<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Remittance-with-UPI-_Blog-Banner-.webp" alt="M2P Fintech" title="" width="100%" height="284">India has the world’s largest diaspora. More than 30 million Indians reside outside the country. The Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) from the US, UK, and the Middle East make India the world’s largest recipient of remittances. Despite the pandemic and its economic impact, India received $87 billion* remittance in 2021. (Source: World Bank 2021 report)The MENA region is home to a significant expatriate population. And more than half of its outbound remittances are sent to India. India-UAE is the world’s second-largest remittance corridor clocking more than $20 billion in transaction value. It makes up 33% of India’s total inward remittance volume. According to the Central Bank of the UAE’s (CBUAE) report, the outward remittances of the UAE increased by 9.2% in the third quarter of 2021. India retained its position as the top recipient by accounting for 26% of the outward remittance.<h2 class="heading-node" id="3sb73vqzx">India and the Middle&nbsp;East</h2>Now, remittances from the Middle East are not a recent phenomenon in India. They go way back to the 1900s when Indians moved to the Persian Gulf, searching for better opportunities. Since then, India’s trade relationship with the UAE and the rest of the countries in the Middle East has flourished. Today, over 7.6 million Indians live in the Middle East.During 2021–2022, India chalked up a total trade of $154 billion with countries in the Gulf Cooperation Council (GCC), accounting for 18.3% of its collective imports and exports value. The bilateral trade between India and the UAE is valued at $72.9 billion. The UAE, Saudi Arabia, and Iraq are India’s third, fourth, and fifth-biggest trading partners, and the trade sector is expected to expand over the upcoming years.The recent Comprehensive Economic Partnership Agreement (CEPA) is a significant milestone for bilateral trade relations between India and the UAE. Effective from 1 May 2022, CEPA offers an open and equitable ecosystem for businesses and accentuates new frontiers in cross-border payments and remittances.<h2 class="heading-node" id="fwofl48gd">Tale of Money Transfer to&nbsp;India</h2>In the early eighties and nineties, expats physically visited money transfer operators and agents to send money to their families back home, while businesses and Governmental agencies depended on conventional modes of <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a>. However, these traditional methods were fraught with challenges such as security, time delay, high costs, and currency conversion fees.For example, Demand Draft (D/D) was one of the earliest forms of remittance. D/D is traceable at any given time and hence, was considered the safest and niftiest money transfer method. However, it was an exceptionally tedious and time-consuming process. But slowly, things changed. Remittances started to evolve, from drafts to personal cheques and wire transfers to the online and mobile transfers of today.<h2 class="heading-node" id="ko5i3w91c">Key Challenges in Remittances</h2>Differences in the time zones, currency conversion, multiple compliance checks, unforeseen delays, charges, and the uncertainty of receipt of payment were challenges that payers and payees faced in international remittance. As customer preferences and technologies evolved, cost, compliance, speed, and interoperability emerged as factors that affected convenience, security, and seamlessness.CostThe charges associated with the remittances vary across markets and services providers. Key factors include the transaction amount, transfer destination, payment channel, and exchange rates. In addition, the cost of a service provider is subject to the complexity involved in managing settlements in multiple currencies and the time and effort required to maintain compliance with the <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a>/AMC guidelines and partnerships. This calls for innovative technologies and digitization to minimize the cost, in turn reducing the overall transaction cost for the customers.Compliance and SpeedThe most common reasons for the delay in remittances are the fragmented remittance information coupled with the extensive checks for anti-money laundering and fraud activities. Financial institutions ought to carry out an overarching list of compliance checks to mitigate risks. A central hub to share cross-national information can aid in speeding the payment process.Interoperability<a class="link" href="https://m2pfintech.com/blog/why-payments-interoperability-is-a-must-for-todays-generation/">Interoperability</a> plays a crucial role in improving the speed and time of remittances. Cross-border payments are time-intensive — lesser the compatibility between the systems, the higher the transaction risks. A standardized global messaging format reduces the time, effort, and error that arises with the translation.