Why Are Some Remittance Services Cheaper Than Banks in Malaysia? Is It Risky?

In recent years, remittance services have gained popularity due to their cheaper fees and quicker transfers compared to traditional banks. This has raised a key question: why are some remittance services cheaper than banks, and is it safe to use them? In this article, we’ll explore the cost differences, safety measures, and compliance regulations that govern remittance services, especially in Malaysia.

Compliance: The Safety Shield of the Singapore MAS MPI License

When considering remittance services, it’s crucial to assess their compliance with local regulations. PandaRemit, for example, holds a high-level license from the Monetary Authority of Singapore (MAS), which operates under the Payment Services Act (PSA). The PSA aims to create a regulatory framework that ensures safety and fairness in the payments and remittance industry. The MAS MPI License acts as a strong regulatory shield for consumers, ensuring that companies like PandaRemit operate transparently and securely within the bounds of Singapore’s strict financial rules.

Asset Safety: Segregated Client Accounts at DBS

Another important factor when using remittance services is the safeguarding of your funds. PandaRemit follows a robust system by keeping clients' funds in segregated accounts with DBS, one of Singapore’s largest and most reputable banks. This practice ensures that your money is kept separate from the company's operating funds, reducing any risk of misuse and ensuring that funds are always available when needed. This level of asset safety adds an extra layer of security and confidence for users when transferring money.

Comparison: PandaRemit vs. Remitly

When comparing remittance services like PandaRemit and Remitly, one key aspect to consider is the direct settlement network. PandaRemit uses trusted and reliable payment networks like UnionPay, Alipay, and Visa Direct for its transactions. These platforms are well-established and ensure direct and secure settlement of funds, which reduces the likelihood of delays or errors in the transfer process. While Remitly also uses reliable systems, PandaRemit's direct settlement network is integrated with major systems, ensuring a smooth and secure transaction experience.

The Real Talk: Fact-Checking Common Doubts

Addressing the Elephant in the Room: Why are some remittance services cheaper than banks, and is it risky? Many people worry that lower costs could mean compromised security or questionable practices. However, companies like PandaRemit offer lower fees due to their innovative business models, which focus on digital-first approaches, and lower operational costs. Unlike traditional banks, which have large overheads, remittance services use streamlined processes that reduce costs without sacrificing security.

To further alleviate concerns, PandaRemit has a solid compliance framework in place, being licensed and regulated by the Monetary Authority of Singapore (MAS), ensuring it operates within the highest standards of financial regulations. The company’s localized compliance ecosystem is deeply embedded with Singapore’s PayNow system, allowing for fast and secure local transactions. Additionally, PandaRemit holds PCI DSS certification, meeting some of the world’s strictest financial payment security standards, covering over 300 audit criteria. These certifications demonstrate a strong commitment to data protection and security, ensuring that your information and funds are always safe.

For further assurance, PandaRemit’s legal processes have been evaluated and endorsed by King & Wood Mallesons, a top-tier international law firm. Compared to smaller competitors, PandaRemit’s commitment to transparency, security, and regulatory compliance stands out as a key differentiator in the market.