Last month, we conducted a number of focus groups to speak to small businesses about their experiences with sending money overseas, or getting paid from overseas. One of the biggest takeaways, not only from this research, but from other surveys, comments on articles, speaking to customers regularly, is that opinions vary widely, based on experiences which vary by a similar degree. Things such as the bank used, the currency sent or received, the transaction size, the destination country or booking channel (in person, desktop, mobile), even the day of the week can have a huge impact on the user experience.
We conducted two sessions over 2 days with small groups (<10) of businesses which had been pre-selected as senders of cross border wire transfers based in California, who were not aware of Align Commerce. We asked them questions about how they currently conducted cross border business: what was working? What wasn’t working? How they chose a service, and what might make them reconsider their choice? The results were illuminating and we wanted to share some of their opinions:
Some interesting points came out of this subject and are a great example of the differing requirements of businesses (and how intertwined these subject are). One business which was sending money to Latin America, had the opinion that “it seems like there’s something suspicious going on (with several day transfers)” – their money would take between 5 and 7 days to be credited into the account of their beneficiary and they couldn’t understand why. The impact for them was they didn’t particularly trust their bank was sending money correctly, (they thought perhaps the bank was sending it the cheap slow route and charging the expensive, fast fees).
Another view, widely held; businesses were willing to pay extra for faster transaction settlement. This is something which already exists with some banks, but it can depend on transaction size or the knowledge of the bank teller (or functionality of the bank website).
No confirmation the payment was received
“We need a better way of insuring and confirming funds reach their destination.” This was definitely the most consistently held view (even more so than hatred of high fees, which we expected to be a clear winner). Here are some more direct quotes:
“I wait to see if the money’s gone out of my account”
“You just got to wait until it happens”
“It pops up, that’s it”
“It would be nice if it was like UPS and you could follow it”
“The longer it took for wire transfers to settle, the more import tracking seemed to become.”
What stood out here was how much confusion there is around the price of sending money overseas. Wire transfers are considered expensive, with many people unaware of the exact amount of their fees – the makeup of fixed fees and percentage rates made it difficult to calculate the cost. Whilst some commented that international wires were a “rip off” others were basing their cost calculations from the cost of sending domestic wire transfers – totally unaware of the additional cost of foreign exchange conversion rates charged by banks on international wire transfers.
Whilst the theme of the session was cross border, companies considered domestic transfers to be expensive as well, which we found interesting because we thought the price of domestic transfers would ‘base’ user’s perceptions of cost. Also interesting was how inconsistent charges on incoming wires scored highly on the business ire scale… sometimes there were no fees, sometimes up to $25-$30 – but no explanation from the bank as to why these fees were different.
From the perspective of a payments company, trust is one of the most important factors of dealing with someone else’s money
and here one of the most important themes was how trust was associated with brand and the reputation of the payments provider, not only for the business itself, but for the sake of their customers.
The execution channel made a huge impact on perceptions of convenience, but also on price. In the worst case some participants actually needed to go into the bank in person for wire transfers, and when they enquired about access to online transfers, were told this level of access would cost an “outrageous” monthly fee.
Bank processing times also had an impact on convenience, as businesses would have to plan their day around cut-off times. If participants didn’t complete international transfers by 12:00 pm they would miss out on sending their payment until the next day (a particular experience of West Coast businesses who need to adhere to East Coast Fedwire processing times).
For one businessman who went into the branch to conduct his international transfers, he would see a specific teller each time, “no one else could do it (unless it was large (e.g., over $80,000) then a branch manager was necessary”. Banking security was also an issue for this user, where they would … “See the banker, show my ID even though I’ve worked with the same bank for ten years, it takes 45 minutes…”
“It’s a huge suck of my time”
The market for international wire transfers is very large and like Walt Whitman, it contains multitudes. Whilst we have touched on a number of the challenges businesses face, there are most likely a number we have missed and an equally large number of businesses whose opinions have not been represented. Banks have chosen to segregate their customers into ‘value buckets’ where they align their service offering with the revenue they can generate from each customer. This may have worked in the days when there was no competition, but modern fintech companies are working to provide low cost solutions which take advantage of modern technology to significantly improve the service offering.
Align Commerce is using the blockchain to deliver money from a bank account in one country to a bank account in another, bypassing traditional bank payment networks and therefor avoiding the fees and delays associated with traditional bank wires. Payments are very quick, fees are low and they provide a host of tracking features so you (and your customers) can see where funds are at any time.