NEW YORK–A new report on the multi-billion-dollar international money transfer industry said it has uncovered hidden fees, discrepancies and restrictions that could jeopardize growth for traditional players.
The report, from Finder.com, noted the international money transfer market is booming in America, worth $135 billion last year, with an estimated 84.3 million Americans (34%) sending money to people in other countries. That's more than half the money borrowed for mortgages last year ($231 billion) and worth more than credit card debt and student loans taken out last year combined ($124 billion), the company noted.
“Despite the serious changes and growth of the industry, the industry has received little attention, enabling it to fly under the radar with some providers complacent with consumers,” Finder.com said in a statement. “A survey of more than 2,000 American adults commissioned by finder.com found 96% of these Americans who transfer money are not happy with their provider and 80% feel ripped off.”
Following the survey, Finder.com said it launched the Money Transfer Awards 2017 to improve transparency and recognize best practices. The company said more than 45 factors were considered and over 1,500 data points were collected for the preliminary research, including notable user experience, market size, number of countries and territory coverage and digital transactions. It used five main methods of testing including: live transfers, online quote generation (over 2,000), user testing, site testing and external ratings.
According to Finder.com, the winners and key themes were:
Best User Experience: Winners: Xoom, Sharemoney, Western Union, Pangea. “Despite operating in the age of the ‘digital wallet’, attractiveness trumps usability for many international money transfer providers with more than half (54%) scoring below average for ease of use and the same proportion taking five minutes or more for consumers to set up an account. Many did not even make the inquiry process simple with 31% providers forcing customers to provide personal details before they would be served a quote.
Most Convenient: Winners: Transferwise, Xoom, Western Union, World First, PayPal, Small World Money Transfer. “Many providers appeared to favor smaller transactions with only four out of the 13 allowing over $5,000 to be transferred per transaction within 24 hours yet 85% offering a minimum per transaction of up to $24. Where you are sending money to and from which state were also barriers to convenience with some providers. About half of the providers (46%) sent to bank accounts of less than 40 countries and territories while about half of providers aren’t even available in some states due to differing license laws across the nation.”
Fastest Transfer: Winners: World Remit, Xoom, Sharemoney, Western Union, Pangea, Small World Money Transfer. “While set up times varied across providers, the process of transferring was fast with providers offering turnaround time of within two days, the same amount of time as a local transaction for one bank to another. However, new payment methods or the adoption of the digital wallet may soon challenge this. Currently only four of the 13 providers offer transactions within 24 hours.”
Best Rates: Winners: Transferwise, Circle. “A provider’s rates impacts the amount received on the other end so for many consumers, this is the most important element of their provider choice. However, many may not realize that many providers build their fee into the rate they quote (on top of other fees). For the transfer quotes that were analyzed, only half of the providers charged over 3% of the transaction in fees (e.g. a 3% cost means $485 will be received when sending $500), meaning the remainders fell under the 6% industry average as quoted by the World Bank. Circle and Transferwise were the clear standouts in this category as the only two providers that didn’t charge a higher exchange rate above the mid-market rate, while Circle does not even charge fees.”
Most Trustworthy: Winners: Transferwise, Circle. “With the international money transfer market notorious for a lack of transparency, trust in a provider is of paramount importance. Only two providers didn’t hide fees by building into the exchange rates they offered and two in five providers (40%) didn’t transfer funds according to the estimated delivery time. The vast majority of providers were keen to get consumers transferring money quickly without identification processes however with 70% not requiring ID to sign up, and 77% not needing any additional documentation after sign up.”
Outstanding Product Winners: Transferwise, Circle, Xoom. “Outstanding Product co-winners Transferwise and Circle both represent unique business models in that they do not charge extra in exchange rates, or ‘hidden fees’. Xoom was a standout for its usability and also on price.”
For more: www.finder.com/international-money-transfers/money-transfer-awards.