Wallets: The next game changer in the payments space?

In tandem with the increasing digitisation of money, e-wallets are beginning to replace credit and debit cards at a rapid pace. How will this development affect the cross-border payments and remittances industry?

An e-wallet, also known as an online or digital wallet, is simply a software application that allows users to store e-money, complete transactions and receive payments through their smartphones or other digital devices. Money can be deposited in an e-wallet prior to any transactions or, in other cases, an individual’s bank account can be linked to the e-wallet.

Leaving cash behind

E-wallet technology is supporting the shift away from cash deposits as a way of sending money abroad. “The persistence of anti-money laundering concerns means fewer banks will be okay with cash deposits for international payments,” explains Mike Laven, CEO of Currencycloud, a global payments platform.

“Market share in international money transfer is moving to digital-first neo-banks like Starling, Revolut and Monzo and online services such as Transferwise, Remitly and Azimo, making cash remittances for international payments decrease significantly. With app-based services on the sender side and e-wallets on the receiver side, the days of cash-based services are numbered.”

Currencycloud, launched in 2012 and one of the founding members of the London fintech scene, provides an API and support services for cross-border payments. Its clients are agile fintechs and other innovative companies that are operating across borders and, as such, need low-cost foreign exchange. One such fintech is MangoPay, which provides a platform for online marketplaces to create e-wallets to easily accept payments from customers.

Currencycloud’s platform is built on smart technology that takes the complexity out of moving money. A client’s developers can use the company’s API building blocks to create customised payment solutions. The Currencycloud team is currently working to further develop user experience when it comes to cross-border payments and remittances.

“There are two key areas we are working on at the moment: transformational and tactical,” says Laven. “SWIFT gpi is transformational as it allows customers to follow their international payments in detail within an app, and speeds transfer times from days and hours to minutes and seconds. We are only the third non-bank on the network.”

“From a tactical perspective, we are increasing payment speed for local payments for many countries from two to three days to same day. We are also expanding our payments network, and further down the line we will be looking to add functionality to be able to pay to cards or e-wallets.”

Removing cross-border friction

In June 2019, Currencycloud announced a partnership with Visa, aimed at further driving innovation in cross-border payments.

Visa’s clients now have the option of using Currencycloud’s platform to offer customers in-demand services like multi-currency wallets and real-time notifications on foreign exchange transactions. Visa’s account holders will be able to better manage their transactions abroad through improved visibility and control of their money.

“Through our deal with Visa we will be offering all issuer banks the ability to provide real-time FX rates to all of their customers and have it locked in so customers know exactly what they’re paying at the point of purchase,” says Laven. “Customers will be able to see what they are actually spending.”

Visa’s European CEO Charlotte Hogg, commenting on the partnership, said: “Our goal is to continue to help our clients meet this increasing demand for slick, simple and more convenient cross-border payments and make it easier for Visa cardholders to manage their money when travelling. Our partnership with Currencycloud will empower our clients to do just that by offering an innovative, competitive, digital-first solution that ultimately gives consumers and cardholders more control over digital payments — at home and abroad.”

The team-up is timely. By 2020, cross-border ecommerce is expected to reach $900 billion in value, accounting for over one fifth of the global ecommerce market. Visa and Currencycloud’s partnership will focus on offering solutions that remove the barriers to how consumers transact abroad.

Currencycloud is certainly one to watch as we move towards a cashless future.

Mike Laven will be discussing how digital payments and e-wallets will drive the industry forward at the 2019 IAMTN Global Summit, which takes place in London on 2–3 October.

To find out more about the agenda and register, please visit the event website.