Big Cross Border Transfers a Big Deal to More Companies

Global companies are realizing that there is a high demand — and a low supply — of services for the high-volume cross border payments niche.

"The most common way to do [a big transfer now] is still to go to a bank, wait in line and fill out a form," said Prince Ghuman, global director of enterprise development at USForex, a Sydney-based foreign exchange company which this week enabled all-hours access to its dealing platform and customer service for high-amount cross border transactions. "The experience is not optimized."

Both consumers and businesses are driving growth in cross border payments volume, according to Capgemini, and the burgeoning market is attracting lots of attention. In just the past year, mobile wallet ventures such as Seamless have partnered with technology providers to enable cross border transactions, while established companies such as Western Union and MasterCard have collaborated to counter the incursion of startups that use distributed ledgers to avoid correspondent banking fees.

Some companies are approaching larger volume payments such as tuition and real estate to differentiate themselves. MoneyCorp and Tempus recently launched a collaboration to focus on larger transactions, typically in the thousands of dollars in value and Flywire focuses on tuition payments for international students, though it is also seeking to serve other payment categories.

USForex, a subsidiary of the online international payment company OFX, leverages its scale and partnerships to execute multi currency transactions in 190 countries in 55 currencies. Its existing bank relationships help the company avoid the third parties that help manage international transfers, a time and fee consuming process that has become a major selling point for the companies hoping to disrupt international correspondent banking. Transactions above $5,000 have no transfer fee, and below $5,000 carry a $5 transfer fee.

OFX also powers international payment services such as Travelex, Moneygram, ING Direct and Macquarie.

"If you are transferring from San Francisco to London, we take the money in San Francisco and pay it out in London using our own bank account, so you are in our network the whole time," Ghuman said, adding the constant availability of service staff is designed to aid consumers that are making larger transfers. "If you're sending a couple of hundred dollars you don't need as high a touch as if you are sending thousands."

This higher ticket market serves a changing customer landscape and is not designed to be an alternative to Western Union, according to Talie Baker, an analyst at Aite Group.

"There's a growing need for that type of payment, there is so much more of a global marketplace with people traveling more than ever before and transacting in multiple countries more so than ever before," Baker said. "There's also more of a market for higher skilled professionals who have addresses in other countries."

USForex is hoping to stake out a position in cross border payments that's distinct from the remittance-heavy strategy of other companies, but with a difference from the growing number of "large ticket" cross border startups that are entering the market by not forging a relationship strategy that still includes more traditional transfers.

"We focus on the lifecycle of our users," Ghuman said, saying payments typically range from a few hundred dollars to as much as $50,000 or $60,000.  "It's the son who moved to the U.S. and is sending money back home who advances in his career and wants to make a big real estate purchase. And there's also the freelancers and expats living in London who may have rental income coming from back home that's in thousands of dollars per month."