Moving Money Across Borders | The star
HAWALA was an old, informal way of transferring money across borders where there was no movement of physical money.
It is said to be based on a large network of money brokers. Even though it is now considered illegal, it does exist in some parts of the world.
That aside, wire transfers have been used for decades to transfer money across borders.
Lately, fintech has given birth to new avenues and new players have emerged with various offers, including transfers via mobile phone and electronic wallets.
This reduced the transfer time to several minutes compared to previous days depending on location, amount and provider.
“If you send ringgit in pounds sterling, you pay ringgit to our account in Malaysia and we pay it to your recipient from our UK account,” said Lim Paik Wan, country manager of Wise (formerly Transfer Wise).
She added that “whenever possible, money does not cross borders. Today, 38% of all our international transfers around the world are instant, delivered in less than 20 seconds. ”
WorldRemit Country Director for Malaysia and Head of Asean Business, Ridzuan Aziz, said “over 90% of transactions are completed in under 10 minutes due to the digital nature of our business.
“Our clients are also able to follow their transfers in real time so that they have full visibility of their money throughout the transfer process,” he added.
A money transfer involves the sender, the recipient and the channel used for the transfer and in this case it can be done through banks for non-bank providers.
There are several non-bank providers outside of Wise and WorldRemit. They include Western Union, MoneyGram, Paypal, and Remitly. Several banking groups also use some of the non-bank providers to transfer money.
Either way, the global money transfer market continues to grow with people sending money for a variety of reasons, be it for their children’s education or for business, including workers. migrants who send money home.
Last year, remittances worth RM26.5 billion were sent according to the Fintech Malaysia 2021 report.
The report says that the market share of electronic remittances has increased from 14% to 25%, showing that Malaysians can opt for new era and less expensive electronic transfer providers than traditional providers.
With the rise of transactions and providers, the struggle for market share between banks and non-bank groups continues to intensify.
Since July, Ambank has been offering electronic food vouchers for overseas remittances of a minimum of RM50,000 for a limited period.
Likewise, CIMB Bank is running a cash back campaign for overseas money transfers up to RM50,000. HSBC offers no cable charges for wire transfers through online banking and several other banking groups have their own offers.
When sending money overseas, there are a few factors to consider in terms of speed, reliability, security, fees (transaction and exchange fees), and exchange rates.
The money transfer fees depend on the provider, location, amount and how you pay for the transfer. On top of that, some providers add a fee to the exchange rate they use to convert your money. It is best to know if there are any hidden costs before sending the funds. Rely on those who make your transaction transparent. Be aware of the restrictions on international money transfers.
Choose only licensed players and avoid last minute transfers as this can lead to high transfer costs and the cost of remittances.
It is best to check the supplier’s details as to how many agents they have, whether they are supported by ATMs and the different types of currencies and their currency conversion and transaction fees.
“The conventional way to send money abroad through traditional financial institutions usually involves high fees and hidden fees. Often the full costs only become evident after the transaction is completed due to the lack of clarity in pricing structures, ” said Lim de Wise.