By EWN • 30 June 2021 • 10:44
The coronavirus pandemic hit many industries hard. Airlines received bailouts while cruise lines raised billions through bond sales. Similarly, the money transfer industry was affected as the amount of global remittances declined. Still, many online money transfer firms recorded strong growth as people shifted to their platforms. In this article, we will look at international wire transfers and how they changed during the pandemic.
What is a wire transfer?
A wire transfer is a process of sending money from your bank account to another person’s bank account who is in a separate country. For example, if you are in the United States, it is possible to wire funds to another person’s bank in France.
This process is mostly made possible using the Swift network. Swift is a banking communication service that is used by more than 40,000 banks globally. Each bank has a Swift code that is used to identify it in the system. As such, when you initiate a transfer, your local bank will automatically communicate with the other bank and the transaction will be complete.
There are three main ways of doing a wire transfer. First, you can do the old school option of going to your local branch and conducting the transaction. Second, you could use your digital banking platform to send these funds. Indeed, many banks have started to offer this feature. Finally, you could use online platforms like Wise to conduct the wire transfer.
Wire transfer during the pandemic
The coronavirus pandemic changed so many things in the money transfer industry. For one, many people staying at home embraced online money transfer methods. In fact, companies like PayPal, Wise, and PaySend recorded strong growth during the year.
Similarly, traditional companies like Western Union and MoneyGram recorded strong growth of their digital solutions. Analysts expect that this trend will continue now that many people have experienced the quality of services these firms offer.
As all this happened, the use of traditional options of wire transfers changed as well. This is because many people embraced these digital platforms since they were not allowed to go to banking halls.
At the same time, cybercrime-related to the pandemic increased substantially during the pandemic. Furthermore, many people in countries like the United States received thousands of dollars in the form of stimulus. The overall process of these crimes is almost the same. A scammer will gather details about a company and make a phone call or write an email to someone in finance. They will then direct the finance person to wire funds to a foreign bank account. With so many working from home, the number of these crimes increased substantially.
The pandemic had many bad consequences like death and job losses. It also left some practices that will likely remain for a long time. For example, in money transfer, more people will keep using digital platforms that are relatively cheaper and cost-effective. Similarly, policymakers at the government and corporate level will add more guidelines to prevent or reduce instances of wire transfer fraud.
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