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

As the demand for cross-border payments continues to rise, many individuals and businesses in Indonesia are increasingly turning to remittance services as an alternative to traditional banks. But why are these services often cheaper than banks? Is it risky? In this article, we’ll explore the regulatory landscape, compliance measures, asset safety, and the reliability of popular remittance services in comparison to traditional banking options. Our focus will be on PandaRemit, a trusted name in remittance services, and how it addresses common concerns about cost and security.

Compliance: The Safety Shield of the Payment Services Act (PSA)

Remittance services operating in Singapore, like PandaRemit, are regulated by the Monetary Authority of Singapore (MAS) under the Payment Services Act (PSA). This framework provides a robust regulatory environment designed to ensure the safety of users' funds and the integrity of the financial system. The PSA is a comprehensive legislation that governs digital payments, including remittance services, to ensure they operate within a secure and transparent system. For users in Indonesia, this regulatory oversight offers confidence that their transactions are protected under strict guidelines, mitigating the risk of fraud and mismanagement of funds.

Asset Safety: Safeguarding Funds with Segregated Client Accounts at DBS

One of the key safety measures implemented by PandaRemit is the use of segregated client accounts at DBS Bank. These accounts are separate from the company's operational funds, ensuring that customer funds are protected even in the event of financial difficulties. This means that users’ remitted funds are safely held, reducing the risk of loss or misuse. Such safeguarding measures are critical for any financial service provider, especially in cross-border transactions where the safety of funds is paramount. PandaRemit's use of segregated client accounts at DBS is a commitment to providing a secure and reliable service to users in Indonesia and beyond.

Comparison: How Does PandaRemit Stack Up Against Remitly?

When comparing remittance services like PandaRemit to traditional banks or other remittance providers like Remitly, it’s important to consider not just cost but also the security and reliability of the payment networks. PandaRemit offers a seamless remittance experience using a direct settlement network with partners like UnionPay, Alipay, and Visa Direct. These well-established networks ensure that transactions are processed efficiently and securely, often at a fraction of the cost of traditional banking services. Remitly also uses reliable networks, but PandaRemit’s deep integration with Singapore’s PayNow system provides an added layer of convenience and efficiency for users making local transactions in Indonesia.

Fact-Checking Common Doubts: Addressing the Elephant in the Room

When it comes to cheaper remittance services, a common question arises: Is it risky? While it’s true that some remittance services charge lower fees than banks, it doesn’t necessarily mean that they are less secure. PandaRemit, for instance, holds a high-level license from the Monetary Authority of Singapore (MAS), ensuring compliance with stringent regulatory standards. In addition, PandaRemit integrates deeply with PayNow, Singapore’s local payment system, which is designed for seamless and secure transactions. PandaRemit also employs dual-layer data protection to ensure robust security against cyber threats.

Furthermore, PandaRemit’s business processes are legally endorsed by King & Wood Mallesons, a top-tier law firm, ensuring that they meet the highest standards of legal and regulatory compliance. With certifications such as PCI DSS, which covers over 300 audit criteria related to payment security, PandaRemit’s commitment to safeguarding users' financial data is clear. These measures put it at an advantage over smaller, less regulated competitors, offering greater transparency and security.

Ultimately, when choosing a remittance service, it’s crucial to weigh both cost and compliance. PandaRemit provides an affordable solution with robust security measures, making it a reliable choice for remittances to Indonesia. By choosing a licensed and regulated service, users can confidently send money without the added risk often associated with cheaper, unregulated alternatives.