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New Tech Greases Old Payment Rails To Allow Fast, Cheap Int’l Banking

If the pandemic has taught us anything, it’s that economies, firms and individuals are inextricably linked with their money.

Chinese consumers can order luxury goods from Europe. European firms can set up shop in Latin America. Latin American workers based in the U.S. can send money back home — all of it done digitally, across borders, time zones and currencies.

USEND Chief Operating Officer and Chief Technology Officer Ran Grushkowsky said establishing and maintaining cross-border accounts and transmitting funds — to say nothing of card issuance or paying gig workers — is no easy task.

At a high level, he told PYMNTS, the company seeks to solve the problem of giving access to financial services, and by extension, giving developing countries outside the United States the “financial freedom” that is firmly entrenched inside the U.S.

Global Money Movement, Interconnected

Flexibility in managing and sending money has become a consumer expectation, underscored in some cases with urgency. Individuals in Brazil, for example, have had to navigate wild currency fluctuations, have fretted about the purchasing power of their savings held domestically, and have been limited in their ability to hold funds elsewhere, outside the country.

“Being able to take your capital and deploy it in another market — and earn money there — is becoming a necessity, especially in an online world,” maintained Grushkowsky.

The platform model, he said, affords users the freedom to bank wherever they like and access the economies of their choosing across the globe. That access connects digital touchpoints that include mobile device and online marketplaces, as well as traditional brick-and-mortar conduits, such as branches and remittance agents.

The company traces its roots to 2007, with an initial focus on money remittance in the U.S.-Brazil corridor. But through the 14 years since, USEND has evolved into a platform provider of a full suite of financial services, across borders, for individuals and businesses. Last year, the company’s platform logged $1.1 billion in payments volume and $17 million in revenues, more than double the previous year.

Tackling The Inefficiencies

With a bit more granular detail on target markets, Grushkowsky noted that the while USEND does serve underbanked and unbanked populations, USEND is actually targeting “average, middle class” consumers who, in the age of the pandemic, are finding a “gap” in access to everyday banking services.

It can take days to open a bank account, said Grushkowsky. Issuing cards in the U.S. for non-U.S. based businesses and individuals is a costly logistical challenge, and SWIFT wires, the company has said, are inefficient when it comes to moving money across borders.

On the banking side of the equation, he said, financial institutions (FIs) have traditionally had to establish their own entities on a country-by-country basis, using local banks — hardly ideal when it comes to taxation or from a capital perspective.

Infrastructure Agnostic

In terms of mechanics, he explained that USEND is using existing rails to facilitate transactions across more than 100 countries and is, in effect, infrastructure-agnostic — partnering with legacy FIs across the globe, but also with technology- and cryptocurrency-savvy upstarts like Ripple Labs.

“We are agnostic to how value is being transferred and how value is being stored,” said Grushkowsky, adding, “We have a very deep understanding of compliance and we work closely with regulators in all the regions and countries in which we operate.”

That deep knowledge of market-by-market compliance allows consumers to be onboarded quickly, in a streamlined manner, and to start transacting quickly through application programming interfaces (APIs) that can automate that process. (Automation is key, he said, noting that in banking, it gets expensive to “just throw bodies” at a challenge.)

Thus, for the vacationer booking a trip from her computer in Brazil on a platform like Airbnb for a vacation in Spain, money moves effortlessly along that corridor.

Against that backdrop, he said, USEND operates as a consumer brand but leverages partnerships, too, to broaden its reach and range of services offered. In one illustration, BBVA is a strategic partner, where the U.S.-based bank uses USEND to move money in Latin America.

“From a history of observing demand, in the money transmission space, we’ve learned quite fast that serving multiple masters — and diversifying our offerings through various relationships — improves the overall product and experiences and costs,” he said.

In illustration of cross-border banking on a truly global scale, he noted that USEND has one of the first U.S.-issued debit cards for international businesses, which allows those enterprises, outside the U.S., to conduct business as easily as any domestically incorporated firm. Enterprises in one country can establish bank accounts in another in order to transact.

“This is really about the democratization of banking around the world,” he said. “That is what we are after. COVID-19 has put a tailwind under that process, as individuals and corporates have become dependent on the ability to earn and access money in other countries and [invest] in new opportunities.

That includes crypto. Grushkowsky told PYMNTS that blockchain and cryptocurrency-focused firms, including leading crypto exchanges, have pursued relationships with USEND to help with tax collection and compliance. As a result, USEND plays a role in incentivizing more people to embrace the digital currencies. Other licensed money transmitters don’t have the compliance or technological infrastructure to power crypto-related activities.

Remarking on the recent news that El Salvador has made bitcoin legal tender, he said, “You’re going to see more countries that are going down this route. Africa is probably next.”

Speaking generally about cryptocurrencies, he said that there any number of ambitious projects that are seeking to rebuild and change the financial services ecosystem — and some of them may be successful — but mainstream adoption will take time.

Looking Ahead

Looking ahead, Grushkowsky said the company has been working with a range of banks — from the largest legacy players, such as J.P. Morgan Chase, through to credit unions and FinTechs. USEND is in the process of exploring a joint venture with a bank that would cater to specific money-movement corridors. The company is also working on lending services and creating a broker/dealer arm in order to help customers invest.

Grushkowsky said USEND has applied for licenses in Europe and the U.K. and is “eyeing more territories” in Latin America. The company is also mulling the prospect of branding out into Asia, with strategic partnerships with major FIs in China.

“We want to create the rails — the stack — that enables cross-border financial freedom,” said Grushkowsky. “There shouldn’t be any limitation of what or where you can bank or trade because you live in one country versus the other.”

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