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Home Digital Payment Solutions How a Remittance Company Can Benefit from Launching a Digital Wallet

How a Remittance Company Can Benefit from Launching a Digital Wallet

27/06/2023
(10 min)
Peter Shubenok
Managing Director

The market for global personal and business money transfers is huge. People send trillions of dollars daily via bank accounts, cards, and e-wallets, so this industry is ever-increasing. 

The uses of e-wallets are diverse, from paying for products in an e-store to financing one’s family sustenance from abroad. 

Remittances exceeded $630 million in 2022 and are expected to continue rising by 20%+ a year, giving a new push to remittance business development. 

The largest share of remittance flows is observed in the East Asia and Pacific region, Europe, and Central Asia. Remittances from the immigrant workforce are the major lifeline of thousands of families in developing countries like Tonga and Samoa, where remittances constitute 50% and 34% of the national GDP, respectively. 

However, digital money transfers are not as affordable and frictionless as one would naturally suggest in 2023. Most traditional transfer channels impose high commissions (reaching 8-9%) on top of the currency exchange rates, thus eroding the essential funds of middle- to low-income families in developing countries.  

According to World Bank’s data, a reduction of transfer fees to 5% would save up to $4 billion in costs for African families. 

The answer to this problem is e-wallet – a more affordable payment method that eliminates most of the bank commissions and reduces fees to under 2% per transfer. 

This article examines the benefits of digital wallet use in the remittance business and explains why e-wallets are one of the best FinTech startups ideas in 2023.

 

Overview of Digital Wallets Market

Digital wallets are quickly rising in popularity and adoption across the globe, especially in the states, where large portions of the population are still unbanked. As of 2021, the global mobile wallet market size was estimated at $6+ billion, and its CAGR was predicted at 27.4% in 2022-2030.

U.S. Mobile Wallet Market

This way, the market of digital wallets is expected to exceed $51+ billion by 2030 (other figures name $30+ billion as the 2028 market growth target). 

The diagram below exhibits the key statistics of e-wallet use by modern consumers. It shows that 72% of online payments are currently conducted using e-wallets, and e-commerce players also increasingly adopt this technology to make money balance transfers with customers easier and more affordable. 

The overwhelming share of e-wallet users are aged 18-34, and the age range of this technology’s adopters continues to expand.

The global e-wallets landscape: 2023 and beyond

 

How Does an E-Wallet Work? 

What’s so different about an e-wallet, and why would a user and a remittance transfer provider benefit from it? Here is a breakdown of the e-wallet payment flow – see the diagram below.

How Does an E-Wallet Work?

Users can easily deposit money to their e-wallets from a bank account or a direct deposit of cash, then send the money to another holder of an e-wallet account by using only the recipient’s email or phone number. 

Regardless of whether the recipient has a bank account in their home country, they can cash out the received money in many convenient ways.

 

E-Wallet Functionality Important for Remittance Businesses 

Talking about the benefits of digital wallets specifically for digital remittance companies, we at RNDpoint usually implement the following functionality : 

  • Money transfer. E-wallets allow seamless and instant international money transfers to a broader number of locations without limiting the service’s availability to bank account holders only. 
  • Currency conversion. While banks and traditional remittance channels usually charge considerable currency conversion fees, e-wallets make those commissions lower and more manageable. 
  • Transaction tracking. Users have a simple, intuitive interface in which their transactions’ status will be reflected in real-time. 
  • Payment notifications. Most e-wallets provide SMS or push notifications about the money transfer’s status changes. Thus, users get instant alerts when their payments are issued to the recipient.  
  • Remittance history. It’s easy to track the history of transactions in the e-wallet profile or download reports in Excel or PDF formats.  
  • Beneficiary management. You can save the contacts of your relatives or friends to whom you regularly send money, thus avoiding the entry of payment details over and over again. 
  • Remittance cost estimation. You can learn the fee for the transaction before you actually send it. The e-wallet calculates all transfer details and shows them to you.
  • Value-added services. These are bill payments, mobile top-ups, access to extra financial products, insurance, and savings accounts.

