Fintech helping migrants but money still goes on a ‘donkey’


Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO and has 20 years of experience in the international finance world focusing on cross-border payments, technology and the property sectors. Daniel is widely quoted as an expert… Read more
  • A TransferWise executive asks, at a time where instant messaging is the norm, “why does money still go on a donkey?”
  • Fintech startups are disrupting the remittance market but they haven’t penetrated the larger market yet, experts say
  • Global remittances to developing nations are set to reach $550 billion this year


Fintech is not only disrupting international money transfers; it is also helping undocumented immigrants send money back home. According to a report by The Economist, about 50% of hired farmhands in the United States are undocumented, with a large number of them unbanked. Work permit issues aside, migrants in America still need a way to make cross-border payments.

Immigrants need to send money home as it is the main driving force of their migration. Mexicans who work in farms in the US, for example, usually just send money through friends, but others use formal channels to do so. International payments through these channels is still considered expensive though thanks to the meagre salaries that farmhands in America receive. Fintechs are solving this problem. Many startups are even providing their money transfer services for free as long as the sender can wait for a few days for the funds to appear in the recipient’s account.

The fintech industry has disrupted cross-border payments in the past few years. With remittances set to grow, challenger banks such as TransferWise, Azimo, and WorldRemit will likely get a bigger piece of the pie soon. Remittances sent to developing countries are likely to reach a whopping $550 billion this year, according to an April 8th press release from the World Bank. Experts say that this number beats foreign direct investment, making it a rather lucrative industry. E-commerce and cross-border transfers to small enterprises is forecast to make $10 trillion per year in the coming years.

It is unfortunate, however, that a good chunk of this money is taken by middlemen, a comment from UAE’s Finablr noted. The good news is, fintechs are expected to keep disrupting the system, but as The Economist wrote, challenger banks only have a small portion of the market as of the moment.

In a world where instant messaging is already the norm, “why does money still go on a donkey?” asks TransferWise’s Taavet Hinrikus, one of the founders of the brand during an interview with The Economist. TransferWise only charges a tenth of what British banks charge for international payments.

Observers say that despite fintechs making their mark in finance history, they still have a long way to go. One of the biggest problems are the complex regulations that financial technology startups have to comply with before they can operate in most countries. However, there is more good news, experts add. The internet will not only aid these fintechs, it will help them spread the word about better fees, something that migrants are looking for. The hefty fees are a huge concern, but in the past, senders had to pay these fees because they didn’t have other options.

Fintechs also have another advantage over the big banks as they are now partnering with e-wallet providers and other startups to extend their global reach. This is a significant development, according to reports. It is also noted that Western Union’s recent partnership with, a Philippine-based e-wallet brand, indicates that times are changing.

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