Those who follow the financial services industry segments, especially from a multi-regional or global perspective, will understand that the regulatory environment by market is widely varied. Even at a high level there are often different structures (e.g.; the U.S. structure is the most complicated, which we explain in one of our ongoing reports around the topic), but when you then move into the potpourri of rules around products and services, there are hundreds of directions that things can go. This is one reason that compliance and risk management software exists and regtech is gaining greater foothold. In this brief announcement posting, appearing in Best Exchange Rates.com, they point out that the Japanese Financial Services Authority (FSA) has announced it will remove a ¥1 million (US$9,000) cap on cross-border money transfers handled by non-banking entities. This is an example of one of those many rules that differ by country.
‘This is set to change after Japan’s Financial Services Agency announced this week its plan to grant money transfer licenses covering larger transactions to “suitable” non-banking firms that meet minimum capital requirements. Further announcements are expected but it is estimated that the cap will be removed by mid-2021. “By creating a new service category, we want to make convenient payment methods a reality,” Japanese Finance Minister Taro Aso has said.’
While we are not sure what ‘suitable’ means (wiggle room wording for regulators), this sounds like pretty good news for the growing number of fintechs who are specializing in cross border remittances, looking for further markets and business cases to expand. Not that this makes Japan any more or less difficult than it already might be (the posting indicates that 64 licensed money transfer companies are already in the market), but the shift indicates the ‘open banking’ type of mentality that continues to gather momentum around the globe. This is causing the traditional banks to re-think delivery processes and pricing.
‘Further to providing massive savings on cross-border payments (traditional banks can cost six times as much), many of these non-banking services are easier to use because of simple and well-designed online platforms, and many offer much faster processing times.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group