It wasn’t so long ago that banks were the main service provider for international money transfers with companies like Western Union and MoneyGram snaring a part of that huge market. These services were inefficient, in that the transfers took a long time and cost a great deal. Even today you might lose over 10% of the total transfer amount in various fees and currency exchange margins when sending money abroad via a bank.
These companies appeared to fill this specific need, meaning to provide cheap and easy money transfers to the huge pool of migrant workers worldwide. They started with a focus on remittances, but today they are used for all kinds of financial operations.
As no money has to move across the border and the need for human involvement is minimal, these companies have low overhead costs. This allows them to not only charge minimal fees but also use small currency exchange margins. That’s how cheap international money transfers of today are possible, and blockchain has the potential to change that further.
There are a lot of talks today about and the tremendous impact it can have on the finance industry as a whole. It’s easy to see why this technology has such huge potential because blockchain transfers are nearly instantaneous, secure, and cheap. They have a , but these are the most important ones for an average person who needs to transfer money internationally.
There’s no other way to put it. If everyone can send money abroad fast and cheap, no one will use expensive bank transfers. Even money transfer companies that are popular today will lose customers because they will be more expensive overall.
The reason for that is the extreme volatility of cryptocurrencies. For all their advantages, the lack of stability makes them incredibly risky. This is why few businesses accept them and not many people have access to crypto.
The leaders of these companies seem to understand the threat. One look at the latest developments in the industry, like the revolutionary pricing change announced by a renowned , proves that they are preparing. Simply put, they are making their rates lower and services more efficient in order to ensure that their customers don’t feel the need to explore the strange and uncertain world of crypto.
A few years back, the average margin for money transfers was above 1%. This was good compared to other options, but this definitely wasn’t as good as it is now. The greatest change came in the form of TransferWise, a money transfer company that single-handedly revolutionized the industry.
The impact of this was fast and brutal. TransferWise became one of the fastest-growing businesses in the last decade, and one of the most successful. This is definitely amazing for everyone who works there, but it’s the wider impact on the industry that matters more.
Today, this situation might repeat itself through WorldFirst. After at the beginning of the year, WorldFirst went through several changes. Little is known about what exactly went down during that deal, but now we can see that WorldFirst is making waves in the money transfer industry. The reason is the company’s latest pricing change.
three pricing tiersThis means that WorldFirst currently offers a highly beneficial opportunity for anyone who needs to use this kind of service. Even if they fall into the most “expensive” tier, the margin of 0.5% is one of the lowest and the fact that it’s fixed means less risk for the customer.
However, part of that reason might be the fear of crypto and all that it represents. Blockchain is growing and this won’t change. Experts predict that it will keep growing and will play a prominent part in the money transfer industry within the next decade.
The question here is whether it will be enough to keep money transfer companies in business after the rise of crypto. That’s hard to predict today, but one can be sure that these businesses will keep working on new methods of securing their future. Ant Financial will surely stand at the forefront of that fight because this giant might lose everything when blockchain makes a leap forward.