In the past, sending money abroad usually used to be an expensive and hectic task. This was mostly as a result of the almost never-ending chains of middlemen, manual paper work and hidden charges.
However, in recent times, developments have surfaced in the finance industry that have helped individuals, small and mid-sized companies to enjoy faster, cheaper money transfer services.
These are all benefits which larger corporate bodies, banks and governments have traditionally held through their direct access to the institutional foreign exchange markets which exchanges 4.8 trillion Dollars of transactions each day.
Overtime, money transfer operators (MTOs) have been facilitators of international payment transactions and the International Monetary Funds (IMF) recognizes MTOs as “financial companies (but usually not banks) engaged in cross border transfer of funds using either their internal system or access to another cross-border banking network.”
The complexities of different currencies and banking systems means that sending money from one country to another is completely different and this has over the years necessitated an evolution of the international money transfer market.
In light of the above, as new players enter the market, the level of competition arises, using fees as a tangible differentiator to position against current players. Building their business models on purely digital platforms also provides them with lower fixed costs and their modern, cleaner technological platforms offer consumers quicker turnaround times.
One other significant change in the international money transfer market is that as the industry moves towards one having the characteristics of a commodity market, players are having to fund new ways to differentiate themselves with the above mentioned competition through services like prepaid debit cards or payroll services for business, all of which offers the consumer more choice and utility.
With the speed of the evolution of the international money transfer market, it has now become apparent for existing market players to find efficiency improvements and offer different value added services in order to stand out from the crowd.