Living in a world where most of consumer payments happen almost instantaneously, you could be forgiven for thinking that most of the money sent across borders is carried there by pigeons.
That may as well be the case for the majority of international transactions. When sending money overseas, unfavorable exchange rates, expensive fees, long delays and a total lack of transparency have been the norm for so long that they’re just taken for granted.
“There’s no clear transparency on how those fees are calculated,” Ria Money president and CEO Juan Bianchi told PYMNTS in a recent interview. “When you send a payment, it’s the same as sending a pigeon with money — there’s no way to call it back.”
Those are just two of a litany of issues Ria Money and its parent firm Euronet are trying to solve with the launch of their new service, Dandelion, this week. They’re billing the service as a first-of-its-kind solution that will simplify cross-border payments by conducting them transparently in real time.
Read more: Euronet Debuts Real Time Cross Border Business Payments Platform Dandelion
Bianchi was joined by Michael Brown, CEO of Euronet, who said cross-border payments can also be incredibly expensive because of high fees and unfavorable exchange rates. Brown explained that businesses often don’t realize the exchange rates their banks quote can be anything from 3% to 6% higher than the actual spot price, which can translate to an extra $3,000 or more in fees on a $100,000 payment.
Real-time payments, Brown said, are already a thing in many countries. So if those systems are all connected on an international basis, it’s possible to speed up money transfers by an order of magnitude.
“Nowadays, consumers believe payments should be more like text messages, as fast as you want,” Brown said. “But that’s not the state of the world. If you find yourself sending an international payment that crosses borders and currencies, you can be waiting three, four or five days for it to get there.”
Bianchi explained that it doesn’t have to be this way, because the infrastructure to support instant transactions in many parts of the world already exists. The problem is that much of it is currently restricted to domestic payments. So when money needs to be sent overseas, payment providers have to revert back to more traditional payments rails, which usually means SWIFT or something similar.
Euronet and Ria Money see an opportunity to speed things up with Dandelion because they’re already connected to those faster domestic payment rails in most countries. Bianchi said this means the company is in a position to help banks connect with all manner of digital wallets, for example, and help FinTechs to play nicely with banks in different countries.
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“All of that needs to come together and it needs to happen fast,” Bianchi said.
Having operated for more than 35 years in dozens of countries, Euronet and Ria Money say they have the connectivity, country managers, legal entities and everything else that’s needed to facilitate quick, inexpensive and transparent cross-border transactions. So with Dandelion, we are basically just packaging that existing infrastructure and making it available as a service for the wider ecosystem, Bianchi said.
Brown gave the example of a friend of his who owns a business that sells additives for concrete. He explained that his friend’s business needs to import chemicals from countries like China, parts of Europe and elsewhere, and that those transactions typically add up to around $45 million a year.
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“So if you lose two percent or three percent on every one of those transactions, it isn’t just thousands of dollars you’re losing,” Brown said. “It’s many thousands of dollars.”
Bianchi said the best analogy of what Dandelion is doing is the internet of things, which brought connectivity to everyday devices such as people’s phones, cars and homes. Dandelion is doing much the same for payments, he said, enabling true interoperability that makes it possible for cross-border financial transactions to be done rapidly and inexpensively, from just one place.
“That interplay is going to be a game changer, and it will be true disruption at scale — that’s what we’re doing,” he said.
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