<h2 class="heading-node" id="xfzjj9vvg">UPI — Resolving the Challenges in Inward Remittance</h2>The introduction of <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> has changed the course of remittances. This ground-breaking financial innovation has the potential to help the payer and payee overcome remittance challenges and has made international transfers quick, simple, cost-efficient, and transparent. Money transfer institutions are tapping the potential of fintechs to develop a UPI-based cross-border payment ecosystem that leverages global networks to make overseas transfers more reliable and secure.As one of the largest markets for inward remittances, India is adopting UPI as a fundamental mode of remittance through its strategic collaboration with several nations. National Payments Corporation of India (NPCI) set up a payments wing (NIPL) to internationalize UPI and Rupay, and enable real-time bank account payouts.NIPL has inked agreements with several countries in the Middle East and the Asia Pacific, including United Arab Emirates, Nepal, Bhutan, Singapore, and Japan, to deploy the UPI payment rails in their jurisdictions. In the last two years, companies like LuLu Financial and Al Ansari Exchange have benefitted from real-time UPI–based remittances.<h2 class="heading-node" id="gfll6t4lh">Benefits of Integrating UPI and Remittance</h2>Mobile-first InteroperabilityUPI offers a mobile-first, interoperable open payment infrastructure. This allows Payment Service Providers (PSPs) operating on diverse payment systems to undertake, clear, and settle payment transactions through a common interface with common identifier/security standards. This minimizes the challenges of integration and interoperability.Anywhere Anytime AvailabilityUsually, cross-border payments are restricted to banking hours/days. But UPI is a 24x7, 365 days service. With UPI, remittances can be done at any time via more than one digital channel from anywhere without worrying about the banking hours, bank/public holidays, or even bank strike.Real-time TransactionsUPI is a real-time payment system that instantly completes and settles the transactions. It eliminates the need for registering the payee and the waiting time to activate the payee as a beneficiary. The interface allows the users to transfer money by simply keying in the virtual address or UPI ID to make the requisite payment. This will drastically reduce the transaction time and associated risks.Curtails ErrorA lot of things can go wrong when customers transfer money by entering the details of the beneficiary’s bank account. For example, they can provide an incorrect account number or a wrong IFSC code leading to a transaction failure. UPI remittance can curtail such errors as the customer can disregard the bank account details and remember only the Virtual Payment Address (VPA) or the UPI ID to complete a transaction successfully.Prevents FraudUPI uses proxy identifiers like a mobile number and a user-specific Unique Identifier (UPI ID or VPA) to make payments. This is the main advantage of UPI as it addresses security and privacy concerns. Additionally, the UPI ecosystem has single-click two factor authentication to protect users from financial fraud during digital transactions.Reduces Waiting Time and FrictionAs established earlier, the remittance process entails filling up the beneficiary’s bank account details and waiting several hours to transfer the funds to their friends/family. In the meantime, the senders and receivers are both left in the dark over the state of a transfer. Implementing UPI in remittance systems helps address such frictions as it enables instant transactions and lets the customers know the status of the money transfer.Increases Cost-EfficiencyBanks charge a competitive fee for each international transaction. Since the interface has the potential to simplify the correspondence between global banks, it would reduce the time and effort involved in each transaction. This allows banks to lower the transaction fee.UPI’s real-time, round-the-clock, and simple interface radically enhances the cross-border remittance experience as customers benefit from superior efficiency, speed, accessibility, and transparency.<h2 class="heading-node" id="gzqqd1ipr">M2P — UAE’s first UPI-enabled Remittance Service Provider</h2>As UAE’s first UPI-enabled remittance service provider, we enable banks and foreign exchange operators to facilitate end-to-end settlements inclusive of conversion facility. Our deep domain expertise, innovation, and technology know-how render a hassle-free/frictionless remittance experience for both the payer and payee.Most importantly, our intermediary banks are certified by NPCI, and we are compliant with the remittance directives issued by the Reserve Bank of India (RBI). Our full-fledged, mobile-first, customizable API stack simplifies UPI transactions and enables real-time international transfer.To know more about using UPIs for cross-border remittances, write to us at business@m2pfintech.com.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Remittance with UPI - A Giant Leap for Cross-Border Payments

