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Is the Overseas Money Transfer Industry Going the Fintech Way?

February 14, 2018|0 min read
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Faced with crucial challenges to survive in this fast-paced technology driven world, banks also have to deal with stiff competition that has come their way in the field of overseas money transfers. A number of fintech companies have entered this sphere in the last two decades, and some have given banks and older players valid cause for concern.

Fintech overseas money transfer companies have done well to capitalize on the shortcomings of banks. Now, even individuals and small businesses have access to quick and cost-effective ways when it comes to making or receiving cross-border payments. 

The Cost Factor

The cost-effectiveness offered by fintech overseas money transfer companies comes from offering competitive exchange rates and charging little to no fees. These companies have access to the highly speculative foreign exchange market, which was the privy of banks and high street brokers until not so long ago. By operating with lower spreads than banks, the fintech companies are able to offer near market exchange rates. Besides, while hidden charges still remain a concern with banks, the good fintech companies have put this worry to rest. 


Regulations play a crucial role in the overseas remittance industry, and this is an aspect that requires the attention of even the new players. Fortunately, the good companies are well aware of the legal requirements, and are registered with and regulated by relevant bodies in countries where they operate. Depending on the country where these companies are headquartered out of, they may be registered with or regulated by:

  • The United States Financial Crimes Enforcement Network (FinCEN)
  • The United Kingdom Financial Conduct Authority (FCA)
  • Australian Securities and Investments Commission (ASIC)
  • Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
  • The Monetary Authority of Singapore (MAS)
  • The Hong Kong Monetary Authority (HKMA)

Since technology serves as the backbone of their operations, FinTech companies in this realm use the highest levels of encryption to safeguard user data. Besides, most even keep client funds in segregated bank accounts. 

Transfer Options

In the past, you were mainly limited to transferring money to bank accounts. If you used a company such as Western Union or MoneyGram to send money to a cash pickup location, you would have to pay a substantial amount as fees.  Now, fintech alternatives such as Azimo and WorldRemit have built sizeable agent networks of their own, giving their customers a more cost-effective way to send money to physical locations. 

Incidentally, Azimo and WorldRemit also let their customers top off mobile wallets and airtime in a number of countries. While not very common in the West, the use of mobile wallets is rampant in several African and Asian countries. With the same regions having considerable populations of unbanked people and increased mobile phone usage, more FinTech companies plan to enter this space. 

People who want to receive money but don’t want to part their bank account details now have the option of receiving funds using no more than their email addresses. TransferWise lets you receive international payments by using just your email address. You then withdraw funds into your bank account on your own. While PayPal has offered this service for some time, its exchange rates and fees leave room for improvement.

The Advent of Multicurrency Accounts

Many leading banks in the UK and Australia provide multicurrency accounts, although this is not the case in the U.S. Besides, with banks you typically need to worry about the exchange rates you get and the fees you need to pay. By entering this space, fintech money transfer companies are catering to the needs of small businesses, online sellers, and freelancers who deal with international clients.

A multicurrency account works as an umbrella account, and is made up of receiving accounts in different currencies. The receiving accounts essentially work as local bank accounts from different countries. When you receive a payment in a matching currency, it goes into the relevant account, and you don’t have to pay any currency conversion fees. 

The table below gives you an indication of the multicurrency accounts provided by different fintech money transfer companies.


Receiving Account in


The U.S., the UK, and Australia


The U.S., the UK, Canada, China, Japan


The U.S., the UK, Europe, Canada, and Hong Kong


Backed by adequate funding and a growing market share, FinTech companies such as TransferWise, WorldFirst, WorldRemit, and OFX are here to stay. It’s not just cost-effectiveness and speed that is driving more customers toward the FinTech alternatives, but high levels of customer service as well. If banks don’t clean up their act, they will continue losing out on their share of the overseas remittance pie.

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