The amount of international money transfers handled by South Korea’s fintech firms have increased more than 25 times over the past year, hinting at the growing popularity of small-sum cross-border money transfer services.
According to the Financial Supervisory Service, Korea handled $365 million worth of small-sum money transfers in the first quarter of 2019, up 2,507 percent from $14 million handled in the fourth quarter of 2017 when such services began operations here.
A user uses mobile banking service Kakao Bank.
This total figure is calculated by adding up the value of all of the overseas money transfers made from Korea and vice versa in a designated time period.
During the cited period, the total number of money transfers grew from 22,000 to 550,000, according to the FSS.
Right now, Korea permits fintech companies to handle cross-border money transfers as long as the amount does not exceed a ceiling.
The current limit is $3,000 per transfer to a maximum of $30,000 worth of transfers per year. But legal changes are underway to raise this limit to $5,000 and $50,000, respectively, by year-end.
There are currently 25 fintech firms running such money transfer services here, up from just four as of August 2017, according to the market watchdog.
By charging transaction fees that are lower than that of traditional banks, such businesses have been increasing their user base consisting mainly of foreign migrant workers with remittance needs, foreign students and locals with overseas money transfer needs.
In the first quarter of this year, the average money transfer amount per case -- calculated by dividing the total dollar amount of all money transfers by the number of cases handled -- came to $660. It marked a 3.3 percent increase from $640 recorded in the fourth quarter of 2017.
The average amount of money transfers facilitated per business came to $18 million worth of transfers with 27,000 cases. This marked a nearly tenfold growth from $2 million worth of transfers and 3,000 transfer cases.
As for the countries receiving the most amount of transfers from Korea, the most popular destinations were Nepal (24 percent), the Philippines (19 percent) and Vietnam (12 percent), according to the FSS.
Looking ahead, the FSS pledged to step up its monitoring of cross-border money transfer businesses to ensure legal compliance while increasing consumer convenience.
By Sohn Ji-young / The Korea Herald (firstname.lastname@example.org)