Amongst other areas, FinTechs have helped global citizens fulfil their banking and cross-border payment needs. However, global citizens are also struggling with traditional providers’ offerings in the wider payments space. We take a closer look at the payment needs of global citizens and how FinTechs are solving these.
One of the most publicised problem areas in the payments space is the issue of paying for goods and services abroad, for instance, while on holiday. Traditionally, travellers would have approached their bank or a local foreign currency dealer and exchanged currencies at, most probably, very unfavourable FX rates. Alternatively, they would have either paid with their debit or credit card or used either card to withdraw cash, incurring a slightly better exchange rate but then also being charged an additional fee. Recently established money transfer FinTechs and digital banks have identified this area as a significant opportunity. In Europe, Monzo, Revolut, Starling and TransferWise all offer prepaid/debit cards that travellers can use at close to mid-market exchange rates, and at no additional cost, for both purchases and cash withdrawals (although typically monthly limits apply).
Similarly, Alibaba, the world’s largest e-commerce platform, and Tencent, owner of the hugely popular WeChat social media platform, have launched their respective retail payment solutions. Boasting hundreds of millions of customers, AliPay and WeChat Pay enable customers in China and the wider South East Asia region to pay for goods with the mobile app not only in their home countries but abroad as well. Following a recent expansion, both solutions are now accepted at millions of North American and European merchants. These innovations mean that, when abroad, paying with cash in the local currency and/or with a credit/debit card are not necessarily the only/best solutions anymore.
Similarly to purchases in the host country, global citizens often need to make payments to their home country. Whether it is their own expenses or those of their relatives, making these payments from abroad can be difficult. This is what start-ups such as ZymPay (UK to Africa) and Saldo.mx (US to Mexico) are aiming to solve. Both digital wallets enable expats to pay bills via credit/debit card, with the app facilitating the payment to the service provider in their home country.
Paying friends or family abroad can also be tricky/expensive. Situations such as splitting bills (e.g. a family dinner, utility expenses) are hassle enough without the international element but are even more so when travelling or living abroad. Most often, these affairs would traditionally have been resolved in cash but with the move towards cashless societies, a digital solution is becoming desirable. Thankfully, there is a FinTech (plenty, actually) for this. Start-ups such as Fused (UK) and SplitWise (US) focus on students and young professionals splitting expenses of their shared accommodation, while Split (US) and Tab (US) enable friends and family to split restaurant bills. Additionally, most digital banks (including the ones mentioned above) have also recently started offering streamlined peer-to-peer payment features that enable users to send funds to their contacts with a single click. Whether through a case-specific app or through a digital bank feature, sending money to peers is now easier than ever.
Combined with the strides made in the remittance space, FinTechs continue to offer innovative solutions to global citizens’ payment needs. However, as the global citizen cohort continues to grow, so do their needs.
Our next post will explore other areas of financial services penetrated by FinTechs as we conclude our global citizens-focused blog series.