What is the story of The International Association of Money Transfer Networks (IAMTN)? How did it start and what are its responsibilities and objectives?
Many people know IAMTN’s annual summits and events around the world, but IAMTN is much more than that. It was in 2005 when we realised there was a need for our industry to have a platform to network and explore opportunities and challenges between stakeholders. The idea of a platform for remittance service providers to network was immediately very well received by the industry. IAMTN is a non-profit membership organisation, and the only global trade association that represents the cross-border payments industry. Today, our membership base represents the entire spectrum of the modern international payments network, including banks, payment institutions, electronic money transfer organisations, and mobile operators. Our role has evolved along with the the industry. Our mission is to bridge the gap between public and private sectors, connecting innovators, disruptors, and stakeholders to explore the challenges and opportunities in today’s remittance industry.
IAMTN is dedicated to representing the views of the cross-border payment industry, working closely with governments, regulators and, all other important stakeholders – such as the FATF, FSB, World Bank, International Fund for Agricultural Development (IFAD), UNCDF, Swiss Agency for Development and Cooperation (SDC), UK Department for International Development (DFID) – to create reliable payment systems and mechanisms for migrants globally.
What are the differences between the B2C and B2B money transfer worlds? Are regulations equally applicable for both?
B2B stand for business-to-business and B2C is business-to-consumer. Regulations vary from country to country, and they apply differently to B2C than they do to B2B. Amongst the differences we can mention the size of transactions. The more complicated (and expensive) the transaction, the higher the level of authorisation needed for the transaction to be approved.
For example, there are differences between fragmented data standards, or lack of interoperability, complexities in meeting compliance requirements, including for anti-money laundering and countering the financing of terrorism (AML/CFT), and data protection purposes.
What are some of the challenges specific to cross-border remittances?
One important challenge affecting the industry is bank de-risking. Banks have been withdrawing – or failing to offer – their facilities to specific customers in greater numbers than ever before. IAMTN and its members have been working in this matter with FATF, US Treasury, HM Treasury and FSB among others on the action plan to assess and address the decline in correspondent banking relationships and remittance firms’ access to banking services. Among the recommendations submitted to G20 on March 2018 by the FSB, was an IAMTN proposal to develop ’Certified International Standards’ to improve the risk perception of the sector by banks. Demonstrating the level of AML/CFT compliance could help to improve perceptions surrounding risk management practices within the sector. This is an on going process. Bank de-risking, including corresponding bank de-risking, is a very complex matter where the right stakeholders from both the public and private sectors need to work together with the same agenda.
Financial Inclusion also remains among the important challenges.
Challenges in the cross-border payment industry affect end-users and service providers, but they do not affect them all in the same way.
In the context of the World Bank’s prediction of global remittances experiencing sharpest decline in recent history, how exactly did COVID-19 affect migrants and international remittances markets? How are IAMTN and other key players in the industry helping to address the issues and risks currently posed by the current COVID-19 crisis on the cross-border remittances markets?
COVID-19 has completely changed our world and we may also say that this pandemic has impacted everyone; however, the impact on migrants has been particularly severe, given the fact that they were already marginalised and suffering hardships before the pandemic struck. So, because of this, many migrants have lost their jobs and their ability to send money back home to support their families.
IAMTN is helping to address the issues and risks currently faced by the industry during the COVID-19 crisis, and to make sure that we come out on the other side of this crisis in the best shape possible. They are a lifeline for the emerging economies that will be hit the hardest. In March 2020, in partnership with the United Nations Capital Development Fund (UNCDF), IAMTN launched an industry survey of remittance providers (among others, banks, foreign-exchange houses and Money Service Businesses) to assess the impact of COVID-19 on their customers and businesses. The survey aimed to highlight the issues and risks posed by the COVID-19 crisis on migrants and remittances, to assist stakeholders in the public and private sectors to address these. Over 150 organisations, comprising IAMTN members, partners and stakeholders, responded to the survey. The survey summarises the responses from 77 CEOs and senior executives across 30 countries, serving over 20 million migrants. As a follow-up from the report IAMTN produced, UNCDF was seeking partners to respond to the increased challenges faced by migrants and their families to send and receive remittances.
