faster.
Disrupting the Landscape
Fintech organizations will carry on disrupting the cross-border payments industry by introducing cheaper, efficient, more transparent, and more secure payments, than the ones offered by conventional financial institutions. FX-related customer risk and fraud are mitigated by deploying a seamless user interface that doesn't compromise data integrity.
Last but not the least, let’s dive into mass payment and learn more about how this option helps companies in their pursuit of quicker cross-border payments.
What are Global Mass Payouts?
Mass payout or mass payment is a unique batch payment system that enables quick and easy payment transfer to multiple recipients at the same time. With this, you can streamline your payouts whether they are for individuals or businesses. There are many uses for mass payout, sending earnings, rebates, incentives, rewards, and commissions are a few examples.
Further, international companies use this to disburse funds globally and these companies need to choose the right platform in order to get the most benefit out of using the mass payout option. The ability to send batch payouts quickly is the most important feature.
The location or different currencies should not affect the speed of mass payout. If you get the best partner for this, your global cash disbursements will become really easy. The best platforms have necessary compliance frameworks, the ability to handle FX, and the best-integrated fraud controls.
Important Features to Look Out For
You might be wondering how to differentiate between a good and bad mass payment platform, don’t worry, we’ve got you covered. Let’s discuss some important features that you cannot afford to miss out on when choosing your payment disbursement service.
Status Reporting
Your team and vendors should be on the same page in terms of information regarding the payment status. Neither one of the parties involved should be kept in dark since money is involved and we all would love transparency regarding the status of the payment.
If the status reporting is done in real-time, you will be able to see information about beneficiary details, reconciliation updates, transaction reporting, and settlement notices.
Security
Without a doubt, security is on this list. Given the number of payment frauds that occur on a regular basis, having good security will only be good for you. Along with security, you also need an easy-to-use interface that can be accessed globally.
Supported Countries
If you’re choosing a platform for global mass payout, you need a platform that supports all the countries that you want to work with. This way, you can ensure minimal hurdles along the way and it can lead to smoother operations for your business.
Local Payment Methods & Currencies
Send mass payouts in local currency is something you will definitely need. You need to look out for the platform which provides you with a global network that supports most currencies and provides different secure payment options for you.
Cost
A global mass payout will send cash disbursement to more than 500 recipients with just a single action. However, each recipient adds further costs for you as well. For a single payout, the total cost might not be that high, but when you send payouts to more than 500 recipients the total cost can pile up really fast. Make sure you’re getting the price for the transactions.
Speed
Your admin time is precious. When you use the mass payout tool, you will save up on admin time. However, what’s even more important than time-saving for your business? - the recipients’ money. Some payments are made urgently such as invoices that are overdue and payroll.
If recipients of such urgent payments don’t get their money on time, it might leave the recipients annoyed. Payments’ speed also depends on currencies. Some currencies take a long time to process while others are processed faster. Some mass payouts are sent instantly, while others take a few days.
Convenience
Convenience for users, whether payee or recipient, is important. With the mass payout tool, convenience comes as a major benefit, especially for payees. Companies can save hours that would’ve been spent on sending single payouts. With a single action, you’re able to send more than 500 payouts. Further, look out for tools that will further make it easier and more convenient for you to handle global cash disbursements.
Running batch payment is easy. You need to upload the file which contains all information regarding payments of mass payout. Once you fill out the necessary information, you can automate the payment. Many platforms provide mass payment options, but very few actually focus on convenience.
From security to convenience, fintech has paved the way for faster and better remittance operations. You can handle your monthly payroll, pay suppliers regularly, and distribute incentives along with several other uses all done with the help of batch payments automation API. Further, you can integrate your business tools with your chosen platform (assuming it supports integration) and make it work the way you want to.
Automate Mass Payout with IntaSend
If you’re looking for a convenient, effective, and user-friendly payment API, IntaSend can help you achieve your payment goals. Recently, IntaSend has partnered with Remitly which will allow developers and businesses to easily send single or mass payouts without any hassle. Countries include India, Pakistan, and 9 other countries in Africa.
Provide your partners and customers with the best payment options through IntaSend and reach new markets faster. Sign up for our remote payment service today to get started.
