Experiencing the benefits of Transparent FX for Payouts
Sending money across borders often presents significant challenges, particularly due to the lack of transparency around foreign exchange (FX) fees. Often, consumers and businesses don’t know how much local currency they are sending abroad. The variability of FX rates and the addition of hidden fees can lead to unexpected and higher costs at the time of settlement. Moreover, processing delays can prolong settlement times, sometimes extending them to several days, which complicates reconciliation and budgeting efforts.
Case Study: Unexpected Costs in Cross-Border Transfers
Case in point: A consumer plans to send 1.8 million Ugandan Shillings to a bank account in Uganda from the US, estimating the cost to be about $500. Previously she has used a Money Transfer Organization (MTO) for making such transfers. However, due to a highly volatile FX rate and service fees added by corresponding banks, her final charge is $535 – seen four days later. The consumer, frustrated by the additional costs and delays in settlement, vows not to use that MTO again. She decides to shop around for a lower cost way to send money abroad.
Significant impact on consumers and business
This lack of transparency is a significant issue for consumers. Many are frustrated by the lack of solutions and end up using a third-party MTO for cross-border transactions. While this may be a feasible workaround for individuals, banks, Payment Service Providers (PSPs) and MTOs are missing the opportunity to provide better customer service for cross-border transactions. Their customers end up leaving their ecosystem to make cross-border payments. In turn, they have less compelling customer experience, which leads to lower utilization, fewer transactions, and ultimately, less revenue and loyalty.
Businesses also struggle with a lack of FX transparency during payouts. Like consumers, they move from their native banking ecosystem to make cross-border payments to reduce costs and for speedy settlement. When it’s time to reconcile their accounts, they also have to consider the payments made through other financial systems. This adds complexity and additional manual reconciliation processes for their accounts payable team. Where possible, it’s easier to consolidate their payments processing by staying within their native banking applications.
Thunes: A Solution for Transparent Cross-Border Payments
With Thunes, customers and end-users experience transparent upfront costs, automated conversions, and fully traceable transactions. Consider the United Nations Federal Credit Union, which partnered with Thunes to provide a convenient, secure, fast, and affordable money transfer solution for its members worldwide. Many members had bank accounts, businesses, and families in hard-to-reach parts of the world. This partnership enabled mobile money transfers for members in emerging markets, particularly in Sub-Saharan Africa, Asia, and Latin America, where currency volatility is often rife.
With complete visibility on transaction prices and FX payout fees, both senders and beneficiaries understand the amount they will receive in their local currency. Thunes provides transparency in FX base source and spread, enabling customers to forecast, manage costs and cash flow more accurately. Since the launch of this partnership, the credit union’s transaction volume for mobile money transfers has more than doubled.
Thunes’ comprehensive approach to FX transparency
Thunes provides single API access to send payments using transparent FX in over 130 markets worldwide. Our services are fast and traceable, allowing you to see where your money is and when it settles at an optimal market rate. Senders and beneficiaries can easily understand the amount they will send and receive in their local currency.
In summary, Thunes’ Exchange Currencies service* allows you to convert currencies for your payments, lock in flexible FX rates, and simplify financial operations. With a wide selection of currencies, including those from emerging markets, you can provide better cross-border money transfer services to businesses and consumers.
For more information on how Thunes’ can help you with FX, contact us today.
*This is not a standalone service. It can only be used in tandem with Thunes’ Pay service