The report revealed that 91% of respondents experienced immediate changes in remittance volumes, with 69% saying that they have been significantly impacted by a sudden decrease in volumes. Some countries have been hit harder than others. South Asia, East Asia, and the Pacific region, for example, have been most affected by outbound remittance changes, whilst nations in Sub-Saharan Africa have been the most impacted by the drop in inbound remittances. The survey also showed that scaling up digital channels was a top priority for remittance service providers, its importance propelled by the closure of physical sites and widespread staff isolation.
The effects of the global lockdown caused by Covid-19 has been felt by migrants and remittance providers alike. One positive thing we can take from this is how encouraging it is to see public and private sectors coming together to work towards innovative new solutions, but more needs to be done. IAMTN members have risen to the occasion. Given the ongoing lockdown measures, remittance providers are rethinking ways in which to expand their agent network. Some are planning partnerships with businesses that remain open as essential locations so that they can provide new access points for migrants and families. Many have introduced fee-free services. Others are providing food, protective equipment, and pharmacy services alongside the usual remittance services.
The fate of South Asia’s millions of economic migrants in the Gulf and elsewhere has long been a humanitarian issue, but the Covid-19 pandemic has now pushed the world into a recession, and their uncertain employment status amidst lockdown has become a major economic headache for countries such as Bangladesh and Nepal that depend on the earnings these workers send home.
Figures released by Bangladesh Bank in June 2020 show that year-on-year remittances for the month fell by 25%. This drop in payments, which have tended to average between USD 300 and USD 600 per month, will be a significant loss to millions of households across the country.
Senegal, like much of Sub-Saharan Africa, is another market that is struggling. The pandemic has caused inbound remittances into the country to dry up following strict lockdowns in European countries such as France, Italy, and Spain. The Sub-Saharan region as a whole is expected to experience a 23% fall in remittances in 2020 – greater than the 20% the World Bank anticipates globally. The industry is pulling together.
Besides this, IAMTN joined the Governments of Switzerland and UK in the Call to Action, ‘Remittances in Crisis – How to Keep Them Flowing’, also supported by KNOMAD, World Bank, United Nations Capital Development Fund (UNCDF), International Organisation for Migration (IOM), United Nations Development Programme (UNDP), and International Chamber of Commerce (ICC).
At IAMTN, we need to make sure that we do as much as possible to keep remittances flowing. Remittances will drop in volume, but increase in importance.
What is the future of cross-border remittance industry, especially post-pandemic crisis? What are going to be the key developments in the remittances industry related to regulatory frameworks, digitalization, and innovation?
According to our recent report, almost half of the providers we asked, said that they would not be able to financially sustain the crisis, were it to prolong beyond three to six months. Therefore, it is important that we do everything possible to assist these players as they provide a critical last-mile delivery to enable migrants to send money back home. Disruption of their operation could reduce the market competition, increasing remittance costs and potentially shifting remittances from formal to informal channels.
Remittance service providers scaling up digital channels is also a priority but we need to consider that this requires real investment and time.
When it comes to the key developments, we believe that it is important to have remittances recognised as an essential service, so this will allow agents to continue operating, and in this way avoid a shift to informal remittance channels. Another important development would be that the policymakers and regulators work closely with the industry. Account opening through e-KYC and offering access to appropriate identity documents are essential enablers for digital remittances.
We believe changes can be made, if governments include remittance services providers in fiscal support measures extended to the financial sector.
About Veronica Studsgaard
Veronica is passionate about innovation and fintech that enables access to financial services for the world. She is also a strong believer that everyone has a right to access financial services in a way that allows them to grow their business and improve their lives. Since founding IAMTN, in 2005, she has been working on bridging the gap between the public and the private sector, helping to unlock public and private resources to reduce poverty and support local economic development.
About International Association of Money Transfer Networks
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