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Contxto – Despite individuals sending US$574 billion worth of remittances to their native countries in 2016, a 1.4 percent drop compared to the previous year, the numbers actually grew in Latin America and the Caribbean. During this time, the region saw a 7.4 percent increase with US$74.3 billion in funds sent.
Keeping these numbers in mind, it’s apparent that remittances won’t be going out of style any time soon, especially in Latin America.
Chilean fintech Global 66 is keenly aware of this. During the first half of the year, the remittance platform facilitated over 20,000 transactions, sending approximately US$15 million abroad in the process.
The future of remittances
According to CEO Nicolás Jaramillo, the financial technology industry is certainly evolving to accommodate new players. At the same time, platforms such as his are also challenging traditional models, such as Western Union.
“With the growth of this item, new actors are coming, mainly digital, which are beneficial for users as they are characterized by a more transparent service and a better experience,” said Jaramillo. “We believe that these types of companies will see greater growth than the traditional ones.”
Almost half of Global 66’s operations took place between Chile and Colombia, representing about 48.6 percent of all remittances made through the platform. Peru snagged second place with 17.6 percent, Venezuela third with 9.64 percent, and the United States last with 7.1 percent.
Regarding transaction values, the highest amounts remitted by users went to the United States, Australia and Europe, respectively. While Gringos and Aussies received an average amount of US$1,400 per shipment, Europeans got about US$1,000.
Average shipments were also about US$230 per operation. Some interesting insights from Global 66 show that Haitians make average transactions of US$110 while Colombians typically exceed US$400.
Transfer frequency and amounts are also changing. While some prefer to send one large money order once a month, more are starting to make smaller shipments every two weeks.
“We see that the behavior of foreigners when sending money is also changing,” said Jaramillo. “When lowering the costs, we see that the remittance will begin to look more like a national transaction. That is to say, with more frequency and smaller amounts.”
How does it work?
Users can make international transfers from four countries, including Chile, Mexico, Peru and Colombia. In turn, there are 55 countries eligible to receive funds, everywhere from Vietnam to Cyprus.
From the looks of the platform, Global66 stresses that transfers and remittances are fast, transparent and affordable. According to the website, the 100 percent online service is 8 times cheaper than competitors.
Part of the service involves using real-time exchange rates. This prevents people from accruing hidden costs or being caught off guard by steep fees.
By the end of 2019, Jaramillo expects to reach US$50 million worth of transactions with over 50,000 transfers.
At the moment, Global 66 is wrapping up its first funding round with undisclosed investors to raise US$2 million. Moving forward, the goal is to open offices in Peru, Colombia and Argentina.