A remittance company makes money by charging fees for transferring money between individuals or businesses across international borders. The fees can be either a fixed amount or a percentage of the amount being transferred.
Additionally, remittance companies often generate revenue by earning a profit on the exchange rate. They purchase currencies at a wholesale rate and then sell them to their customers at a slightly higher retail rate, which allows them to earn a profit on the difference. The remittance companies can save money by using the services of global remittance technology providers who are in the business of cross-border payments SaaS for banks and businesses.
Remittance companies may also earn money through interest on funds held in transit, although this is less common as they typically aim to transfer funds as quickly as possible to minimize the risk of fluctuations in exchange rates.
Finally, some remittance companies offer additional services, such as bill payment or mobile top-up, for which they may charge additional fees or earn commissions from third-party providers.
Fable Fintech creates customizable international remittance SaaS solutions / white-label money transfer software / open banking APIs / white-label global payments platforms (SaaS/PaaS)/ Forex rate systems for banks and financial institutions. Fable Fintech also provides cross border B2B, DTC remittance solutions for businesses along with Fx rate systems. Learn more about cross-border remittances and international payment technology on Fable Fintech's cross border payments blog