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Blog-Banner_02_WordPress-1.webp" alt="M2P Fintech" title="" width="100%" height="661">Imagine you own a digital wallet. Its primary function is to let you spend viz., shop with partner merchants, make payments, and transfer money to other wallets and bank accounts. Then the same wallet offers a card (any authorized card network Visa, MasterCard, RuPay) to facilitate card-based in-store and online payments. Further, the wallet also comes with a UPI virtual ID to allow payments via QR codes and <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a>.This is payments interoperability making life easy for you.<h2 class="heading-node" id="abd3">What is Payments Interoperability?</h2>Now, there are several definitions for interoperability. But at its core, it is the basic ability of multiple digital systems, applications, and databases to connect and communicate with each other.Payment platforms leverage financial technology to connect and share data among ecosystem partners, viz., banks, payment gateways, payment processors, merchants, and consumers. This integration helps carry out transactions between payment service providers, third-party processors, and other networks without hassles. The interoperability occurs at the origination point, at the network level, or through an intermediary, both in national and international payment systems.Here are a few common attributes of interoperability.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Interoperability_BlogBanner_02_wordpress.webp" alt="M2P Fintech" title="" id="7ruk1ov0f" width="100%" height="661">Payment system interoperability can be at domestic (national) and international levels.<h2 class="heading-node" id="558a">National Payments Interoperability</h2>National payment interoperability is limited to payment systems within a single country. National interoperability usually involves the same type of accounts. It happens between:<ul class="list-node" id="sk8vndtl8"><li>Deposit accounts issued by various banks</li><li>e-money transaction accounts offered by mobile network operators</li></ul>National interoperability is ensured through bilateral agreements between Payment Service Providers (PSP) and Payment Systems Infrastructures (PSIs). Or through a centralized interoperability solution, with standardized regulatory measures stipulated by the central bank.<h2 class="heading-node" id="2998">RBI’s Mandate for Domestic PPI Interoperability</h2>Governments and Central Banks are giving interoperability a significant push to accelerate cashless ecosystems. <a class="link" href="https://m2pfintech.com/blog/rbis-new-guidelines-for-ppis-how-will-it-impact-the-fintech-industry/">RBI</a> aims to make interoperability mandatory for all full-<a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">Prepaid Payment Instruments (PPIs</a>) and acceptance infrastructure by 31 June 2022. The move is to drive inclusion in <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless payments</a>, and optimally utilize payment instruments like cards and wallets, given the constraint of scarce acceptance infrastructures like point-of-sale (POS) devices, ATMs, QR codes, and bill-payment touch points. Any user who signs up for a wallet, <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid card</a>, or UPI on PPI rails should be able to make digital payments via any network.LivQuik is the first PPI issuer in India to achieve full interoperability as mandated by the RBI. This feat enables customers to enjoy optimized card and UPI payments across wallets. Similarly, initiatives like <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">Central Bank Digital Currencies (CBDC)</a> will further drive interoperability, inclusion, and innovation.<h2 class="heading-node" id="d3b9">Need for Interoperable Cross-Border Payments</h2>Interoperability in <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a> is critical to making financial services accessible, affordable, and reliable. It involves coordination between multiple stakeholders, including central banks and regulators. It encompasses technical, regulatory, and usage interoperability to enable quick, convenient, secure, and seamless transactions regardless of the Financial Services Provider (FSP) network.According to a recent Visa survey, only 50% of merchants have a cross-border trade-compatible payment processing infrastructure. Without globally interoperable payment systems, small and medium-sized merchants cannot tap into international trade and markets. Interoperability levels the playing field and eliminates the inefficiencies of a closed-loop payment systems, i.e., payments between users of only one payment provider.An end-to-end interoperable platform delivers access to cross-border payment services through an integrated gateway. It enhances the user experience through its ease-of-use customer onboarding and <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">digital KYC.</a>A centralized interoperability platform calls for stringent global regulatory compliance and data security standards for utmost security. It enables faster reconciliations with real-time reporting and data-driven insights into payment patterns and customer behavior. Moreover, an automated platform saves time, reduces human error, and cuts costs. It enables infrastructure and data sharing which helps tech-driven payment ecosystems reach economies of scale.While international interoperability comes with a few challenges, it can be overcome with the support of the regulators, the global schemes, and a compatible business model across international borders and technology.