Fintechs could save migrant workers a combined £520m when moving money from the UK to emerging economies, according to new analysis by UK fintech Paysend.
Each year, migrant workers in the UK send £8bn back home. While the average global transaction fee is currently 7% of the money transferred, the fintech average is already well below 2%.
Combined, these savings mean migrant workers in the UK could send up to £520m more back home each year if they move money with lower cost fintech businesses.
The UN has previously called for money transfer fees to drop to 3% to boost education spend in emerging markets. This analysis shows many new fintech start-ups are already below 2%.
Ronald Miller, CEO of Paysend says, “Moving money changes lives. Money transferred might go on education, healthcare, or give families the ability to buy a home or start a business. Rather than simply acting as a ‘hand out’, research shows that money sent back home creates independence and sustainability, for the recipient and their communities.
“Paysend’s card-to-card money transfer service, Global Transfers, enables our customers to move money in an instant. With fixed, transparent and low fees, more of our customers’ money is enjoyed by those they care about.
“We’ve made what was once a laborious, slow and expensive process to pay, hold and spend money across borders now simple, quick and low cost. It’s why one million customers have used our service.”
Paysend examined the fees applied to money transfers of £1000 from leading fintech companies. The research revealed average transaction fees are well under 2% for all fintech businesses assessed.
With Paysend’s flat fee transaction of just £1, people currently subjected to the global average 7% transaction fee could save up to £65 on a £1000 transfer.
This saving could equal two terms of primary school fees at a Primary school in Lagos, Nigeria or a month’s worth of insulin and other medical supplies for a diabetic in India.
It’s also half a week’s worth of food for a household in Ukraine or a two months’ worth of fuel in the Philippines.
Launched just two years ago, Paysend’s card-to-card money transfer service, Global Transfers already services one million users across more than 70 countries around the world.
The growth stems from the emergence of increasingly mobile segments of the work force and the continued growth of international students. These are people who live and work in one country while financially providing for, or relying on, others in another country.
Global money transfers will soon overtake foreign direct investment as the biggest inflow of capital into developing countries. The World Bank predicts that 290m migrants will send $689bn back home this year.