Matt Montes is U.S. general manager at Paysend and has nearly 30 years of financial services experiences, most recently serving as president of Catalina Card Services. He founded and led AccountNow, the first online D2C prepaid debit card company in the U.S., which was acquired by Green Dot Corporation. Matt shares with us his hope for the future.
America is just weeks away from inaugurating President-elect Joe Biden as the new commander-in-chief, beginning a new chapter in the country’s history. In addition to addressing the COVID-19 pandemic head-on, Biden has committed to making sweeping overhauls to position America as a welcoming country to foreign entities.
Many world leaders embraced the incoming administration, offering congratulatory messages to the Biden campaign shortly after the results of the election were confirmed. Comments from Germany’s chancellor and Italy’s prime minister echoed the opportunity to strengthen transatlantic partnerships.
Biden’s goal to strengthen international relations combined with the arrival of vaccines in many countries, has the world hopeful that cross-border travel, commerce and immigration will increase as early 2021. This global cooperation is not only good for the economy as a whole, but also marks a positive shift for the fintech industry as it will create even more need for cross-border peer-to-peer payments for two key reasons:
• More migrants are anticipated to come to the States, which means more payments will be sent back to home countries.
• Americans and foreign-born workers alike were forced to use digital, contactless payment methods during the pandemic; a behavior shift with permanent staying power.
Renewed Foreign Relations Opening New Doors
From Senator to Vice President and now President-elect, Biden has long been an influential voice when it comes to foreign relations and policy. Throughout his 2020 campaign, Biden outlined a plan to improve international affairs. A cornerstone of this initiative is his plan to make travel from Muslim-majority countries accessible.
In addition, Biden has promised to modernize America’s immigration system modernize America’s immigration system and welcome immigrants into our communities with a number of sweeping changes. According to the National Foundation of American Policy, by 2021, legal immigration to the U.S. will have decreased by up to 49%. The declining number can be attributed to restrictions around H1-B visas. However, these restrictions are set to expire at the end of the year, and the incoming Biden administration has already signaled that it plans to increase the number of H1-B visas in 2021.
By improving foreign affairs and updating the U.S.’s immigration system, many hope that the desire to immigrate to the United States will improve once the COVID-19 vaccine is widely available. This is critical for the American economy, as research suggests that the totalannual contributionof foreign-born workers is about 10% of the U.S.’s annual GDP, or roughly $2 trillion. It’s also good news for the home countries of these workers, since an estimated $554 billion is sent back to loved ones each year.
A demand for contactless cross-border payments
Once travel and immigration resume, a larger migrant population will result in a potentially higher volume of money that needs to be sent back to friends and family overseas. However, the preferred method of these peer-to-peer payments won’t be traditional financial institutions.
Why? Well, during the pandemic, consumers quickly adopted digital methods for sending payments, because they add safety, cost-effectiveness and efficiency at nearly every stage of the money transfer process. In fact, digital money transfer services experienced a sizable uptick in global remittance transfers. At Paysend, for instance, we saw a 15% increase in both users and transfer activity during March and early April.
Once vaccines are widely available, it’s unlikely that people will revert back to old habits of bank branches and card swiping. A recent McKinsey study illuminates how this newfound culture of convenience has staying power. The survey found that more than half of new and increased users report an intent to continue using digital and contactless services post-COVID-19.
With access to vaccines on the horizon and the Biden administration vowing to improve immigration policies, we can expect immigration in the U.S. to increase within the next four years. Because migrants will remit more than $2 trillion outside of the U.S. border during this timeframe, and prefer to do so right from their mobile phones, the digital money transfer market will continue to grow faster than industry analysts previously expected.