<h2 class="heading-node" id="9178">Global Partnerships with Payment Networks</h2>A clear example of an interoperable <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payments</a> partnership is that between India’s <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> and Singapore’s PayNow. The need for faster cross-border payments and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> has been a catalyst in establishing the link between India and Singapore. The interoperable link between UPI and PayNow, enables instantaneous, cost-effective, and transparent payments across borders.Now for those new to UPI, it is India’s real-time payment system with a Virtual Payment Address (VPA). It is completely mobile-based and supports person-to-person (P2P) and person-to-merchant (P2M) payments and funds transfers.And PayNow is Singapore’s real-time payment system available to all participating banks and non-bank financial institutions. It is also a mobile-based system and enables peer-to-peer funds transfer using mobile numbers, VPA, or Singapore NRIC/ FIN. The UPI-PayNow partnership is only the beginning and is established to foster faster and smoother transactions between India and Singapore.India also holds strategic partnerships with the following payments networks and banks to enable seamless, interoperable transactions on our payments rails.<ul class="list-node" id="tpyzch3q0"><li>Discover Financial Services (DFS), US</li><li>Japan Credit Bureau (JCB), Japan</li><li>Union Pay International (UPI), China</li><li>Royal Monetary Authority (RMA), Bhutan</li><li>Mashreq Bank, UAE</li><li>Lycra Network, France (in the pipeline)</li></ul><h2 class="heading-node" id="1f35">Benefits of Payments Interoperability</h2>Interoperability benefits the entire payment ecosystem, including customers, merchants, end-users, and businesses. In addition to enhancing user experience and helping mitigate security risks, it delivers the advantages below.<ul class="list-node" id="ol9tnl3en"><li>Payment flexibility:&nbsp;The ability to accept all forms of payments is a game-changer. Universal payment acceptance helps customer retention and increases customer reach. Though there are several digital payment systems and digital offerings from payment system providers, customers are not required to sign into multiple systems and complete their <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/">KYC</a> many times. Interoperability brings issuers and acquirers together to undertake, clear, and settle payment transactions across payment systems, ensuring universal payments and consumer retention.</li><li>Faster payment system: Electronic transactions are the key to reconciling and collecting payments, unlike cash-based systems. Advanced technology and fast internet connectivity make it easier to increase the speed of transactions.</li><li>Secure payment and POS integration: Integration pushes the transaction directly to the payment terminal and eliminates manual entries, thereby enhancing security.</li><li>Low operational costs:&nbsp;Integrated payment platforms reduce operating costs and seamlessly communicate with multiple devices across different financial service providers. It helps save money on adding new payment terminals.</li></ul><h2 class="heading-node" id="0b67">Addressing Challenges — Getting it Right</h2>Getting interoperability right through open <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-based platforms is a start toward harnessing and expanding the payments ecosystem. Interoperability can be tricky when dealing with legacy systems. Technical challenges usually comprise systems that use different technical standards, communication protocols, and related software and hardware infrastructure. Another common challenge relates to data and semantics. Payment systems may use different languages and need to be translated. Inadequate translation leads to corrupted or lost data.It is crucial to address the regulatory, technical, and business challenges of interoperability to make cross-border payments affordable, faster, transparent, and inclusive. Strategic partnerships with fintech firms, banks, exchange houses, and Money Transfer Operators (MTOs) with a focus on regulatory compliance and technology innovation will pave the way to overcome challenges and enable frictionless international transactions.