Making international money transfers mobile
By Olivia Chow, consumer trends expert & finder.com Money Transfer Awards Project Lead, finder.com
When it comes to buying groceries, splitting dinner with a friends or paying for a cab, Americans are increasingly reaching for their smartphone over their wallets.
Recent research conducted by personal finance comparison website, finder.com, found that digital wallets are now the preferred method of transferring money for 57 percent of the population. However, this upward trend is only applicable when it comes to domestic transactions with the majority of international money transfers still conducted in person with cash (80 percent of these transactions according to the 2015 IMTC).
As more and more financial providers do way with physical locations and ATMs, making way for innovations that place mobile payments at the forefront, similar movements for international money transfers are likely much further down the track.
The reason for this can not attributed to industry size. Analysis by finder.com uncovered that 34 percent of Americans, or 84.1 million, make international money transfers. Last year alone saw an estimated $140.1 billion transferred out of the country, which is more than half the amount borrowed for mortgages and more than student loans and credit card debt combined.
Research indicates that trust, or lack thereof, amongst consumers could be playing a significant role in consumers feeling deterred from online international money transfers. Preliminary research conducted by finder.com found a huge number of dissatisfaction. Research revealed 96 percent are unhappy with their international money transfer provider with 80 percent of these feeling 'ripped off'.
So what can providers do to improve consumer trust and satisfaction, and ultimately encourage them to make international money transfers on mobile devices?
Finder.com recently launched an extensive study into international money transfer providers - forming the inaugural finder Money Transfer Awards - to gain insights into those offering best practice across user experience, convenience, trust, speed, rates.
Here are three things we found which could encourage consumers to go mobile for their international as well as domestic transactions:
Integrate ID verification into application
Transferring money outside of the U.S. opens up a whole new level of security concerns including money laundering, fraud and theft. For this reason, the industry is heavily regulated and transfers require a great deal of identification verification. While having policies in place to protect consumers is a good thing, it certainly isn't as convenient as we’re used to with domestic digital transfers.
Mobile payments are meant to make life easier and more convenient and the providers that performed the best in this area had found solutions to typically onerous verification process by allowing users to submit and upload documents within the online applications. While some did require a phone call, we found these were always initiated by the provider promptly after the information was inputted saving consumers from needing to email email additional documents.
The beauty of mobile beyond convenience is the connectivity it provides. When transferring money for domestic transactions on your device, we really take it as a given that we’ll be able to transfer from state to state. However, with international money transfers, customers have to look up whether or not a particular service is available in their state and if so, has the ability to transfer to the country they want to send money to. Connectivity and accessibility usually afforded by mobile transactions is not as far reaching for international money transfer with not one of the
You would imagine the globalization of the internet would overcome this barrier yet not one of the providers researched in the finder Money Transfer Awards covering more than 90 countries and territories. In fact, more than half offered less than 40 countries available for transfers. This applies to the veterans in the money transfer industry, like Western Union and Moneygram, who boast country coverage counts over 130, but can only receive funds digital (in a bank account) in less than 60. The rest are only available if recipients want cash. Expanding corridors offered will be a big drawcard for consumers to switch from physical to digital transfers.
Greater price transparency
When operating in USD for USD as domestic transfers do, exchange rates don't come into play. However for international money transfers, they can be a fundamental decision maker for consumers. Unfortunately, the research into satisfaction levels revealed consumers were confused about rates and often ended up feeling ripped off as a result. Exchange rates are rarely offered online at market rate, with fees of the different providers built into the quotes which can dramatically impact what is received on the other end of the transfer. Some providers, like TransferWise and Circle, do use the assumed market rate making the fee truly the only that needs to be compared.
Physical cash transfers may not offer the best prices (on the contrary), customers are given quotes before providing all of their personal information. In contrast, less than 70 percent of our finalists provided accurate exchange rates and fees before having to sign up for an account. Transparent steps with a clear and open path from transfer to delivery could help build consumer trust and adopt digital transfers.