The problem with money transfers
Ever wondered if there is an easier, faster, and cheaper way to send money to your loved ones back home? Is there a way to make a transaction for free or without using a bank as well as expensive money transfer services?
We guess you have answered yes to one or all of the questions above. Worry not! Although there is never just one "the best" solution, you are not alone in asking those questions.
Introduction to domestic remittances
Many young people in South Africa leave their hometowns to work in the city. Although they enjoy city life and are making ends meet, they never forget their roots and where they come from, especially knowing that life outside the city financially can be more complicated. That’s why many young working people transfer to their loved ones at home. This money is to take care of those who depend on these young adults for financial support.
Based on recent research, only in South Africa, more than 24 million people receive or send money. These payments professionally are called domestic remittances.
Furthermore, the volume of domestic remittances is over $11 billion, or roughly 4% of the total GDP of South Africa. We can see the same happening in other African countries.
Why do people send money?
This phenomenon has taken over the younger generation and has led to the coining of a new term called “Black tax”. This is where young adults have to bear the burden of supporting their immediate and extended family. Interestingly enough, the “Black tax” usually applies to those who work mostly in the city as they have high expectations. South Africa is not an exception.
Having to send cash to your loved ones who do not stay with you is not only financially stressful but also costly. This is because there is a large gap in financial institutions as they do not account for the fact that family members back home do not have bank accounts and quite often cannot afford smartphones to use mobile money applications.
Most family members want to receive physical cash to use for their purchases. In these rural areas, cash is the main means of purchasing goods and services. Globally over 1.5 billion people are unbanked, potentially including your family back home.
However, it’s not always possible to withdraw money, drive back home and give them cash.
How It works today
Most Millennials and Generation Z in South Africa opt to try and use technology instead of a bank to send money to their loved one’s bank accounts and this money should then be withdrawn as cash. But because the loved ones do not use bank accounts (or have access to a stable network and the internet), they opt for various financial services that offer remittance-focused services, and this money can be withdrawn at participating local supermarkets or post offices.
To facilitate this transfer, you must visit the city’s local bank and withdraw cash. After which you would then have to go to the local supermarket and deposit that money. Here you will be given a code that you need to provide to the family member at home. The family member at home can then use this pin to withdraw money at the local supermarket.
The most popular solution to transfer your money is currently by bank transfer or cash agents, especially in locations where bank branches or ATMs are not accessible. This process is extremely costly because, with every transaction or handling of money, a charge is incurred. From charges for withdrawing and depositing to transport and petrol costs, as you need to travel to the ATM and the local supermarkets, it’s all just chaotic.
This means if you want to send money back home you have to also account for these charges. Also, if someone else gets hold of the pin they can withdraw the money.
How much does it cost usually? How much of the transfer cost is reasonable?
It is known, that cash transactions add up to at least 5% to your costs, considering traveling, fuel, time spent, and other factors. Adding additional banking and processing costs, such transactions can cost you up to 10% and more. So if you sent 2000 Rand to your loved ones, at least 200 Rand could be lost in the process. Keeping a bank account could become costly as well.
Although this process works, it is laborious, unreliable, time-consuming, and unacceptable, especially in this modern day and age where technology is advancing at the speed of light. Surely, there should be a better more advanced digital solution for this process.
But what if you didn’t have to go through this whole process to send money to your loved ones? What if you could send money to your family with just one click on your smartphone?
How can I do a free transfer?
When you usually send money or receive a transfer, money transfer service providers are using a certain network of partnerships through banks and remittance companies. So, what's the best solution to send and receive money? You can relax now.
The Solution: How does the Glow app make sending money back home more efficient and how you can use it
So what exactly can you do with the Glow application? Our goal is to make your life easier!
First, you can open a completely free bank account
Just download the Glow app and choose to top up funds. For that, you will need first to pass the KYC (know your customer) procedure. For that, you only need a national card or a passport and to make a selfie to prove it's you.
Link your bank account with the Glow app or deposit directly by cash at a cash agent or retail store
You don’t have to go through the hassle of changing banks as Glow app allows you to link your current bank account to the app on the go. After doing this you can seamlessly do transfers of your money from your current account to Glow.
With Glow app, all this is done without physically handling your money!
If there are no funds in your bank account or simply you don’t have one, there is also a simple solution: just go to the nearest Pick n Pay counter and deposit the money right into your Glow e-wallet.
Transfer money back home directly for free
With the Glow app, you don’t have to withdraw money from the ATM and then deposit it to your family member. You can skip this whole process and simply send money to your family member with just a click. Just enter their phone number and they will receive an SMS message in a minute or less with a secret code to redeem the cash at the nearest cash counter. OR… you can just invite them to use Glow app by clicking on the invite button in the app's interface. They can keep the money safe and cash out at any time.
Glow is one of the few companies to offer completely free payments.
Enjoy other benefits Glow app will be offering soon
Our team is working on several solutions, that with the Glow app, your life would become much more simple. Soon you will be offered a digital card for your online and contactless payments, the ability to pay utility bills or buy airtime while using the Glow app, as well to have a savings account. More features are to be announced soon.
So what are you waiting for? Now you will be able to send money effortlessly with your smartphone for a fraction of the time you invest only to download the Glow app and as well create a free account.
Join our waiting list and get informed when to get back to our website and download the Glow app.