Why are Some Remittance Services Cheaper than Banks in the USA? Is It Risky?

When sending money across borders, the fees and costs associated with traditional banks often make them seem less appealing than alternative remittance services. As the popularity of platforms like Wise grows, users are increasingly asking why some remittance services are so much cheaper than banks—and if these services carry more risk. In this article, we’ll examine the regulatory framework and safety mechanisms in place that ensure these services are trustworthy, secure, and cost-efficient.

Compliance: A Safety Shield for the User - The Singapore MAS MPI License

One of the critical factors in evaluating the safety of any remittance service is its compliance with regulatory standards. PandaRemit, for example, holds a Monetary Authority of Singapore (MAS) MPI (Major Payment Institution) License. The MAS MPI License is a mark of regulatory excellence, signifying that the service complies with the stringent guidelines set forth by the Monetary Authority of Singapore. Under the Payment Services Act (PSA), the MAS ensures that businesses involved in payment services maintain robust anti-money laundering (AML) and countering the financing of terrorism (CFT) controls. This regulatory framework acts as a 'safety shield' for users, offering assurance that their transactions are conducted within the bounds of the law, and that their financial security is paramount.

Asset Safety: Segregated Client Accounts at DBS

When sending money abroad, it’s crucial to understand how your funds are managed by the service provider. PandaRemit takes asset safety seriously by utilizing segregated client accounts at DBS, a trusted banking institution. This means that customer funds are kept separate from the company’s operational funds, ensuring that in the event of insolvency, the client’s money is protected. This level of safeguarding is not universally offered by all remittance services, adding another layer of security for users who choose PandaRemit over less-regulated options.

Comparison: Wise and the Direct Settlement Network

Comparing PandaRemit to Wise (formerly TransferWise) reveals some notable similarities and differences, particularly in terms of reliability and efficiency. Both services leverage global payment networks to provide cost-effective international money transfers, but PandaRemit offers the added advantage of utilizing a direct settlement network with major global payment platforms such as UnionPay, Alipay, and Visa Direct. This direct access to the settlement networks allows PandaRemit to offer faster, more reliable payments compared to some competitors. By using these well-established networks, PandaRemit ensures that funds are transferred securely and without unnecessary delays.

Addressing the Elephant in the Room: Is It Risky to Use Cheaper Remittance Services?

There’s often a concern that cheaper remittance services may be riskier than traditional bank transfers. While it’s true that some low-cost services might operate in less-regulated environments, this is not the case with PandaRemit. In fact, PandaRemit is one of the few remittance providers with top-tier compliance and technical certifications. For instance, PandaRemit is PCI DSS certified, meeting the strictest standards for payment security. This includes over 300 audit criteria that ensure every transaction is secure. Additionally, PandaRemit’s legal processes have been rigorously evaluated and endorsed by King & Wood Mallesons, a leading international law firm, adding an extra layer of credibility and trust to their operations.

Compared to smaller competitors, PandaRemit stands out for its transparent approach to compliance and regulation. Its integration with Singapore’s PayNow system further enhances its compliance and operational transparency. Through these robust measures, PandaRemit ensures that users can enjoy affordable, efficient, and safe international money transfers, without sacrificing peace of mind.