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Remittances: A Powerful Force for Financial Inclusion July 3, 2024

This article is brought to you in partnership with Clear Junction, written by Dima Kats, Founder and CEO, of Clear Junction.

Given how much migration around the world has grown over the past two decades, and combined with technology making money transfers more accessible, remittance corridors, inflows and outflows have undergone significant shifts.

No matter where remittances are sent from and headed to, it’s vital that they are made with security and speed built-in. But many remittance providers are struggling to facilitate fast and cost-effective remittances due to high costs, FX conversion challenges, and logistical hurdles. And sadly, that means many people seeking efficient remittance services have struggled to access and afford them. On the other side are recipient individuals and families who depend on those services – they can’t afford to be faced with delays in receiving funds.

Traditionally, the main option for remittances were money transfer networks like Western Union or the post office. But these transfers are often slow to be processed, and in places where physical infrastructure is sparse, chances are that recipients in home countries need to be paid via non-banking payment rails. However, not all payment networks may be available or accessible in every region, limiting the reach of remittance services.

Another challenge is that many banks are hesitant to work with remittance companies due to the perceived higher risk associated with money transfer businesses, which leads to account closures or limited access to banking services.

High transaction costs, including fees associated with currency conversion, international transfers, and intermediary banks, can also eat into remittance profit margins. Finding cost-effective payment solutions that offer competitive exchange rates and low fees is a constant challenge. This means many remittances remain cash-based and therefore more prone to fast-changing FX conversion rates eating into remittance balances and provider profitability.

Fluctuations in exchange rates can impact the profitability of remittance companies, especially those operating in multiple currencies. Remittance companies need access to services with the best FX rates on the most commonly used currencies like USD, EUR or GBP in order to give the best value to their customers.

On top of all of that, employing secure and proven technology is of paramount importance, as is the knowledge that when funds are sent, they will appear in the recipient’s account in as little as a few minutes.

That’s why Clear Junction’s platform is designed to minimise the operational and financial challenges of scaling up remittance FinTechs. We understand the difficulties faced by remittance companies in establishing accounts. So, our collection accounts enable remittance companies to hold a monetary balance with Clear Junction, enabling them to gain access to domestic and international payment networks across the UK, Europe, and US and benefit from competitive FX rates when conversion is needed.

Clear Junction provide a transparent fee structure, which gives remittance companies full visibility of the costs that they will incur on making cross-border payments – unlike some traditional methods when you do not understand the fees until the transaction has been received.

With remittances worth billions of EUR and GBP flowing through our pipes, we’re trusted by a wide range of players to provide reliable technical infrastructure, fast transaction routing, and low FX rates that enable people to send money home, to where it’s needed most – at the fingertips of recipients.

What’s more, Clear Junction can help remittance companies extend their reach outside their domestic markets, enabling them to access and build strong relationships with counterparties in various geographies. Our existing clients operate as a network and often times we are pleased to see internal settlements within that network.

Amongst the advantages offered by Clear Junction is the upcoming roll out of cross-border settlements using stablecoins. Using blockchain and pegged to a reserve asset like US dollars, stablecoins offer real-time settlement and remove the intermediaries that add to fees and risks. Stablecoins hold the potential to fundamentally transform remittance flows to underserved and emerging markets, empowering more financial inclusion and economic development, at societal and global levels.

With Clear Junction, you’re guaranteed clear advantages in your remittance offerings: reduced transaction costs, faster and more secure remittance flows, and the power to reach more customers. Get in touch with us at https://clearjunction.com/contact/ if you’d like to find out how we can help your business.

Meet Clear Junction at IPR Global 2024!

Joining as Platinum sponsors, you can meet Clear Junction at our annual IPR Global event, where you can dive into deep conversations, explore potential partnerships, and discover the latest trends in the industry from leading influencers.

The top decision-makers will be there, so don’t miss this golden opportunity. Our spaces are limited, so seize your ticket now before it runs out at: https://global2024.ipr-events.com/

We look forward to seeing you!

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