Alan Marquard, head of transfer solutions at Mastercard, told pymnts that remittances are ripe for continued transformation to digital channels, and to digital wallets, which make international fund flows cheaper, faster and more convenient.
Earlier this month, Mastercard announced a new connection with China’s Alipay, which enables bank, FinTech and corporate clients to offer customers a connection to an e-wallet that has more than 1 billion users.
Marquard noted that although sending money across borders isn’t new, the shift to digitized ways of paying have been intensified by the pandemic. Migrant workers have always sent funds home. But in recent years the gig economy has taken flight, and flexible working arrangements have seen professionals working across countries and remitting funds internationally. There’s also been a boon in online platforms, where sellers (whether they’re individuals or small businesses) and buyers send payments abroad.
And, as he said to pymnts, “at the end of the day, payment needs drive payment types,” adding that “digitized experiences like this tend to offer better value for money than multi-chain or ‘multiplayer’ chains of payments where a number of people are taking a ‘slice’ along the way.”
Cross-border payments, as traditionally conducted, have several players in the mix via the correspondent banking system and they can be expensive, with fees averaging around 6% of the transaction. The G20 has identified key areas that need to be addressed to improve cross-border payments: speed, cost and transparency.
Digital Wallets Gain Ground
Though Marquard observed that many remittance payments end up at cash endpoints, in countries where cash economies hold sway, digital wallets are finding wider berth as a conduit for end-to-end digital fund flows.
“Wallets,” he said, “are becoming a cross-border mechanism.”
That’s especially true in countries like China, where, especially in remote areas, getting to bank branches is no easy task.
“The convenience of digital forms of things that exist in your hand, on a phone, with super apps like Alipay,” Marquard said, “has opened up [financial] access to hundreds of millions of people who couldn’t have been reached before.”
The recent announcement with Alipay, he said, builds on the news last year that Mastercard was being incorporated into the Alipay wallet, enabling consumers to use cards, for example, with QR codes.
The new efforts, said Marquard, help satisfy the need for sending remittances (via P2P transactions) home to China, which is among the largest “remittance receive” destinations in the world. The joint effort with Alipay, he said, is one where the infrastructure is in place to deliver payments in close-to-instant fashion, with transparency and full disclosure of fees upfront, so that the amount received is the amount that’s actually needed by the recipient.
The March announcement is illustrative of the payment network’s focus on cross-border payments as Mastercard Move’s services, which include cross-border functionality, touch 10 billion endpoints and cover more than 95% of the world’s banked population across 280 countries.
For the payment network’s clients including second- or third-tier banks or smaller money transfer outfits maintaining a global network with compliance and fraud capabilities has been out of reach.
As he told pymnts regarding Mastercard Move, the goal has been to “build a service that can either fill in for big players or be an end-to-end payment service offering effectively for smaller players.”
As cross-border payments become faster and more digitized, he said, with digital wallets in the middle of it all, apps can be linked to other services so that other financial services can be integrated, which in turn broadens financial inclusion. In building out Mastercard Move, he said, “we want it to be a comprehensive money transfer offering,” that can be tied to payroll cross borders, gaming payments and B2B transactions.
As he told pymnts, “that roadmap of making sure that we can service every single kind of payment to any endpoint that’s what we’re working really hard on at this very moment.”
Source: pymnts
Image: thepaypers