<h2 class="heading-node" id="99d4">Need of the Hour for Today’s Generation</h2>Payments interoperability is the linchpin of today’s digitized economy. When done right, it can lead to greater convenience, speed, reliability, security, and seamlessness. It is the need of the hour today, as it enables people from all walks of life to benefit from the convenience that the cashless economy offers. It can increase service offerings, reduce costs, empower the end-user and help improve payment systems. Thus, interoperability is a strong facilitator for financial inclusion.By leveraging <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API</a>-based <a class="link" href="https://m2pfintech.com/blog/cross-border-payments-a-swift-money-flow-across-borders/">cross-border payment platforms</a> with simple integrations across domestic switches, bank accounts, mobile wallets/e-wallets, MTO transfers, and forex card solutions, we can enable financial inclusion and seamless payments across APAC and MENA regions. With India to start with and then extended globally.Along these lines, M2P is proud to partner with LivQuik for <a class="link" href="https://m2pfintech.com/blog/upi-the-driver-of-economic-growth-and-inclusion/">UPI</a> services on exiting <a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">PPI</a> offerings like cards, wallets, gift certificates, and other products. Thereby enabling interoperable payments on the LivQuik platform.Want to know more about building interoperable payment systems?Write to us at business@m2pfintech.com.<a class="link au ly" href="https://forms.gle/kJgVoD29t2vcxtbp9" target="_blank" rel="noopener ugc nofollow">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link au ly" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noopener ugc nofollow">LinkedIn</a>&nbsp;and&nbsp;<a class="link au ly" href="https://twitter.com/m2pfintech" target="_blank" rel="noopener ugc nofollow">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Why Payments Interoperability is a Must for Today’s Generation?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner1251-6-1.webp" alt="M2P Fintech" title="" id="t5u9jgsxm" width="100%" height="317">The advent of international payments has been long-standing in the financial world, facilitating commerce and trade. Be it sending money back home or international business contracts, today’s rising global commerce can be attributed to the growing volume of international digital <a class="link" href="https://m2pfintech.com/blog/future-of-payments-processing-matched-with-industry-needs/">payments</a>.It is a valuable ally for businesses and individuals who wish to enjoy commerce or transactions across borders. The surge in cross-border B2B payments is exponential since the penetration of the internet. With predictions of 30% growth in the next three years, cross-border e-commerce has taken off to exponential heights in these 2 years.Also, the businesses that offer software as a Service (SaaS) heavily depend on cross-border payments as their demographic is spread across the globe. In recent years, these players have played a monumental part in increasing the volume of cross-border transactions.The advancements in Fintech today empower many businesses and individuals to make instant payments. Businesses can experience stress-free invoicing, tax handling, and recurring billing in a few clicks. They also have access to top-notch support portals to handle any issues that arise out of a transaction.Fintech companies experiment with technologies like <a class="link" href="https://m2pfintech.com/blog/blockchain-and-fintech-use-cases-and-applications/">Blockchain</a> to bring more transparency and Artificial Intelligence for better regulatory compliance.<h2 class="heading-node" id="2511" style="text-align: justify">What are cross border payments?</h2>Cross border payments happen when the payee and the recipient are in different countries. These transactions can be retail, wholesale or recurring in nature. Decades back, the electronic messaging system served as a crucial mode to enable cross border payments.The cross border payments industry now utilizes many payment modes like <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit cards</a>, cross-border <a class="link" href="https://m2pfintech.com/blog/what-is-a-payment-gateway-and-payment-switch-understanding-the-basics-of-payments-architecture/">payment gateways</a>, <a class="link" href="https://m2pfintech.com/blog/tale-of-money-transfers-from-hawala-to-one-click-remittances/">wire transfers</a>, e-wallet, distributed ledger technology, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs,</a> etc., every day to facilitate international payments.<h3 class="heading-node" id="d1xc42b0j" style="text-align: justify">Cross-border payment methods</h3>In fact, we can classify cross-border payment methods as Past, Present, and Near Future, where every advancement is an incremental leap in payment facilitation and user experience.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com//m2p-website-file/marekting-cms/m2p-blog/2025/05/1-1.webp" alt="Cross border payment" title="" id="py8ljf39p" width="100%" height="253">The Past<h3 class="heading-node" id="8e54" style="text-align: justify">Wire transfer</h3>It is an electronic transfer of money, where the money is ‘wired’ from one account to another. If you are initiating a domestic transfer, it is called a “Bank wire.” In the case of cross-border payment, wire transfer is interchangeably referred to as “Remittances.” It is the oldest method of initiating a cross-border payment.<h3 class="heading-node" id="c67b" style="text-align: justify">How does it work?