Key features of a digital wallet

All these features play a vital role in making a specific digital remittance provider’s business attractive to customers. They enjoy greater flexibility in payments, low commissions, instant transfers, and unrestrained money receipts available even for unbanked individuals. 

This way, remittance businesses can make their services universally affordable and convenient for broader populations. 

RNDpoint develops digital wallets for remittance businesses. To learn all the details, visit our page.

 

The Advantages of e-Wallets for Remittance Companies 

As a rule, the discussion of digital wallet benefits is limited to customers only. However, having a money transfers app is a great bonus for a remittance company as well. 

Here are the perks a remittance business can reap from e-wallet integration. 

Enhanced Customer Experience 

One of the most frequently cited digital wallet benefits is the provider’s ability to enhance customer experience. Modern users are picky and tech-savvy, so they choose remittance providers with simple, intuitive interfaces and a broad set of features and financial operations.

Reasons for remittance businesses to accept digital wallets

E-wallets that allow seamless and convenient money transfers, end-to-end data protection, simple transaction monitoring, immediate transactions, and other extra services will surely win user trust and commitment. 

Cost Efficiency and Operational Benefits 

Money transfer companies can enjoy the advantage of operational cost reduction using e-wallet technology. 

Digital wallet transaction processing fees are much lower than card processing fees, and any remittance company can reduce its operational expenditures with e-wallets. 

This way, they can grow their revenue without large-scale business infrastructure changes.

Increased Market Reach and Customer Acquisition 

The ability to attract more customers and achieve greater geographical coverage is also among the benefits of digital wallets

Users like comprehensive, safe, and convenient solutions and adopt remittance solutions that contain everything they need from such a service. 

By integrating an e-wallet, a remittance business can provide access to advanced analytics, location awareness, real-time updates, and many other perks that will attract new and existing users.

Data Insights and Analytics 

Transfers of money are data-intensive operations. There should be rigorous monitoring and secure data storage for compliance and auditing goals. 

E-wallets keep all remittance information in one place, giving access to financial institutions and simplifying compliance monitoring for remittance providers. Advanced, in-depth analytics of remittance records can improve user experience and allow businesses to deliver personalized service. 

Money transfer app development for remittance businesses is one of RNDpoint’s core competencies. If you need a consultation, feel free to contact our experts.

 

Unveiling the Challenges and Considerations of eWallets for Remittance Businesses

Looking at these benefits shouldn’t mislead you into thinking that an e-wallet is a panacea for revenue growth in the remittance business. You should consider some e-wallet integration bottlenecks before investing money and time in this project. 

Security and Fraud Prevention 

Benefits of digital wallets include advanced encryption and rigorous AML/KYC checks, which minimize the risks of fraud or scam while at the same time preserving the speed and simplicity of e-wallet transactions. 

However, to meet regulatory requirements and preserve a good reputation, businesses must implement top-tier security solutions into their e-wallet software. These measures may be costly, though without them, an e-wallet can easily become the target of hackers.

Regulatory Compliance 

Money international transfers are subject to rigorous compliance regulations, and e-wallets can provide automated compliance controls for businesses. 

Nevertheless, the very design and deployment of an e-wallet should follow a complex regulatory landscape of the jurisdiction where the remittance company plans to provide services. 

These regulations include proper licensing and registration of the digital wallet software, AML/KYC procedures, customer due diligence measures, rigorous privacy and data protection measures, and consumer protection (e.g., lawful disclosure of fees, transparent terms and conditions, and effective dispute resolution mechanisms).

Regulatory Compliance

Technical Infrastructure and Integration 

E-wallet integration in the remittance business can be accompanied by technical infrastructure issues, as this technology requires robust, scalable back-end systems to enable the safe and effective processing of large transaction volumes. Such infrastructure should comprise powerful servers, databases, and network architecture optimally suited to the type of tasks e-wallets are expected to complete. 

