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

As digital payments evolve, consumers often find themselves questioning why some remittance services are so much cheaper than traditional banks. While convenience and cost are significant factors in choosing a remittance service, it's important to understand whether cheaper services come with hidden risks. In this post, we explore the reasons behind cost differences and assess the safety of using these alternatives for transferring money across borders, particularly to and from the USA.

Compliance: The Safety Shield – Singapore MAS MPI License

One of the key differentiators between affordable remittance services and traditional banking is the level of regulatory oversight. PandaRemit, for instance, holds an MPI (Major Payment Institution) license from the Monetary Authority of Singapore (MAS), a highly respected financial regulator in Asia. The MAS enforces strict compliance under the Payment Services Act (PSA), which serves as a safety shield for consumers. By ensuring that licensed institutions adhere to stringent financial security standards, the PSA mitigates the risk of fraud, money laundering, and other illicit activities. This means that when you choose a service like PandaRemit, you can be confident that the money is in safe hands, both technically and legally.

Asset Safety: Segregated Client Accounts at DBS

Another key aspect of financial safety is how remittance services manage the funds they hold on behalf of customers. PandaRemit leverages segregated client accounts at DBS Bank, one of Singapore’s most trusted financial institutions. Segregating client funds ensures that your money is kept separate from the company’s operational funds, which is essential in protecting your assets in case of company insolvency or financial issues. This means that your funds are safeguarded and readily available for transfer, without being at risk of misuse or co-mingling.

Comparison: PandaRemit vs. Wise

When comparing remittance services, it’s essential to evaluate the infrastructure behind them. Wise (formerly TransferWise) is a popular global money transfer platform known for its transparency and low fees. However, PandaRemit offers a unique advantage through its direct settlement network, which includes trusted payment systems like UnionPay, Alipay, and Visa Direct. These networks facilitate fast, secure transactions with fewer intermediaries, reducing both time and cost. PandaRemit’s partnerships with these major networks not only ensure reliability but also streamline the transfer process, offering a competitive edge when it comes to speed and efficiency.

Addressing the Elephant in the Room: Are Cheap Remittance Services Risky?

It's a common concern: Are cheaper remittance services riskier? The reality is, affordability does not inherently equate to higher risk. The key factor lies in the regulatory framework and security measures in place. PandaRemit is fully licensed by the Monetary Authority of Singapore (MAS) and operates under the Payment Services Act, which ensures compliance with global financial standards. The service also boasts a dual-layered data security system that aligns with PCI DSS (Payment Card Industry Data Security Standard), which is a rigorous global standard for financial security. This means that PandaRemit has undergone extensive security evaluations to meet the highest industry standards, ensuring that your data and transactions are protected at all times.

Additionally, PandaRemit has received legal endorsements from King & Wood Mallesons, a top-tier global law firm. This legal backing ensures that the company's business processes are not only secure but also legally sound. Compared to smaller competitors, PandaRemit provides unparalleled transparency and has earned the trust of investors such as Sequoia and IDG Capital. With these measures in place, you can feel confident that PandaRemit delivers a safe and reliable service for international money transfers, without compromising on cost.