How Are Fintech Companies Transforming the Sending of Remittances?
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Fintech companies operate as financial intermediaries in different segments within which are payment solutions, including remittances .
Only the inflow of foreign currency from remittances reached a new historical maximum between January and October 2020, of 33 thousand 564 million dollars, 10.4% more than the same period of 2019. That amount exceeds 8 thousand million dollars the value of the surplus trade accumulated in the same period, according to the Bank of Mexico (Banxico).
Remittances, coming mainly from Mexican migrants living in the United States, represent Mexico's second source of foreign exchange after automotive exports and constitute an important income for millions of people.
It should be remembered that Mexico is the third country that receives the most remittances in the world, displacing the Philippines, which held that position for many years, and only China and India surpass it.
But how are fintech companies transforming remittance sending? According to Sebastián Medrano, specialist in fintech issues and growth director at AlphaCredit, the startup that has raised the most capital in Mexico, these companies are attracting new clients by offering more practical alternatives because:
Everything from an app
Users can open a digital account from an application and deposit money into it through establishments in the United States; once on their cell phone they can send the money to Mexico easily and in seconds.
Fintech companies have lower costs compared to traditional methods of sending remittances and, sometimes, without the need to have a bank account to carry out the operation.
Being a purely digital service, fintech companies can reduce commission costs compared to traditional methods.
By traditional methods the money can take up to three days to pass, while through a fintech it is a matter of seconds.