The hidden challenges of Cross-Border Remittance products every New Founder should know

For founders launching new fintech or remittance products, whether C2C, C2B, or B2B, the goal is usually simple: make money movement fast and easy for people but achieving this dream isn’t as simple as it sounds. After the excitement of conceiving an “innovative idea” and painting the “glamorous dream”, founders must confront a crucial aspect of cross-border payments that truly defines this ‘ease’: the payout process.

Payouts, moving money from sender to recipient, are the vital final stage of remittance, and often where products hit a wall. Building the infrastructure to handle these payouts is expensive, time consuming, and can easily distract founders from their core mission.

Let’s break down the key challenges of processing payouts and explore the best possible solutions.

Top Payout Challenges for Fintech Founders
Payouts in remittance have unique challenges. These aren’t just technical issues, but business-defining factors that directly impact customer satisfaction and profitability issues every founder should be aware of.

Common challenges include:

1. Limited payout channels and Financial Exclusion: With the various payout options available today (traditional bank accounts, mobile money wallets, and cash pickup points) relying on bank transfers alone no longer cuts it.

For founders, building a product that supports all these channels is financially demanding. Yet, failing to offer multi-channel payouts excludes a large size of the global population, especially in regions where banking is not the norm (the unbanked and underbanked). This limited reach can quickly restrict a startup’s growth and influence in the industry.

Founders must make a tough choice: build lean to serve a few at lower cost, or invest heavily to serve many and expand reach, regardless of the financial strain.

2. Liquidity and foreign-exchange volatility: Processing remittance payments requires maintaining pre-funded accounts in multiple currencies. This is known as liquidity management, and it is quite challenging because it restricts a company’s cash flow and exposes a business to unpredictable foreign exchange rates.

An unexpected and unpredicted change in a currency’s value can wipe out a transaction’s profit, harshly turning the business model to an unpredictable one.

3. Compliance and Regulatory Bottlenecks: Every country has rules guiding its financial operations, particularly around receiving money. In the U.S., regulations vary by state, taking the challenge to another level.

These rules include KYC checks, Anti-Money Laundering requirements, pro-terrorism funding checks, and more. The compliance responsibility is heavy, and founders must not only understand these frameworks but also learn how to navigate their nuances.

Having compliance processes embedded into a product often leads to delay in launches. On the other hand, ignoring or breaking these set rules lead to regulatory fines and possibly suspension of services.

For new companies, building a compliant fintech product is expensive. It requires a compliance team, strong technology infrastructure, and costly licensing that founders must plan for realistically.

So, what’s the solution?
One way founders can ease the challenges of building a remittance product is through PARTNERSHIPS. By outsourcing certain components of the process, they can significantly reduce the burden before launch.

Of course, partnerships wouldn’t solve everything and some challenges are best sorted in-house however, business owners can avoid many of the most time-consuming hurdles, especially around licensing and compliance.

This is where Sendsprint’s Market Entry Toolkit comes in.

Sendsprint’s M.E.T provides a Remittance-as-a-Service platform that helps money service businesses overcome licensing barriers in the U.S., and launch multi-channel compliant products faster and more efficiently.

Our infrastructure at Sendsprint gives partners access to:
– Multiple and unified payout networks: Through our market entry toolkit, partners gain unified access to a global payout ecosystem. This includes bank accounts, mobile money wallets, and more.

By integrating our solution, founders can instantly offer diverse payout options, making their service accessible to everyone, regardless of preference. This tackles financial exclusion and gives their business a competitive edge in the market.

– Built-in compliance engine: Integrating our solution into your new or existing payment product is simple and straightforward. It gives founders access to a licensed compliance framework, and helps them save years of effort by utilizing our infrastructure for AML screening, transaction monitoring, and regulatory reporting.

These are processes that would ideally take years to build in-house.

By partnering with Sendsprint, founders can enter new markets with confidence, launching products that meet all legal requirements without breaking the bank.

– Real-time tracking and faster settlements: To stay competitive, fintechs need to move money quickly. Our payments infrastructure streamlines payout operations by eliminating many of the bottlenecks in traditional banking networks.

In addition, our toolkit provides real-time transaction monitoring and visibility into money movement, strengthening peer-to-peer trust, and reducing disputes or support tickets. This helps founders reduce resource-heavy support costs and redirect those resources toward growth.

By leveraging our RaaS solution, founders can stay focused on scaling their fintech product, with the guarantee that their cross-border operations depend on a secure, compliant, and proven infrastructure that keeps them in business in the short-term and long-term.

Learn more about Sendsprint’s Market Entry Toolkit HERE and get started today!