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Fintech revolution in money transfers

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By Christiana Lambrou

It is widely unknown that money transfers have been around since 1871 with the telegraph-based transfer services in the US.

Back then, a sender would pay money to a telegraph office or a bank and the operator would transmit a message and “wire” the money to another office, using passwords and codebooks to authorise the release of the funds to a recipient at another location.

Since then, money transfers have significantly improved along with technological advancements, but in the last decade, this sector has evolved by leaps and bounds.

The innovations through more effective products and services are astonishing and can’t be ignored.

The need for physical presence at a bank for a money transfer or any other financial services has become obsolete in several countries, with China being in the lead.

It has never been so easy to make multi-currency money transfers thanks to the rise of ‘fintech’.

Today’s Electronic Money Institutions (EMI) are aggressively gaining market share while weakening traditional financial institutions which are still stuck on non-value services.

Online payment providers offer a wide range of services through the technological advances available.

Online accounts nowadays offer electronic wallets (e-wallets) in all major currencies, prepaid cards and payroll services.

Account users of eCredo, a Cyprus-based online e-payments provider, enjoy all the above services and are able to convert their money in any currency 24/7 from the comfort of their own space at competitive exchange rates while making online purchases whenever they wish.

Businesses identifying a favourable exchange rate can convert their funds on the spot, for later commercial transactions.

EU customers of eCredo with trade relations in Israel, for example, exchange their EU funds in Israeli shekels (ILS) at any time deemed favourable and proceed with SWIFT payments to their Israeli partners at a later stage.

As a priority, SWIFT funds clear within 0-1 day.

Another way to transfer money is through the Single Euro Payments Area (SEPA) which is an initiative of the EU to simplify Euro transfers within the Eurozone and enables customers to make cashless euro-to-euro payments.

Usually, the funds of SEPA transfers clear within 0-1 days and are charged according to the payment provider’s terms.

eCredo users have the ability to transact via SEPA with zero fees for outgoing or incoming transfers.

The Instant SEPA payments scheme or SEPA Credit Transfers (SCT) was introduced in November 2017 enabling pan-European credit transfers currently up to €100,000 to clear on the account within 15 seconds from all electronic devices at any time and day.

Adoption across the EU has so far been mixed due to implementation deadlines of the European regulations for electronic payment services (Payment Services Directive 2 or PSD2) which introduces security requirements for the initiation and processing of electronic payments, as well as for the protection of consumers’ financial data.

Many EU countries though, were able to implement the SCT domestically and gained a head start to the next leap forward known as the Request-to-Pay (SRTP) scheme introduced by the European Payments Council.

This scheme will provide a new way to request a payment initiation in a digital manner and allows payees to express their payment preferences (e.g. pay now/pay later) in accordance with their needs.

Some other functionalities will be instant peer-to-peer payments using mobile phones, e-billing/invoicing, e-commerce payments and more.

This scheme seems to offer an alternative to traditional debit card transactions and direct debit payments.

As the evolution of money transfers and e-commerce is taking place at the speed of light, EMIs are constantly preparing and adjusting to take the full blow of any technological advances that will need to be interpreted to the business and consumer functionality level.

Christiana Lambrou is Head of Marketing and Business Development at www.ecredo.com