Why Real-Time Money Movement Is No Longer A Luxury

Two things stood out from a recent TerraPay global survey which spanned Latin America, Asia and Europe. Firstly, around 40% of consumers are looking to originate, pay or send a transaction on a mobile wallet - double the number in 2020 when mobile wallets were fewer than 20% of transactions.¹ The second finding which stood out was that everyone is looking to pay, receive, and send money instantly.

With consumers increasingly calling for instant transactions, along with a high uptick of mobile wallets, it’s clear that offering an exceptional user experience is vital for providers. Consumers are also looking for transparency and inclusivity: every demographic of consumers wants to be able to use mobile wallets in the same way.

TerraPay’s Ani Sane says, “We are seeing close to double digit growth in money sent to a digital wallet. In 2024, 43% of money movement was originated by a wallet and 66% of transactions were being delivered to a mobile wallet. Mobile wallets aren’t a nice-to-have for banks and fintechs conducting cross-border transactions, they’re a necessity!

For all the demand for mobile wallets, many banks are reluctant to embrace them because they perceive there are problems with AML and compliance on the receive side of wallets – specifically that these safeguards aren’t ‘bank grade’. Ani acknowledges these concerns but notes, “This perception is wrong. The way mobile wallets are set up globally, and how consumers are onboarded and reported to the banking regulator is exactly the same as the banks’ process. A mobile wallet consumer has the same KYC norms as a banking customer.” It is up to the local market to set the compliance standards for the local regulations in their market.

Wallets, not just for consumers

Even though P2P is the base DNA for all wallets, it’s a myth that mobile wallets are for consumers only. Most wallet platforms are designed for both consumers and merchants – these can be large merchants or SMEs.

Yet, there are significant areas which need to be considered by businesses to ensure successful cross-border money movement to wallets:

Align with local regulations.

Providers need to look at how data is going to be shared: is it P2P or business to small business, or business to consumer. Depending on local regulations there are norms about how data can be shared over APIs. Sometimes documentation becomes very important in these cases.

There’s no one-size-fits-all.

With mobile wallet global money movement, the APIs, AML rules, processes, and fraud monitoring positions all need to be put together and can make money movement complex. Building in liquidity management on top of this, is an extra challenge.

Ani notes that across the 150 countries TerraPay operates in, sharing data and the availability of documents hasn’t been a challenge, as this is a known requirement for cross-border transactions. The challenges come from how the local regulations match to the existing data fields, and if the regulations change, how easy is it to change and adapt to the data fields you have. Ani says, “This is the nub of the complexity of cross border money movement, and I think this will remain.”

Wallets and banks: addressing cannibalization fears

Many banks have concerns that their flow of money will get cannibalized, with their customers’ funds getting funneled into the wallet.

The TerraPay survey shows that the relationship consumers have with mobile wallets and banks differs worldwide:

• Consumers in APAC operate differently to other parts of the world. They have more options in terms of bank accounts and wallets. As a result, there is a synergy on how both operate, and both grow at the same time.
• In some parts of Africa, where there are underbanked markets, the mobile wallet has 100% adoption.
• In Latin America, mobile wallets are gaining prominence, but they are around three years behind the APAC region in terms of penetration, but with similar adoption patterns.
• In Europe, wallets are looked at differently to banks, but the common theme and trend globally is that wallet and banks co-exist and grow.

There are different reasons why consumers use a mobile wallet or a bank account. As far as cannibalization is concerned, it’s worth noting that the average transaction in a bank account is 600 dollars and in a wallet, it is two dollars.

Real-time transactions are now a must-have.

Ani notes, “Real time money movement isn’t a luxury anymore - it is a necessity. If a company doesn’t offer real-time, they won’t be around in five to ten years. It’s the base line. Maybe the next mode is interoperability between bank accounts and wallets, maybe that’s the next movement. But today real time money movement is oxygen!”

Visa Direct. Move money your way.

To learn more about money movement, visit: visa.com/visadirect

Sources:

¹Wild Card in Global Money Movement: Digital wallets