Banks Near Zero Hour on $124 Trillion of Flows
Why do they charge so much for international transfers? Fintech rivals competing for the business say the right price is close to nothing.
An international liquidity event.
Photographer: Gilles Sabrie/BloombergWhat’s the first thing that comes to mind when someone mentions “remittance”? Expatriates sending money home. Second? Lousy exchange rates.
While exorbitant currency spreads and hefty bank charges are the norm for payments that cross national borders, the impression that they mostly affect individuals is wrong. Annual people-to-people transactions amount to $400 billion a year. People-to-business payments – like sending fees to schools overseas – come to another $1.5 trillion. Those are substantial figures, but they pale before the $124 trillion of business-to-business transfers, according to McKinsey & Co.