Revolution or evolution? Digital remittance in Asia Pacific

Cross-border payments are the lifeline of many developing and exporter markets. Asia Pacific is no exception. Research shows that companies want their beneficiaries to receive cross-border payments faster—within 3 business days or less (78%).[1] With Visa Direct, Visa’s real-time* money movement solution, we have seen increased demand for our cross-border payment solutions from the send players in the ecosystem, including banks, remitters, fintechs, online merchants and payment processors.

New demands require new solutions.

The impact of COVID-19 has strengthened the demand for digital solutions across the board, and this is especially true for cross-border payments. Cash drop-off and pick-up became increasingly difficult during the pandemic.

At Visa, we recognize the continued role of the account as the endpoint, especially for larger ticket transactions. Simultaneously, we are experiencing demand for alternative endpoints. In a relatively under-banked Asia Pacific region, we understand the power in reaching consumers where they are, be it account, card or digital wallet—giving send partners access to 3B accounts, 2B cards and 4B wallets globally. As our proprietary network, we have effectively delivered funds to cards as an endpoint for some time. Our 2019 acquisition of Earthport, which is fully integrated as Visa Direct Push to Account, has added accounts to our global endpoint reach.

In large developing markets such as India, Indonesia, Vietnam, and the Philippines, consumer products such as shampoo are often sold in small affordable “daily-use” sachets—with empirical data showing that a reduction in unit cost drives a dramatic increase in unit sales. Digital remittances are showing a similar trend. The average unit cost of a digital remittance has gone down, both in terms of transaction cost and FX spreads. With this, we have seen a corresponding increase in the number of transactions.

This trend will continue, highlighting the need for send partners to be equipped to process larger volumes of lower ticket transactions. As the number of tickets increases, so does the imperative for Straight Through Processing, high authorization rates, and the ability to handle client enquires at scale.

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