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It would be an understatement to say that the coronavirus pandemic has impacted every aspect of life as we know it, including remittances.
At the beginning of 2020, the World Bank had predicted that remittances would increase be at an all-time high. A few months into the pandemic, they revised this and reported that they would drop by 20%. Neither of these predictions rang true.
The year closed with global remittances dropping by a mere $8 billion to $540 billion in 2020, a 1.6% decrease, and is expected to pick up by 2.6% this year.
Even though the remittance market didn’t suffer as much as other industries, and the road to recovery has been rather smooth, it has become clear to both customers and remittance companies alike that the industry needs to adapt to these changing times.
Here are four ways in which the remittance industry will evolve in the post-COVID era:
1. Contactless Remittance Payments
Gone are the days when customers are comfortable with, or in a lot of cases permitted to, line up at physical branches to send money. The era of digital payments has arrived and the pandemic has taken it by force.
Even digital-sceptic customers adopted mobile payments across the globe to minimize the risk of spreading the virus with cash, both senders and receivers. Remitters are experiencing the convenience and ease of use of contactless payments and do not want to switch back to traditional methods.
This has prompted remittance companies to develop their own platforms or integrate with existing digital payment platforms to sustain growth going forward.
2. Interoperability between banks and mobile channels
In many markets, there is poor connectivity between banks and mobile markets, which cause last-mile restraints. Remittance companies need to think about finding the right partner who can integrate with non-cash channels such as mobile money and digital bank accounts, to increase reliability and accessibility, even in remote regions.
AZA Finance’s API gives SMEs & enterprises access to numerous payment providers and banks across Africa and Europe with 50+ currency pairs. In one easy integration, remittance companies can hold a single balance and make payouts across our network. And to top it off, we offer the most competitive rates and a dedicated support team to make your integration smooth and seamless.
To find out more about how our API solution can solve your challenges, reach out to us.
3. Competitive rates and reduced costs
The cost of remittance to Africa is the highest in the world at 9%, mostly due to logistical costs as a result of cash usage. With digital payment methods and better integrations with mobile and digital channels, the cost of sending money abroad should drop.
This would, in turn, reduce the reliance on black-market dealers to send remittances. A lot of customers, especially in emerging markets, turn to informal sources to save on the cost of sending money, despite the security concerns.
With the advent of digitisation, we expect the formal sector to offer comparable rates to the parallel markets allowing for more affordable and secure transactions.
4. Seamless KYC
Virtual KYC has been a topic of conversation in the remittance space for quite some time, but it has never been more necessary until now. Remittance companies will turn to digital channels to conduct KYC practices, by allowing recipients to connect their digital wallets to their SIM cards.
This will allow them to verify their information and complete KYC virtually, making remittance easier and more accessible.
The remittance market is set to change, and remittance companies need to get on board with this evolution sooner rather than later. For more information on how AZA Finance can help you with this transition, reach out to us.