In recent years, the number of scams and frauds specific to money transfer services has increased. Advances in technology have made it possible to transfer money using a variety of devices, which is tremendously handy for many people. In addition, new money transfer services have cropped up around the world.
In both cases, opportunity for dishonesty has risen. However, regulators of transfer services have also begun to look at the practices and associated fees of these companies based on increasing complaints.
Transfer services will never go away because they are too valuable to both individuals and businesses. As a result, regulators have recognized that some of the existing rules needed to be modified and new rules implemented. Although some changes have already been executed, additional changes are expected to occur sometime in the near future.
One of the biggest changes is that rather than money transfer companies being regulated on a state level, the federal government will be taking over in certain areas. Then in February 2012, another change was enacted whereby customers must be given 30 minutes after the completion of a transaction to request a full refund.
Every day, millions of people depend on transfer services for sending but also receiving money for one reason or another. While the goal of reputable companies is to provide a much-needed service accompanied by affordable rates, dishonest companies have an entirely different agenda. We felt it important to provide information on some of the new regulations now being enforced, as well as other regulatory issues being addressed.
The Real Problem
The biggest issue with money transfer services is the lack of regulation for pricing structure. Without any control, the cost of services is something established by each company according to what they feel is right or the level of profit they want to make. To stay competitive, most companies maintain a similar price structure but there are also differences in the amount of fees charged. Because of this, a person might pay $10 to send money through one transfer services company and $5 through another.
Keep in mind that pricing has no cap, whether for actual fees or exchange rates. The variance in pricing has created serious concerns among consumer advocates who in turn have raised alarms to regulators.
Not surprisingly, some companies are fighting back, attempting to defend their fee structures by pointing out that they provide invaluable services to customers. But perhaps the real reason for pushing back against new regulations has more to do with the potential for losing high profits.
The Future of Transfer Services
According to experts, the business of money transfers will reach approximately $437 billion by the end of 2012. Compared to year end numbers of $387 billion recorded in 2009, it becomes clear this is a growing market that needs to be carefully scrutinized.
The primary goal of state and federal regulators is to make these companies more transparent. With this, known facts would be revealed, making it easier for consumers to choose a company with the best terms and lowest fees.
In addition, officials strongly believe transparency will encourage a higher level of competition but also allow people with low income the opportunity to find companies that offer the lowest rates.
Remember, it takes a significant amount of input from consumers, organizations, and even regulators, as well as time, for policy reform and the implementation of new regulations to take place. The good news is that things appear to be moving in the right direction specific to money transfer services.
Until all regulatory changes have been decided and executed, anyone interested in using services of this type should spend adequate time researching different companies and options. Although the fees will still be higher than what regulators want them to be at some point in the future, making comparisons would at least yield the lowest price available at that time.