Remittances are a crucial service for many families with households depending on the regular transfer of money back home. The industry has seen a recent lift from pandemic times and a reversal of the downward trend where uncertainty and lost jobs impacted the ability to send money back home. This is especially true for many developing corridors including the APAC region, and even more so for Pacific Island countries. This increased activity has brought on additional entrants to the remittance industry creating more competition, and more pressure on pricing and margins. So how can remittance companies stand out and better compete for their customer's business?
In many ways, we only need to look at the eCommerce industry for some inspiration and best practices when it comes to online checkout flows (learn more). Remittance customers are looking for fast, low-cost and secure ways to send their hard-earned money back home. Convenience is critical as money is often sent regularly, perhaps even with each paycheck. The work that eCommerce retailers have done to improve their checkout processes, lower cart abandonment, and improve conversion rates also apply to remittance providers. And it starts with removing payment-related friction when your customers look to send money online using your service.
Let’s look at this experience more closely and uncover why many current payment methods are actually unsuitable for remittance providers and their customers alike.
Credit Card: While popular in North America for online payments, credit cards are not very suitable for sending money to friends and family back home. The high variable rates that are charged, including network interchange fees, means that many remittance companies have had to add a surcharge or additional fees to cover the cost. Not to mention the customer having to take on credit to send money, and the additional steps to track and pay off their balance make this option not very convenient. As a result, we’re seeing many customers avoiding the use of credit cards when sending money.
Pre-Authorized Debits (PAD) and Electronic Funds Transfer (EFT): Unlike credit cards, these agreements allow for a low-cost way to authorize and take money from your customers' account. The trouble is that they are not very convenient, from both the business perspective and the customers. An application must be completed and processed taking up valuable time, adding overhead and creating a poor experience. Many customers are also hesitant to provide their banking details fearing security risks and the potential for a company to access their account. The low-cost nature of this payment option doesn’t offset the negative experience and perceptions users have when it comes to pre-authorized agreements.
Interac Online and e-Transfer: Interac e-Transfer® is by far the most popular way to send money within Canada and is similarly just as popular to use when sending a remittance internationally. The trouble is that the current Interac offerings are not very convenient either. Interac Online has minimal support with only two Canadian banks continuing to offer the service. And the original version of e-Transfer was never intended for online payments. That means the experience is not seamless, with the customer having to leave your site to initiate the transfer, instead of you requesting or pulling the money in real-time. It’s also not very fast as the customer needs to wait for you to reconcile the payment and have the funds show up in their account.
When we look at the above payment methods that are commonly offered by remittance companies, we can see that they negatively impact the experience in three core ways listed below.
Convenience: Sending money on a regular basis needs to be easy to use. Asking a user to initiate a transfer introduces an exit point in your checkout and a chance for a user to drop off. Typing in card numbers, expiration dates and CVV codes, along with a billing address contributes to a process that is anything but convenient. Not to mention applications or forms that request personal information, no matter how short, go against user expectations and trust when it comes to sending money.
Speed: When a user wants to send money, they want the process to be fast. And that means the time it takes for the funds to show up in their account and be made available to send. Having to wait or worse, wonder when the money will show up is a poor experience that doesn’t contribute to repeat usage.
Overhead: Both speed and convenience, not to mention your profit margins, are directly impacted by the overhead a remittance company incurs in order to process a transaction. This time-consuming process of accepting and then reconciling funds is perhaps one of the biggest pain points faced by remittance companies.
Solving these issues can help a remittance company differentiate itself from competitors, offering a service that is fast, convenient and desirable to use with minimal overhead to process transactions. Due to these challenges, remittance companies are now looking at API-driven payment solutions that improve their ROI and CX.
Take for example DirectPay - a modern API solution that enables Interac e-Transfer to be seamlessly integrated into a remittance company's payment workflow. Now the payment request is initiated by the company, and not the customer, without any additional steps required by the customer or reconciling by your team. Simply select the payment amount and authorize the transfer with just one click. This is just one example where a remittance company can remove payment friction resulting in a better experience, improved conversion and more repeat business.
It’s a seamless experience: Adding DirectPay as a payment method allows the user to transfer money easily without any additional information to enter, apps to install or cards to look up.
It’s safe and secure: Payments are secured instantly and guaranteed. There are no chargebacks or dispute fees, and users feel safe as no financial details or card numbers are shared.
It lowers abandonment rates and improves customer loyalty: With an enhanced experience and fewer exit points, remittance companies can improve their completion rates. A more desirable experience further leads to long-term customer loyalty.
It keeps overhead low and errors down: Processing transactions faster with less reconciliation time means savings you can pass on to your customers. Errors on both sides of the transaction are minimized as the transfer of information and payment status is communicated automatically.
It’s faster: Receive payment confirmation instantly and let your customers know their money is received and ready to be sent.
Learn more about Interac e-Transfer with DirectPay and how you can improve your customer experience and bottom line. Get Started Now.