Additional infrastructural bottlenecks arise from the need to integrate payment gateways, banking providers, and API connections to third-party financial services to achieve e-wallets’ seamless and safe operations. 

Making those integrations smooth and frictionless is a time-consuming and technically challenging task that demands extensive compatibility testing, data mapping, and advanced API management. 

Another dimension of e-wallet setup in technical terms is the arrangement of end-to-end encryption for user data security and privacy protection. User access should be regulated with robust authentication measures, and regulatory compliance should be secured at every step of user interaction with the e-wallet, which is possible via KYC/AML procedure integration. 

Thus, e-wallet development and integration with the remittance business’s core operational processes is a technically complex and continually evolving process, with regular updates and new feature additions included in the mix. 

At RNDpoint, we have been developing mobile wallets since 2014. Feel free to contact us with any technical issues regarding your project.

 

Success Stories of Remittance Companies that Have Launched Digital Wallets 

Let’s look at a couple of examples of successful e-wallet integration by digital remittance companies. Their case studies will show why this move is a smart investment in your business’s long-term development. 

Western Union 

A well-known player in the global remittance market, Western Union has recently introduced its proprietary Western Union Money Transfer App. 

This e-wallet allows international money transfers and real-time transfer status tracking. Users can quickly convert their funds into multiple currencies in the app, pay bills from the e-wallet, and receive immediate notifications. 

TransferWise

Wise, which is a new name of TransferWise, offers a digital wallet option called Wise Borderless Account. 

It is a multi-currency e-wallet, allowing fund storage and transfers. Users can also order a debit card linked to their account, which helps with global card payments.

Remitly

This remittance business provides a Remitly Wallet to its users. 

The e-wallet simplifies transfer completion and tracking and gives users access to their transaction history. Users can also top up different recipients’ phone numbers from their wallet accounts.

PaySend 

The provider features a handy PaySend Global Account for its users. 

The wallet enables international transfers, currency conversion, and real-time transaction tracking. Users can use their wallet accounts to complete online payments to merchants and withdraw funds from partner ATMs using their PaySend debit cards. 

WorldRemit 

Users of WorldRemit can store funds and send international transfers using their WorldRemit Wallets. 

This wallet allows mobile wallet top-up, deposits to bank accounts, and cash pickup. Clients also enjoy seamless transaction tracking, real-time notifications, and recipient data storage for faster recurring payments. 

A Digital Wallet with RNDpoint 

As you can see, e-wallets are one of the hottest payment FinTech trends today, and you need to work with reputable software providers to enter this niche and get a safe, functional e-wallet for your remittance business. 

RNDpoint can become your trustworthy companion in remittance app development, as we work with remittance businesses and have in-depth expertise in e-wallet design and deployment. 

As a result of working with us and using our digital payments solutions, remittance businesses achieve the following outcomes: 

  • Customer base growth 
  • Quick and seamless money transfers 
  • Ability to grow customer loyalty and trust via extra service provision 
  • Improved customer relationships 
  • 24/7 service coverage 
  • Rigorous control over business operations via detailed reporting 
  • Hassle-free customer registration 

If you’re interested in our professional e-wallet development services and would like to get a detailed cost estimation, feel free to contact us and discuss your project. Our managers will provide a consultation to help you move on. 

You can also examine our collection of startup articles to see how well-thought-out payment solutions can streamline fast business growth.

FAQ

How does a digital wallet differ from traditional remittance methods?
Why should a remittance company consider launching a digital wallet?
How can digital wallets streamline the back-end processes of remittance companies?
What features and capabilities do digital wallets offer for remittance businesses?
Can users perform cross-border money transfers using a digital wallet?
What is remittance information?
How do digital wallets simplify currency conversion for remittance transactions?
How does a digital wallet improve the customer experience for remittance transactions?
Are digital wallets secure for remittance transactions?
How can launching a digital wallet help remittance companies reduce costs?
What regulatory considerations should remittance companies be aware of when launching a digital wallet?

Contents

Peter Shubenok
Peter Shubenok
Managing Director
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