Instant global payments are the future of money

Dora Ziambradirector of operations of Azimoexplains how, by embracing new technologies that allow people to pay for transfers directly from their bank, financial services could be made affordable and accessible to everyone

When you send money overseas with your bank, you’re probably using technology from the 1970s. The SWIFT network was started in 1973 to handle transactions between banks around the world and hasn’t changed much since. . Banks still use SWIFT to manage the billions of annual transactions that fuel the global economy.

Unfortunately, this is why a payment sent from London to Amsterdam can still take up to three days. It would be faster to cycle this distance with a suitcase full of cash (although less safe). In a world where Amazon can deliver physical products to consumers within hours and food delivery startups promise you groceries within minutes, people shouldn’t have to wait 72 hours to receive payments.

For decades, banks had no incentive to change this system. They could charge exorbitant fees, often hidden in exchange rate, and were insulated from competition by high barriers to entry into the global financial system. The technology they used was expensive and proprietary. Regulatory compliance was too complex for startups to manage.

All of that has changed in the fintech era. Ten years ago, cross-border payment companies like Azimo started building their own networks and acquiring the necessary licenses to move money around the world. We built our network with a simple mission: to make financial services affordable and accessible to everyone. The question deserved to be asked: why can’t sending money across borders be as simple as sending an SMS?

The engineering challenge we faced was clear but far from easy: to create a faster, cheaper, and easier way to move money around the world. Since then, we’ve brought instant transfers from the UK, Europe, Australia and Canada to over 80 countries around the world, with more being added all the time. Around 40% of Azimo’s transfers are delivered instantly and 80% within an hour.

Remittance customers have quickly adopted faster digital services because their transfers are not rarely a matter of life or death. Migrant workers support loved ones in their home countries, often sending money for critical medical procedures, food and energy bills. A quick transfer can literally save a life.

Businesses quickly followed suit, realizing they could secure contracts, make investments and pay overseas staff in seconds, improving business relationships and reducing their accounting overhead. Faster transactions reduce paperwork and tedious back and forth billing and payment requests.

Azimo has also embraced innovations such as Open Banking, which allows users to pay transfers directly from their bank account, instantly. No card details, no bank details, no hassle. All you need to do is approve the payment with your banking app. This technology is helping to make environmentally unfriendly plastic payment cards obsolete. It also helps prevent fraud as there are no details to steal.

For transfers to emerging markets where the banking infrastructure is less sophisticated, mobile wallets have bypassed the banking system entirely. Over 95% of Azimo payments in Kenya arrive instantly on M-Pesa mobile wallets. Where traditional banking has failed, personalized payment rails have opened up the financial system, empowering entrepreneurs and energizing entire economies.

More and more countries are introducing real-time payments for local banking rails, from faster payments in the UK to instant SEPA in Europe. Similar systems are being developed in Brazil, Hong Kong, the Philippines, Singapore and Thailand. The world is starting to realize what fintech knew all along: the future is instantaneous.

From 2012 to 2020, innovators and early adopters embraced fintech companies like Azimo and national challenger banks. But in 2020, the COVID pandemic has brought fintech firmly into the mainstream. With high street banks and money transfer shops closed by COVID lockdowns around the world, consumers and businesses flocked to digital services they could use from the comfort of their homes.

Suddenly, new global networks have become the default way to send money to millions of people. Digital providers like Azimo reported increases between 50% and 100% in the number of new customers they acquired in April, May and June 2020. This was made possible by a fast, cheap and reliable digital infrastructure known as the name of payment rails.

After building their own payment rails, smart fintech companies are now offering these rails to other businesses as a service. This network-as-a-service (NaaS) approach allows businesses that lack payment capabilities to expand the services they can offer their customers.

For example, a travel agency might start offering currency exchange at attractive prices rates to customers who book a vacation package. Since many fintech companies can now instantly create foreign currency accounts that integrate Apple or Google Pay, customers wouldn’t even need to withdraw cash in destinations where contactless payments are available.

The biggest prizes will go to fintech companies that have built the cheapest, fastest and most reliable networks. They can offer businesses access to tools that help their business grow faster, at a fair price. It is the opposite model to the defensive and exclusive walled garden that banks have selfishly perpetuated for decades.

Azimo uses this model in its quest to make instant delivery the industry standard for cross-border payments. We will be announcing our first NaaS partnerships in the coming months and expect many more companies with their own cross-border payment networks to do the same. The 2010s were the decade of fintech innovation. The 2020s will be the decade of fintech integration.

About Dora Ziambra

Dora Ziambra is COO of Azimo, one of the leading cross-border payment providers in Europe. She is responsible for expanding Azimo’s global network, managing risk and compliance teams, and supporting any potential business development opportunities.

About Azimo

Azimo is one of the leading cross-border payment providers in Europe. The company was founded in 2012 with a mission to make financial services affordable and accessible to everyone.