Sending money abroad used to be a painful process…
Queueing at the bank, exorbitant fees, days-long waits before your recipient sees any of the funds…ugggh.
What A difference digital wallets have made.
They’ve completely changed the way people send money internationally. It’s becoming a fast mainstream trend.
Let’s take a closer look at what this means…
What You’ll Discover:
- What Are Digital Wallets & Why They Matter
- The Growth of Digital Remittances
- Key Benefits of Using Digital Wallets for Transfers
- How To Choose The Right Platform
What Are Digital Wallets & Why They Matter?
Digital wallets are mobile apps or software that store payment information on a phone or computer.
Users can send money, make purchases and manage their finances digitally without needing cash or cards. In the context of international transfers, digital wallets are already revolutionising the process.
The problem with traditional money transfers is they’ve always been slow and expensive. Banks and legacy providers charge huge fees and take days to process payments. Digital wallets cut through all of this.
They offer cheaper and faster alternatives. Consumers have taken notice. When people look at Paysend vs Remitly, for example, they can quickly see how digital-first competitors are outperforming old school services with lower fees, more competitive exchange rates and instant delivery options.
Powerful stuff right there.
The Explosive Growth of Digital Remittances
The statistics speak for themselves…
Per the Worldpay Global Payments Report, digital wallets represented a transaction value of $13.9 trillion in 2023. This is 50% of all online consumer spend across the globe.
And it’s only going up.
By 2027, they are expected to jump to over $25 trillion in global transaction value. The ease of use is one of the primary drivers of this growth. People want quick and easy ways to move money around the world.
The digital remittance market, in particular, is set to experience explosive growth. Research shows that this market is estimated to grow from $23.4 billion in 2024 to over $83 billion by 2034, with a CAGR of 13.5%.
What’s driving this growth?
- Increasingly, smartphone penetration around the world
- Rapidly growing global migrant worker populations
- Demand for faster and cheaper international remittances
- Easy to use mobile-first applications
There’s also a general move away from cash-based transactions. The number of people using cards, e-money and apps is growing year-on-year, further accelerating the trend.
Key Benefits of Using Digital Wallets for Transfers
Digital wallets are superior to traditional money transfer options in several ways.
Let’s take a look at the main advantages.
Lower Transaction Fees
Banks and traditional money transfer operators make a lot of their money through international transfer fees.
Digital wallet platforms have disrupted the market by offering much lower-cost alternatives. Many charge flat fees of a few dollars irrespective of the transfer amount.
Others offer fee-free transfers up to a certain threshold. These low costs are particularly attractive for people who regularly send money abroad to family members.
Faster Transfer Speeds
Remember when you had to wait 3-5 business days for an international transfer to clear?
Digital wallets have already changed that. It is possible to now send transfers that take as little as a few minutes in popular markets. That means recipients can access their funds in minutes rather than days.
The speed is a massive improvement for emergency funds and time-sensitive payments.
Better Exchange Rates
What most people don’t realise is that banks typically add a 3-5% markup on top of the exchange rate.
Digital wallet platforms offer much lower margins in this regard. Some providers quote exchange rates within just a few basis points of the mid-market rate. This can save senders hundreds of dollars in the long run.
For frequent senders, these exchange rate savings will quickly add up.
Enhanced Security Features
Digital wallets use advanced cryptography and authentication methods to secure transactions.
Things like biometric identification, two-factor authentication and real-time fraud monitoring help to keep funds safe. Many services also offer buyer protection and dispute resolution mechanisms.
These security measures provide peace of mind when making large international payments.
Better still, all these features are transparent to the user. Security updates are applied automatically via the app and user always has the latest protection without having to do anything.
Convenience and Accessibility
Everything can be done from your smartphone.
Users can initiate transfers at any time and from any location. There’s no need to visit a physical branch or stand in line. Transaction history and receipts are all stored digitally for easy record keeping.
This accessibility has enabled international money transfers for millions of people who otherwise had few options.
How To Choose The Right Platform
When choosing a digital wallet provider for international transfers, a few important factors must be considered.
Compare Fees and Exchange Rates
All platforms have different fee structures.
Some charge flat fees while others charge a percentage of the transfer amount. Exchange rate markups also vary widely. Always work out the total cost including all fees and exchange rate spreads before deciding.
Check Destination Countries
Not all providers support transfers to all countries.
Check both the origin and destination country are supported by your chosen platform. Also, check what payout options are available like bank deposit, mobile money balance or cash pickup.
Read User Feedbacks
Customer reviews say a lot about a company’s service.
Look for comments related to transfer speed, customer service response times and any hidden fees. Platforms with consistently positive reviews across many sources are generally more trustworthy.
Test With Small Amounts First
Before sending large sums, it is always a good idea to make a test transfer with a small amount.
This can help you verify that the process works as expected and funds arrive without any problems. It also allows you to get familiar with the platform’s interface and any potential quirks before making bigger transfers.
Wrapping It Up
Digital wallets have already revolutionised international money transfers.
The benefits are hard to argue against:
- Cheaper fees that leave more money in your pocket
- Faster transfers that arrive in minutes not days
- More competitive exchange rates than banks
- Better security features that give you peace of mind
- Convenience of making payments from anywhere
The market research shows that already, over 2.8 billion people around the world use digital wallets. This figure is going to grow as more people become aware of the benefits.
Traditional banks and legacy transfer providers are rapidly losing ground. Digital-first platforms are winning the day by understanding what people want… speed, transparency and value.
The future of international money transfers is digital. That future is already here.
