How instant money transfers are changing the global economy
Now with a partnership of 239 financial institutions from countries around the globe, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been enabling companies, organizations, and individuals to complete their international transfers faster since 1973.
However, “faster” means that your transfer would take 1-5 working days to get to the recipient!
That’s simply not fast enough.
What if the recipient needs it for an emergency?
Things changed for the better in the mid-2010s, when instant money payment gateways started becoming the norm in the international money transfer market.
Today, the rise of modern money transfer platforms and apps, such as BOSS Money, allows businesses and individuals to send money to their partners and loved ones abroad INSTANTLY.
Put simply, with these platforms, you can now send money from the U.S. to your family in Kenya, Nigeria, Bangladesh, India, or wherever, and they will receive it in minutes!
Now, that’s a game changer.
Today, we’ll explore the drivers behind instant money transfers and how truly fast money transfers are changing the global economy.
What’s driving the change?
From financial policies to competitive markets, we can put several things as the reason instant money transfer is fast becoming the norm across the globe.
However, there are three key factors that laid the foundation for this change.
1. Advances in financial technology (fintech)
Most of the rapid changes and improvements in most industries in the past century can be traced to technological innovations.
Following the 2008 financial crisis and a sharp decline in trust for traditional banking systems, key financial investors and innovators shifted their interest towards implementing advanced technologies to secure clients’ funds and ensure faster service delivery.
Thus, leading to the growth of flexible digital banking processes and faster transfers.
2. Growth in smartphone use and internet access
Digitalizing banking and money transfer services was only one step forward.
The next step was a simple yet complex question: how do we make these services easily available to customers?
Parallel to technological advancements in the financial sector, the mobile phone industry was also recording massive advancements, leading to the widespread development and high penetration of smartphones and internet services in the global market.
For context, from 2010 to 2016, the portion of the U.S. population with smartphones rose from 20.2% to 63.9%, according to Statista.
A similar growth trend was also happening in countries around the world, from the Americas and Europe to Asia and Africa.
At the intersection of fintech and smartphones, the answer to the accessibility question was found.
With internet-enabled smartphones already in the hands of the majority of the population, there continues to be rapid growth in the development of instant money transfer mobile apps. And it facilitates instant international money transfers directly from customers’ smartphones.
3. Demand for faster, cheaper international transfers
International payments via traditional banks are often subject to outrageous fees, sometimes up to 7% of the transfer amount. And in many cases, the recipient is also charged a substantial amount by their bank.
These fees, including outgoing, incoming, tracer, and initiation fees, can amount to significant financial burden/loss for both the sender and the receiver.
It also doesn’t help that it could take up to 5 days for the transfer to be processed.
Therefore, it is no surprise that consumers wanted something cheaper and faster, leading to the fast adoption of instant payment platforms and apps globally.
This rapid, global adoption of instant money transfer services has sweeping impacts that have greatly improved personal, business, and socioeconomic relationships and operations.
Let’s take a quick look at some key impacts.
Impact on individuals and families
According to a case study reported by BBC, an individual who sends $100 to their elderly mother in DR Congo could expect her to get about $90. And it will take a lot of hurdles to get to her.
Thanks to instant money transfer platforms, individuals can enjoy:
- Lower transfer fees: Instant international money transfer platforms, like BOSS Money, allow you to complete your money transfer to Ecuador, Mexico, Guatemala, Nigeria, Kenya, or other countries for significantly lower transfer fees and even offer a $0 fee on your first transactions.
- Faster remittances: Money transfers on these platforms are truly instant, in every sense of it, with the money getting to the recipient in a few minutes after you hit “Send.” This means faster response in case of family emergencies, potentially saving lives.
- Global access: You can send instant transfers to your family and friends wherever they are, even in very rural or isolated areas.
The degree of ease and convenience brought about by instant money transfers is helping migrants keep their relationships alive with their loved ones abroad while equally ensuring that they are well taken care of.
Impact on businesses and trade
From a broad perspective, instant money transfer services are instrumental in creating a high-trust and high-profit environment for businesses operating across borders.
With instant money transfers, various business processes have been simplified, such as:
- Vendor payments: Small businesses can pay their suppliers and vendors instantly, allowing them to quickly secure the goods and services they need to keep business going.
- E-commerce: Bearing in mind that they can trust their payment service provider to validate and deposit customers’ payments instantly, more and more businesses are now embracing e-commerce. From a small shop in Wyoming, you can offer your goods and services to anyone in any part of the world and receive their payments instantly. If things go awry, you can automatically refund them without issues.
- Seamless supply chain processes: Running a business is a time-sensitive endeavor, especially if there are multiple parties in the supply chain. Instant money transfer services have been very crucial to reducing unnecessary delays in global supply chains and contracts, enabling more efficient and faster global supplies.
Impact on economies and governments
When something is of undeniable benefit to individuals and businesses, the ripple effects often extend to the immediate economy and government.
In this case, instant money transfer services have led to:
- Widespread economic growth: Instant international money transfers facilitate the global distribution of wealth, especially to low- and medium-income countries. For instance, in 2023 alone remittances to India amounted to USD 120 billion. Countries like Lebanon (31%), Samoa (28%), Tajikistan (39%), and Tonga (41) owe substantial shares of their GDP to remittances, according to the Migration Data Portal.
- Better financial policies and systems: As instant money transfer becomes more popular, governments recognize the potential impacts and develop policies that institutionalize controls for financial security, credibility, and integrity among financial service providers.
Additionally, the rapid adoption of instant payment services has revolutionized the traditional banking system. It is apparent that banks are losing their market shares to fintech companies that provide better and faster international payment services.
In response, the central banks of various countries are exploring digital currencies in a bid to keep up. Local banks, on the other hand, are creating departments that are solely focused on creating fintech solutions.
The future of instant transfers
From all indications, instant payments are here to stay and will only get better as time passes.
As traditional banks are redefining their processes to meet up with the competition posed by instant money transfer platforms, we can expect instant payment services to become more commonplace worldwide.
Market.Us, a global market research company, projects that the instant payments market, now valued at USD 38.9 billion, will grow to USD 82.4 billion in 2028.
Away from the international market, we are also seeing greater adoption of instant payments domestically in developed and developing countries in the form of QR payments, P2P apps, contactless payments, and mobile apps.
As a result, countries like Norway, the Netherlands, China, the U.S., Sweden, and the U.K. are becoming more cashless. Over time, this could become a global trend.
Finally, the security concerns and loopholes existing in the global instant payment market are acting as a basis for countries to adopt smarter regulations without compromising transfer speed and safety. As governments and financial institutions address these challenges, the rate of adoption will most likely skyrocket.
Conclusion
Instant money transfers are a revolutionary phase in human history, one that is transforming how people, businesses, and economies handle money.
Across the board, the benefits are undeniably substantial, which has led to its fast adoption across the world.
But instant money transfer services are not quite there yet; there are still some rough edges that need to be smoothened out.
Once governments, global financial institutions, investors, and innovators develop and implement appropriate policies and measures to address these rough edges, everyone will gain from the change.