</h3>Here the payee visits their designated branch and provides the details of the receiver. Those details include the bank account number, name, recipient country’s currency, SWIFT code, IBAN (International Bank Account Number), bank address, amount to be transferred, etc.The currency rate is fixed before the transaction. The details are directly sent to the recipient branch or via an intermediary bank. That’s not all; the payee also has to pay certain charges like service tax, conversion charges, and other applicable charges. Based on the instructions, the recipient bank credits the amount to the recipient’s account within 5 working days or more at times.<h2 class="heading-node" id="dd8c" style="text-align: justify">Payment Service Providers (PSP)</h2>A popular option for immigrants, Payment Service Providers (PSP), effect transactions either in the form of physical cash or online payments.<h3 class="heading-node" id="b848" style="text-align: justify">How does it work?</h3>The sender visits the agency with the current nation’s currency and proper ID proof for physical cash. The recipient can visit the agency at his location and collect the money after dedicating transfer charges to completing the ID verification process. For online transactions, the sender visits the PSPs apps or websites. Within a few clicks, money flies over the nations and reaches the receiver’s bank account directly.<h2 class="heading-node" id="8db4" style="text-align: justify">The Present</h2><h3 class="heading-node" id="affb" style="text-align: justify">Credit cards</h3>It is a reliable mode of payment while traveling abroad. A <a class="link" href="https://m2pfintech.com/blog/credit-card-processing-a-definitive-guide/">credit card</a> eliminates the need to carry cash in hand. They also offer attractive benefits like interest-free loan periods (a month or more), reward points, gift coupons, shopping offers, easy EMI options, travel insurance perks, etc.<h3 class="heading-node" id="0caa" style="text-align: justify">Forex cards</h3>Many banks and financial institutions offer <a class="link" href="https://m2pfintech.com/blog/forex-cards-international-travel-made-effortless/">forex cards</a> explicitly designed for globetrotters. They can make money transfers across multiple countries with a single card. It helps the users avoid currency exchange rate fluctuations by locking in the rates while getting the card.<h3 class="heading-node" id="0b4e" style="text-align: justify">Digital wallets, ewallets &amp; mobile wallets</h3><ul class="list-node" id="th56mo1sb"><li>These are virtual wallets that can store money and customer information (credit card/debit card number, date, bank details, etc.).</li><li>eWallets are used like <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards</a> where we can store our money.</li><li>Digital Wallets are used to store card numbers, account numbers, expiry dates, IFSC codes, etc. This confidential information resides in the cloud.</li><li>Digital wallets can be used on desktops, whereas mobile wallets can be used on mobile devices.</li></ul><h3 class="heading-node" id="f39a" style="text-align: justify">MasterCard Send</h3>Initiated by the global network provider, MasterCard Send allows both businesses/ individuals to make real-time cross-border payments to the recipient’s debit card number. It does not rely on the bank’s ACH system, so there is no need for a routing or account number to send the money across.<h3 class="heading-node" id="a125" style="text-align: justify">Visa Direct</h3>Visa Direct offers push payments to individuals/businesses across the globe. The business/user can tap into Visa’s global network and send payments in real-time or by a maximum time limit of 24 hours.<h3 class="heading-node" id="c742" style="text-align: justify">SWIFT GPI</h3>SWIFT GPI or Global Payment Initiative aims for transparent and faster cross-border payments. It breaks down all the costs involved, and the payee can keep tabs on where the payment is at any given time. While the older methods of cross-border payments are traditionally mysterious, SWIFT GPI unveils the mystery and significantly increases the speed.<h2 class="heading-node" id="80ee" style="text-align: justify">The Near Future</h2><h3 class="heading-node" id="05b1" style="text-align: justify">Open Banking APIs</h3>Open Banking<a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/"> Application Programming Interface (APIs)</a> aims to simplify the complicated procedures of cross-border payments. As it democratizes access to customer and their data, it becomes easier for fintechs and other financial institutions to build products that address their target demographic version of cross-border payment app.<h3 class="heading-node" id="f3c8" style="text-align: justify">Decentralized Ledger Technology (DLT)</h3>A term made popular by Blockchain tech, DLT can be applied to cross-border payments’ three most challenging aspects. They are backend processes, compliance, and as a means of payment. DLT can speed up the backend process while offering transparency at every step of the transaction. It can also reduce compliance-related costs and can introduce an entirely new method of payment.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/2-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><h3 class="heading-node" id="yj7z6hw5g" style="text-align: justify">How do cross-border payments work?