As more and more Fintech start-ups are challenging traditional players leveraging emerging technologies and innovative business models, there is a need for a transparent source of information and a way to compare international money transfer services.

remittancesTransferring money overseas can be a tedious and expensive process, particularly for migrants sending money to their families in the global south. The main reasons for this is the lack of proper, accessible financial services and information about the existing options. However, this is about to change.

More and more fintech startups are disrupting the international money transfer market, leveraging emerging technologies and innovative business models.

REACHING THE UNBANKED – THE MOBILE BANKING CASE

In Kenya, there are only 10 ATMs for every 100,000 adults. That is why over 17 million Kenyans use M-Pesa, the pioneer in mobile money, as a substitute. The service is a real game changer with regard to international remittances, and is only starting to reveal its full potential. According to a Juniper Research, mobile money transfers are forecast to exceed $65bn by 2014.

WHERE DOES BITCOIN COME IN?

It might be too soon to predict whether bitcoin will change the way in which people send money overseas. However, some companies are determined to offer substantially lower costs by using bitcoin to avoid third-party facilitators such as banks. Good examples include Buttercoin, Bitpesa and Kipochi.

AVOIDING THE (EXCESSIVE) EXCHANGE RATE FEES

Payment service providers often apply excessive and hidden additional fees to currency conversions. Peer-to-peer networks like Transferwise offer an interesting alternative, matching people wanting to send money in opposite directions within a given corridor.

Regalii (for Latin America) and Afrimarket (for Sub-Saharian Africa) offer recipients the ability to withdraw payments in the form of commodities such as medication or groceries in selected outlets, instead of cash.

The maturity of online payments in western countries also resulted in new online services such as Skrill, Xendpay and Worldremit, that send money worldwide at better rates and more conveniently.

HOW TO FIGURE OUT WHAT IS BEST FOR ME?

Many parameters have to be taken in account when choosing the right service and type of transfer. The cheapest service may differ depending on the amount, the type of service and the time of the year. This is why we have built TawiPay, a comparison website for international money transfers that is intended to help migrants navigate through this jungle.

THE MISSING BILLIONS

A fair transfer fee of 5%, proposed by independent organizations such as The World Bank, would result in an additional US $3 billion inflow of money in the Sub-Saharan African countries for example. This can be achieved by increasing competition in the transfer services market, and by making the already operating service providers more cost transparent.