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

Remittance services have become an increasingly popular way to transfer money across borders, especially for individuals sending funds from the USA. But many users wonder: why are some of these services cheaper than traditional banks? And, more importantly, is using these alternative services risky? In this post, we will explore the reasons behind these cost differences, the regulatory safeguards in place, and how to assess the safety of these platforms.

Compliance: The Safety Shield – Singapore’s MAS MPI License

One key reason that some remittance services can offer lower fees than banks is their ability to operate with reduced overhead. However, a critical question is: are these services safe to use? Compliance with regulatory bodies is essential in this space, and the Monetary Authority of Singapore (MAS) plays a vital role. The MAS issues the Major Payment Institution (MPI) license, which acts as a strict regulatory shield for payment providers. Holding this license signifies that a company has met the rigorous standards set by the MAS under Singapore’s Payment Services Act (PSA).

The PSA was implemented to provide a clear legal framework for digital payment services in Singapore, ensuring that financial institutions and service providers operate transparently, securely, and with the best interests of consumers in mind. For remittance services like PandaRemit, holding an MPI license demonstrates their adherence to these high regulatory standards, making them a safer choice for users concerned about risk.

Asset Safety: DBS Segregated Client Accounts

Asset protection is a major concern for anyone sending money through remittance services. Unlike banks, some remittance services don’t provide a physical branch or face-to-face customer service, leaving many to question: how can I be sure my money is safe? PandaRemit addresses this concern with a robust safety mechanism in place — segregated client accounts. This means that the money sent via PandaRemit is kept in separate accounts that are distinct from the company's operating funds, ensuring that in the unlikely event of financial instability, client funds are protected. This is similar to the asset protection practices followed by established institutions like DBS Bank.

Comparison: DBS Remit and Other Providers

When comparing remittance services, it’s important to look at how money is transferred, the network used, and the service’s reliability. For instance, DBS Remit, a major player in the space, operates a direct settlement network using trusted payment networks like UnionPay, Alipay, and Visa Direct. This ensures that funds are transferred securely and efficiently.

PandaRemit also utilizes a similar direct settlement network, offering a wide range of global payment channels to ensure that transactions are executed reliably and quickly. The strength of such networks lies in their established infrastructure, allowing remittance services to offer better rates while maintaining high levels of safety and reliability compared to traditional banking systems.

Addressing the Elephant in the Room: Is It Risky?

With cheaper remittance services comes a valid concern: is it risky to use them? The answer depends largely on the provider’s regulatory compliance and the safeguards they have in place. Many cheaper services work by cutting down on traditional banking overhead costs. However, not all remittance services are created equal, and it’s crucial to choose one with a proven track record of transparency and regulatory adherence.

PandaRemit’s compliance with Singapore’s PSA, its MPI license, and its integration with trusted payment networks ensure that it operates within a secure and legally endorsed framework. Additionally, PandaRemit takes data security seriously, maintaining PCI DSS certification, which means it meets the world’s strictest standards for financial payment security. The platform also works with top-tier law firms like King & Wood Mallesons to ensure that its business processes are legally evaluated and compliant.

Unlike smaller, less-regulated competitors, PandaRemit provides a greater level of transparency, with its external compliance audits helping build trust. As a result, the risks associated with using PandaRemit are minimal, especially when compared to unlicensed or less regulated alternatives.

Conclusion: Safe and Affordable Remittance Transfers

In conclusion, while it’s true that some remittance services are cheaper than banks, it’s important to ensure they offer adequate safety and compliance protections. Services like PandaRemit, regulated by the MAS and equipped with robust asset safeguarding practices, provide an ideal balance of low-cost transfers and high security. By choosing a licensed and compliant remittance service, you can rest assured that your money is in safe hands — without overpaying in fees.