</h3>Cross-border payment is a complex mechanism that involves many players. It carries many fees right from currency conversion to the respective country’s tax and other service charges. Both domestic and overseas entities work together to accomplish the transfer.For example, when a software purchase transaction is initiated, the “correspondent bank” requests the money from the “respondent bank.” Here both the correspondent and the respondent bank will have their colleague bank across the globe. So, the funds will leave the buyer’s bank and reach that bank’s counterpart present in the merchant country, ready for remittance. Then the remittance is transferred to the merchant’s bank for settlement. So, in short, banks work with other players like payment service providers; to transfer the money while navigating currency conversions, different tax regimes, transaction fees, etc. Further, slowing down the process.One of the most popular banks for forex settlements is the CLS bank. Founded in 2002, explicitly for mitigating risk and settlement of Forex transactions, CLS works with 18 currencies in cross-border payments. Even though it has been instrumental in making forex payments easier, it does have some drawbacks. With new emerging currencies gaining global transaction volume, CLS is limited by 18 currencies and is yet to catch up with technological advancements of member countries’ payment infrastructure.To create a seamless flow for the cross-border payments, some changes must be incorporated quickly to ensure better penetration across the value chains:<ul class="list-node" id="cp59ifqob"><li>Applications of Real-Time Payments will offer much-needed transparency. The parties involved can track the transaction status anytime. For example, this is what SWIFT GPI is trying to achieve. It has the potential to be replicated in other payment methods.</li><li>The time factor taken to complete a cross-border payment should be brought to days from weeks. Small and Medium Businesses (SMBs) should have better access to these payments as cash flow is the backbone of their operations. Unpredictable delays and complex transactions will hamper its growth.</li><li>Today’s customers, both retail and corporate, are looking forward to solutions that adapt to their evolving needs. They also favor the platforms where the solutions are embedded for all access.</li><li>Customers today prefer a choice of methods and security when initiating transactions. A flexible ecosystem where transaction history, audit, and reconciliation can give valuable insight and a seamless experience.</li><li>Integrations are a much-needed factor to bring about global interoperability and linking fragmented value chains. No matter the transaction origin, the experience of the transaction must be seamless for the merchant.</li><li>Typically, the stakeholders in this transaction flow more often follow the same regulations. They can be bifurcated into ‘front end’ and ‘back end’ stakeholders. The Front-end players are the Tech companies who look at the ‘data’ aspect of the transaction and can have lighter compliance standards. The onus should lie in compliance with balance-sheet exposure, counterparty exposure, and liquidity for the backend players.</li></ul><h2 class="heading-node" id="3198" style="text-align: justify">How is fintech disrupting cross-border payments?</h2>With Blockchain taking the lead in the fintech space, digital currencies can be used in cross-border payments instead of national currencies limited by geography. As digital currencies are built with technology, it provides a bread crumb trail for the transaction trace and reduces the need for intermediaries. Also, the DLT applications of Blockchain can provide transparency and security at the core. Along with these innovations, Fintech also offers the following benefits:<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2021/05/3-1-1.webp" alt="M2P Fintech" title="" width="100%" height="253"><ul class="list-node" id="4nv0g5ncq"><li>Constant enhancement: Fintech giants are leveraging the latest technologies like Blockchain to make cross-border payments completely transparent and tamper-proof. They concentrate more on the user experience and focus on making complex processes swift and convenient.</li><li>Ease of use: Virtual wallets allow the users to stay free from making a note of all the passwords, account numbers and worry about their confidentiality. You can feed all your confidential information with a single tap and complete your purchase.</li><li>Convenient:&nbsp;Forex cards are travel allies. It makes our wallets light when we are traveling to different countries handling different currencies. We can simply swipe on the retail outlets or wave it with a contactless card. Like an ATM card, it allows us to withdraw the local cash in any country (fed while receiving). The best part is few banks are waiving the ATM withdrawal fees, cross-currency charges, etc.</li><li>User experience:&nbsp;Cross-border payment gateways help businesses to sell across borders. As they comply with PCI data security standards, customers feel secure while buying from a foreign website. Consumers can purchase by simply typing their email ids and enjoy rapid check-out.</li><li>Marketing mate:&nbsp;Businesses can use the buying patterns of the consumers collected through their wallets and retarget them with attractive offers. Wallets offer rewards to buyers in the name of cashback. This money can be utilized only in their portal and increase the sales of the online platform.</li></ul>Over the past decade, cross-border payments industry innovations are drastic and soaring high, with creative Fintech minds entering the space each day. Cross-border payments are no longer a daunting task consuming more time and effort. And we can expect many more innovations that make cross-border payments a secure and transparent exercise.To know more about cross-border payments, write to us at business@m2pfintech.com<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Cross- Border Payments: A Swift Money Flow Across Borders

