“Capabilities are equally distributed, but opportunities are not”.
Brazilian Economist and Sociologist, Jessé Souz
The trailing global financial ecosystem is keeping the skilled and competent providers of goods and services from realizing these opportunities. Those missing out on these opportunities to integrate with the world can be identified in some geographical pockets, but the reasons go beyond their geolocation.
Nature of International Transfers
Of all the cross-border payments globally, international remittance is the largest person-to-person form of value transfer, while B2B payments take the biggest overall share of the pie.
- International remittances to emerging countries have shown an increasing trend, with USD 431.6 billion to USD 626 billion in 2022. Recognizing the importance of remittances as fundamental to a sustainable global economy, the United Nations has expressed the need to reduce transfer costs to under 3% and eliminate corridors with costs exceeding 5%.
- A Payoneer survey observes that 94% of the payment executives plan to maintain and expand their use of foreign-based resources, but:
Satisfaction Limitations
| Payers | Payees |
| 1. 66% are holding back because of FX costs 2. 81% are holding back because of regulatory hurdles | 1. 70% of executives reported an inability to pay recipients in their local currency 2. 73% of executives note an unfulfilled need to take payments in extra-banking accounts like e-wallets and physical cards |
While the costs have reduced significantly, the logarithmic rate of reduction poses a challenge to achieving these goals. For example, the World Bank observes that Sub-Saharan Africa remains the most expensive region to send money to, recorded at 8.46 percent total average cost in Q3 2022, with costs going up to 18-20% in some African and Latin American countries.
The reason for the slow rate of cost reduction is the use of legacy backend infrastructure that engages multiple fees and time-guzzling correspondent bank networks. While incumbents like Paypal, TransferWise, and Western Union have offered better front ends and aggregation of money flows to economize, the traditional reliance on banks is a ceiling to growth.
Consider this
The global average of sending payments across borders is 6.4% as of 2022. If there weren’t a Money Transfer Operator facilitating the transactions, a sole bank-based transfer network would cost an average of 11.69%, even today.
Source: World Bank
Regulation Fragments
The payments are often in different formats, time zones, jurisdictions, and currencies. They are processed by channels with different legal restrictions and regulations, leading to an increased level of complexity in terms of processing cross-border payments.
For instance, in European countries, non-bank providers need to obtain a financial license, while in other countries, a cross-border retail payments agreement is required. The multiple sets of jurisdictions, processes, and regulations increase costs for users and compliance for facilitators.
Another concern, not restricted to cross-border payments but vital to it, is the risk of fraudulent and money laundering cases. To tackle these, the providers have an onerous but crucial responsibility of assessing the customers and transactions. The aim is to build a risk-based assessment system to enforce compliance not just in letter, but in spirit.
Where do we go from here?
International stakeholders are looking for procedural ease, speed, security, and affordability while sending or receiving money across countries. These factors help ensure that they can send money easily, without any concern of it getting lost, serve their family or fulfilling their financial liabilities on time, and being able to send custom amounts with a predefined cost structure.
With national economies at the cusp of globalizing further with borderless gig work and supply chains, international payments are bound to increase in volume and importance, necessitating more efficient and user-friendly ways to send money across borders.
Reiterating every payment service provider’s cliche, allow us to go ahead and say, Binamite does strike a sweet balance with these requirements of the day. What enables us to do it is looking beyond the legacy infrastructures to settle these payments, compliantly, and in real time.
Binamite – New Wine in a New Bottle
Integrated, Not Ad-Hoc Compliance
Binamite automates payment processing worldwide, in real time, with integrated compliance engines that monitor the transactions, users, and entities for their legitimacy throughout their lifecycle.
Our backend logics leverage datasets from law enforcement and fellow payment processors to flag malicious actors and enrich our risk assessment processes on the go.
Instant Settlements
Using blockchain to settle transactions eliminates the question of days and week-long payment times. Transactions complete instantly, or they do not. But don’t worry, you can always see where the money is, because it’s on the blockchain.
Flexible
Our front-end offerings leverage this overhauled back-end system to enable remittances and invoice settlements for freelancers and small vendors. And because it’s on the blockchain, we extend the ability to pay and receive payments with pioneer digital currencies like Bitcoin, Ethereum, and stablecoins along with fiat payment channels VISA, Mastercard, Apple Pay, Google Pay, ACH, regional and domestic payment methods dot dot dot.
The recipients can get paid and manage a digital currency portfolio in one transaction through the Binamite pay-mix feature. Invoice or request a $100 payment in 10% Bitcoin and 90% local currency to get the best of both if you must!
