Reed Luhtanen, Executive Director, FPC
As we step into April, it’s important that we, as an organization, focus in on National Financial Capability Month. It serves as a month to increase financial literacy, expand financial inclusion, and empower consumers to enhance their financial well-being.
At the FPC, we are working to ensure the industry has the information, tools, and resources to support better financial inclusion and consumers understand and have access to the products and solutions that can improve their everyday financial lives.
Consider that we recently released the Financial Inclusion for Cross-Border Remittances and Bill Pay Bulletin. This Bulletin takes a look at the underserved (unbanked and underbanked) and the often-limited options available to them to send money across borders. Despite advances, like the fact that three-quarters of people worldwide now have an account at a financial institution or through a mobile money provider, which represents a 50 percent increase over the past 10 years, billions worldwide remain without access to financial services.[i] And those with newfound access are still dealing with long-standing pain points.
For instance, a lack of trust in financial services remains an issue with the underserved, which is further compromised by perceived hidden costs, difficulty in payment tracking, and high friction in sending the payment. Language and cultural differences between those providing and needing the service also can lead to mistakes or frustrations that affect trust.
Cost serves as another important variable and pain point. Most solutions do not provide specifics on total all-in costs for a cross-border transaction, making it hard to understand the amount that will be received by the recipient and the amount that is charged for the transaction.
And of course speed continues to be a challenge when it comes to cross-border payments and the underserved. Delays in a payment can adversely affect the sender and recipient, particularly considering the financial instability they may be experiencing. And given tracking of cross-border payments can be less than transparent, speed is a leading issue when it comes to cross-border transactions.
Fortunately, the Bulletin identifies cross-border transactions with the added element of faster payments as a viable option for facilitating international payments for the underserved. With the element of speed, use cases such as cross-border bill pay and cross-border P2P payments become an option to better support the needs of those with once very limited offerings and opportunities.
As the Bulletin points out, it’s why we, as an industry, have to keep investing in faster payment products and services. This will help to bring about the solutions that better address the needs of the underserved when it comes to cross-border transactions. In this way, the industry can not only meet the need but resolve pain points that will enable greater access and improve the financial well-being of a large population of people who can significantly benefit from continued financial progress.
This month, we encourage you to take a look at all the resources we have available on the topic of financial inclusion to strengthen your understanding and ensure you are doing your part to help empower your underserved customers. Together, leveraging faster payments, we can better support the needs of this community, enabling opportunities for financial stability and success.