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/05/banner-2.webp" alt="M2P Fintech" title="" width="100%" height="383">The word <a class="link" href="https://m2pfintech.com/blog/remittance-with-upi-a-giant-leap-for-cross-border-payments/">“Remittance”</a> means money sent to an individual in another place. The Latin origin of the word means “To let go or to send.” As the human civilization evolved, so did remittances. It was earlier a bill payment done via mail or a cheque sent for an appliance purchase. But, today, remittances are a much more complex phenomenon. It is hard-earned money of the immigrants sent back home to their families.Until the last decade, immigrants were heavily reliant on banks or FOREX brokers to relay their earnings back home. It came associated with a hefty fee and a longer waiting time of a week or more. It involved multiple players, the differences in conversion fees, processing fees, and so on.But, then again, over the years, Fintech’s intervention has changed the remittance landscape for the better. The primary advantage is the time taken to send the funds across the border. What takes weeks to complete, Fintech does it in seconds. They have turned the tables by providing competitive exchange rates, which were almost close to existing market rates.They have enabled multiple ways of currency transfers where the remitter can send money via:<ul class="list-node" id="2w6efqopb"><li>Enabling customers to see multiple exchanges fees at one place and then make money transfer within the platform — TransferWise (now Wise)</li><li>Doing remittances in bulk and passing on the savings to the Customers.</li><li>Internet-enabled smartphones</li></ul>The advent of account-linked mobile wallets like Google Pay, Apple Pay, Venmo has brought down the transactional fees to a bare minimum or no fees at all. Meaning all the international transfers happen through an app. They have provided the option for the customer to choose their preferred method of payment, right from the comfort of their homes.In fact, India holds first place in the remittance industry. It has averaged US$76 billion in 2020, despite the general decline in remittance across the globe as per World Bank. The main reason why India is the leading country in the remittance index is because of its large diaspora of expatriate population. It is closely followed by China and Mexico in the second and third places, respectively.Additionally, Fintech has unlocked vast amounts of user data, helping to better understand user behavior. The data provides utmost detail right down to the kind of phone used, frequency of transfers, locations, etc.<h2 class="heading-node" id="57f8">What are Fintechs doing?</h2>From extending reach of their in-app payment and transfer solutions, Fintechs are evolving how the age-old Exchanges have been working. While tying up with Banks and Exchanges in regions like GCC and executing remittances on their own in regions like the USA &amp; Europe.<ul class="list-node" id="fq5idmmwt"><li>Extending Banking to the Unbanked:</li></ul>The Fintech catering to low-income-income migrant workers, primarily in the GCC, provides them with solutions like debit cards, bill, payment, and mobile top-up facilities in-app. These fintech players are extending banking to the unbanked, giving them proper accounts, shopping online, and building their credit histories. Such customers’ data will further help them roll out services like Insurance and Credit (loans). — NOW Money<ul class="list-node" id="8v0gg4syi"><li>Blockchain-Powered Digi-wallet:</li></ul>Fintech players are taking remittance to another level where cash is converted as <a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">digital currency</a> using blockchain-powered Digi-wallet. The money can be transferred to anyone having the wallet app installed (more like Intra-app transfer) using this wallet. They further create an ecosystem where the App’s user can do transactions anywhere, without even considering converting the digital currency to actual currency. — MenaPayWith <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/" target="">digital payments</a> shrinking the world, transferring money across borders is now the new normal. New-age Fintech is constantly innovating the best practices to offer enhanced transparency while maintaining high-level security.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Tag: "Cross Border Payments (4)"

M2P Fintech