How remittances to Africa can be made cheaper, faster and boost financial inclusion

by Clear Junction3 January, 2024Payments

Globally, the number of people who need to make low value cross-border remittances has grown rapidly since 1990. Today there are more migrant workers than ever before, not to mention global nomads and international students. Given that more than 11 million African migrant workers and students are in the EU, it’s vital that they have a safe, secure and speedy way of sending money home. But many African remittance providers are struggling to facilitate fast and cost-effective remittances due to high costs, FX conversion challenges and logistical hurdles.

Cost barriers and challenges to remittances

African migrant workers and students are grossly underserviced by mainstream banks, and international remittances are expensive and slow compared to other forms of payments. Traditionally, the main option for migrant workers and students were money transfer networks like Western Union or the post office. But these transfers are often slow to be processed, and in a continent where banking penetration rates are still below 50%, chances are that the recipients in home countries need to be paid via non-banking payment rails. This means many remittances remain cash-based and therefore more prone to fast-changing FX conversion rates eating into remittance balances and provider profitability. Remittances to Africa cost an average of 8.6% compared to the global average of 6.3%.

It’s clear that remittance companies in Africa 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 the other side of those institutions are families who depend on those services. Recipients can’t afford to be left waiting or be faced with delays in receiving funds. 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.

How you can access fast, cheap and compliant remittances with Clear Junction

In order for migrant workers to safely send money home to their families, there needs to be a collection account in the country where the worker or student has migrated to before any transfers can be made and settled in recipient destination countries.

This is where Clear Junction can help African remittance providers offer faster, cheaper transfers – aiding collection of remittance funds in the sending country, and secure and speedy settlement in the recipient country. Our team of experts has worked to provide fast access to payment rails and networks to enable the sending and receiving of funds in multiple jurisdictions.

  • We enable African banks and payment intermediaries with correspondent accounts accessible via the EU and UK banking systems.
  • We facilitate euro-denominated transfers via SEPA, and GBP sterling transfers via the UK’s Faster Payments, BACS and CHAPS clearing networks.
  • We allow full automation of the payment matching process through use of our virtual IBANs that can be set up for each recipient family in the remittance destination country.

Here’s how it works:

  • Let’s say you operate a remittance company or e-wallet service. You can open a correspondent account with Clear Junction which supports a per-request IBAN issuance of account numbers – IBANs (a.k.a. virtual IBANs) linked to your account in Clear Junction.
  • As the remittance provider, you can then allocate a unique IBAN to your remittance recipient customer in the destination country who then shares that IBAN with their relatives in the EU or UK.
  • The remittance sender then makes a domestic bank transfer in euros or pounds from their local bank account in the EU or UK.
  • As soon as the money arrives to your account with Clear Junction, you credit the remittance customer’s balance.
  • The collected funds are converted into your currency of choice using our pre-agreed FX rates.
  • The accumulated funds are transferred to your account in the destination country for further delivery to the recipients.

It’s vital that fund flows are fast, secure, and compliant with all regulatory obligations. Hence why Clear Junction is proving to be the go-to partner for African remittance companies and fintechs.

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 cost-effective FX rates that enable people to send money home, to where it’s needed most – at the fingertips of recipients.

Our API enables seamless integration to automate many of the services you will be offering to customers. You can also manage your account through our online banking platform, which provides an overview of all your payments, transactions, and activities – enabling your team to manage and track everything quickly and easily.

What’s more, Clear Junction can help African remittance companies extend their reach outside their domestic markets, enabling them to access and build strong relationships with counterparties in various geographies.

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.

Latest Posts