Revolutionizing Money Transfers


In a world where forty-five million people live below the poverty line, remittances prove to be a safeguard for most developing countries. At the 2015 Global Forum on Remittances and Development, the future of money transfers was placed center stage, and many agreed that the ability to send remittances through a mobile platform is fundamental. Today, the amount of remittances is almost triple the amount of official development assistance, and they therefore are integral to the economies and progression of third world countries. Most people migrate with the idea of sending money back home to their families, so this is a vital lifeline.

The Problems With Transferring Money Abroad

Dependency on remittances is huge, but with growing security worries, most large banks have closed their money transfer operations to fight against money laundering — a problem that is affecting large portions of the world’s population. Banks that still allow wire transfers abroad, like Western Union and Moneygram, have added fees, making it too expensive to send money abroad. Bank fees attached to money transfers can cost third world countries up to $16 billion a year. However, with the availability of new technologies and constant developments in the urban world, innovative ways to send money are emerging.

The Future of Money Transfers

No matter the reason you’re sending money, efficiency and speed are your top priorities. With peer to peer money transfers reaching new heights, going to the bank to transfer money will soon be a thing of the past. The market for peer to peer transactions is well over $1 trillion, and innovations such as sending money through social media is picking up, making the process easier and faster. Since 90% of money transfers occur between family members, it’s no surprise that social media is joining the leagues of money transfer developments.

Money Transfer Through Social Media:

  • Facebook – The popular social media site recently started offering a money transfer service within the United States through its messaging app. Facebook users simply need to add a US bank issued debit card when using the service for the first time, and can easily send money to any of their Facebook friends in the country. For extra security users can add PIN codes to make transactions.
  • Snapchat – The addictive photo app partnered with Square to quickly and securely send money to friends by linking a debit card to your Snapchat account. If a user does not claim the amount within 24 hours, the transaction is automatically canceled and funds are returned to the sender.
  • Google – Google Wallet allows users to tie debit cards, credit cards, gift cards, and loyalty cards to their account so they can pay for goods in store and online, as well as easily transfer money. To send money through Google Wallet, the sender and the recipient must have email addresses through Gmail or the Google Wallet App.
  • Venmo – The popular peer to peer money transfer app looks very much like a social network. Venmo allows users to sign up with Facebook and link either a debit card or credit card; however, there is a 3% charge with credit cards. Money is transferred easily to friends for transactions like paying rent or splitting a bill.

Transferring Remittances to the Developing World

While new online methods have helped improve the money transfer process in the United States, there are still ways to go internationally. The traditional way of transferring money through a bank, Western Union, or MoneyGram has substantial costs. One of the major problems the money transfer industry faces is how to provide their services to those who are unbanked or underbanked. In a recent CNN article, it was revealed that only 5-10% of the population who reach a certain income level have the need for a bank; the rest of the economy runs on cash. So how do you provide the essential services of a money transfer company to those who don’t have bank accounts?

Several methods for sending money to the unbanked have been functioning for years; many were developed in the third world countries they serve, with 167 services across 73 countries. Popular ways to exchange money are mobile money and airtime currency. As the first valuable digital currency, Airtime allows customers to exchange prepaid phone minutes for cash or to pay for goods and services. Airtime has been around for years and is still avidly used in countries like Cote D’Ivoire and Ghana to pay for a plethora of goods, including life insurance. Likewise, mobile money is used to connect millions who are unbanked. Recipients create an account on their cellphone and can then use that money to pay for any needs or they can trade it for cash. Both of these mobile currencies are helping third world countries function and develop. This is an advancement that will help many, as Mexico and Sub-Saharan Africa are the nations that are most affected by banks who have closed operations and heavy added fees from those who still provide services.

The modernization of money transferring makes the process faster, less expensive, and precise. Money transfer mobile apps eliminate the need for ATMs, which are difficult to find for many living in developing countries. A normal money transfer consists of a sender, recipient, and the intermediaries, as well as the payment interface. Mobile apps, like WorldRemit, cut out the middlemen and make it simple for those in developing countries to access their money. Fifty percent of money transfers sent to Africa through WorldRemit are received as mobile money or airtime. In many cases, the total of remittances is greater than that of prominent sectors of a country’s economy. The Philippines makes $22 billion through their electronics industry, and $25 billion through remittances. In the Dominican Republic, 70% of the population has at least one family member living abroad who provides remittances, and in El Salvador remittances make up 17% of the GDP. The evolution of money transfers through cell phones is one that has been changing the world. While many in third world countries do not have bank accounts, they do try to find access to wifi, hence the need for a mobile approach.

Money Transfer Apps

  • M-Pesa: A money transfer service that originated in Kenya. Today, 93% of the adult population in Kenya is registered for M-Pesa. Most transactions sent through the service are received as mobile money. By 2010, M-Pesa had become one of the most successful mobile financial services in developing countries.
  • World Remit: The WorldRemit App allows users to send fast, affordable, and secure transfers to 110 countries. All money transfers can be received as a bank deposit, cash pickup, mobile money, or mobile airtime.
  • Remitly: Beginning as a startup from Seattle, the money transfer service offers mobile payments to the Philippines and India. The process cuts out any intermediaries like agents and fees, so it is simple, quick, and affordable.
  • Azimo: A money transfer service that works with any internet enabled device. Money is sent to a bank account, or available for cash collection, mobile wallet, and even cash to home delivery. This is the first money transfer service that is fully integrated with social media. Using Facebook, you can easily send money abroad to any of your Facebook friends with the cheapest rates available.

Peer to Peer transactions are increasing rapidly. Plus, as diaspora and migrant communities contribute to globalization and continue to grow, so will the amount of remittances. The move to a mobile platform for financial transactions is one that will help meet people’s needs more effectively. Money is constantly exchanged in every corner of the world, and mobile money transfer apps as well as mobile wallets are helping the process. By creating efficiency and productivity, mobile platforms not only make it easier to send a friend your half of the bill, it but will also make sending money abroad possible, therefore promoting growth and development. Get ready to connect with your cell phone, because with so many new technologies, you have never been closer to transferring money next door, or across the ocean.