Money transfers have been a dominant feature of society since time immemorial. Whether it is transferring money for the improvement of job prospects, relocation, or sending remittances abroad for family and friends, it is an intractable component of everyday life. In a globalized economy with open borders across Europe, between the US and Canada, within the United Kingdom, and in Asia Pacific, people are free to move around and work at will. This has resulted in massive growth in the money transfer industry. Remittances refer to the transfers made by foreign workers to people in their home country. The value of these remittances is quickly nearing the financial aid received in developing countries.
An in-depth study was commissioned by currency experts at MoneyTransferComparison.com regarding bank fees, and how to avoid them when transferring money abroad. This is especially beneficial to the countries receiving the highest remittances, including India, China, Philippines, France, and Mexico. Trends have held for several years. In 2013, for example India topped the charts with $69.97 billion in remittances, followed close in tow by China at $54.9 billion, and the Philippines at $26.7 billion. This global remittance industry got its start in the United Kingdom. The UK banking sector was found to be overcharging clients across the board, with allegations of price rigging in FX markets.
This led to a rethinking in the industry, with the rapid growth and development of non-bank financial institutions tasked with making money transfers internationally cost effective, efficient and hassle-free. The companies leading the charge include World First, Currencies Direct, OFX, Payoneer, and scores of others. These non-bank entities have picked up where banks have failed. They dispense with all the prohibitive costs, fees and commissions, regulatory constraints and delays, and make it easier for customers to transfer money abroad. The success of the UK-based model has facilitated the growth of money transfer services to countries around the world.
In fact, the rapid growth of money transfer services has seen the industry tripling remittances between 2000 and 2012. Since then, robust growth has continued. Banks have heretofore been the most dominant players in the industry, alongside other traditional entities like Ria, MoneyGram and WesternUnion. Unfortunately, their services are expensive, time-consuming and inefficient compared to the non-bank, online money transfer services available today. The fact of the matter is that the online money transfer services industry is a lot more cost-effective than banks, and likely will remain that way.
Asia is the New Epicentre of Money Transfers
Remittances to Asian countries like China, India, Thailand, the Philippines and others have been growing dramatically in recent years. Markets are reporting high levels of money transfers to developing countries. The World Bank reported that the 2015 value of remittances to developing countries amounted to $431.6 billion, up 0.4% from 2014 figure of $430 billion. India remained in pole position at $69 billion in remittances in 2015, $1 billion less than the 2014 figure. The world's second largest economy, China received an incredible $64 billion in remittances in 2015, followed by the Philippines in a distant third with $28 billion.
The explosive growth of the Chinese economy and the widespread reach of Chinese companies across Asia, Latin America, Africa, the Americas and Asia Pacific is the reason for the dramatic uptick in money transfers to China. The markets are characterized by a surge in money transfer companies tailoring their services to online sellers - in China and abroad - wanting to transfer their profits from their sales in China to other countries.
There is a marked uptick in services being provided to Chinese sellers who are looking to sell their goods internationally. Of course, currency transfers are associated with high costs when conducted through banks and related institutions. Money transfer services companies like Azimo, Transferwise and WorldRemit are reshaping the landscape to make it easier for online sellers to transfer their money quickly, cost-effectively and efficiently.