Cross-border remittances are a lifeline for many developing economies, but high fees and long processing times can make timely payments difficult for those who may be the least able to afford delays. Some consumers now are turning to cryptocurrencies as a payment option that allows them to send payments swiftly and securely.
In The Digital Currency Shift: The Cross-Border Remittances Report, a PYMNTS and Stellar Development Foundation collaboration, we reveal findings from a 2021 survey of 2,079 respondents. The study shows how the need for affordability and convenience drives the way consumers send and receive cross-border payments. PSPs that offer alternatives to traditional remittance payments methods may see a surge in interest among consumers seeking to avoid high fees and extended processing times.
PYMNTS’ research found that 70% of consumers pay a fee to send money abroad, with variable fees averaging 6.2% and fixed fees set at $14.80. The greatest percentage of peer-to-peer (P2P) payments were sent to friends or family experiencing economic hardship because of the pandemic (32%). For these consumers, long payment delays and high transaction fees may have a significant impact on their access to needed funds or on the ability of payors to send the total amounts they intended.
Consumers seeking alternatives have moved toward cryptocurrency as an option. Cryptocurrency has become an accepted payment method at many retailers and is available through many PSPs.
PYMNTS research found that 23% of respondents — representing 8 million adults — who made online payments to friends or family in other countries used at least one kind of cryptocurrency. In fact, 13% of consumers surveyed said cryptocurrencies were their most used payment method for online cross-border remittances. Fifty-one percent of those sending cross-border payments own at least one type of cryptocurrency, meanwhile.
Yet, despite the appeal of new, convenient options like cryptocurrency, PYMNTS research found that consumers chose PSPs to send their remittances based on trust. The research found that among all P2P payment choices, trust is the deciding factor in consumers’ choice of a payment service provider (PSP). Fifty-six percent of consumers cite trustworthiness as a factor that would make them more likely to choose a specific provider. Consumers define trust in different ways. More than half of survey respondents said a recognizable brand name increased their level of trust when selecting a PSP for sending cross-border remittances (53%).
According to the survey, consumers also valued transaction security (47%) and the remittance recipient’s ability to gain access to funds quickly (41%) as inspiring their trust. As most (59%) consumers who send remittances increased the amounts sent in the past year, fees and wait times may impact customer loyalty. PSPs will have to consider how consumer loyalty may be impacted if swift and affordable alternative payment methods are not available.
To learn more about how cryptocurrencies are impacting customer experience for remittance senders, download the report.