FinTech, a service to transfer a smaller sum of money without having to use banks, is now available worldwide and is becoming immensely popular among Korean-Americans.
The process of transferring money via FinTech has been streamlined immensely compared to traditional banks, while fees are cheaper by 60 to 80 percent.
FinTech is a combined word between “finance” and “technology.” It is a mobile transaction and transfer service used for personal finance management and crowdfunding.
Among Koreans in their 20s and 30s, SodaTransfer has been a notable feature as the transaction is done at once from banks in each country to save as many additional fees as possible. As of today, transferring $1,000 from the U.S. to Korea warrants a service fee of $15—about 1.5 percent. That is significantly cheaper than the fees charged by traditional banks. However, it still requires a sender’s bank information and the currency on the day of the transaction applies to the service. Each transaction takes no longer than two days. The only downside is that the annual total of transferable funds for each person is capped at $20,000.
“It’s essentially the transfer app playing the role of a mediator between banks,” said Kim, who received $500 via FinTech transaction recently. “But it’s relatively fast and cheap. Unless you’re sending a large amount of money, this is a really useful system.”
Sandhow, another similar app, was designed for transactions of sizable sums, but it is now used primarily for transferring funds. Card transactions and PayPal are also available services, but the currency applies a bit differently. Aside from those two apps, about five to six FinTech apps are currently active in the market.
Previous money transfer services, including MoneyGram and Western Union have their own strengths, such as being able to send funds without having to provide bank information. The service fee rate is from 3 to 5 percent, which is rather high, but another strength is that U.S. dollars are transferred as it is without taking currency into consideration.
However, FinTech transfers became popular among Koreans since two years ago when the South Korean law began to allow foreign transactions of up to $3,000.
Since then, even major South Korean banks have been expanding their app services.
For example, KB Kookmin Bank is now only charging about $5 fee for transfers of more than $100 through Star Banking. Shinhan Bank is also utilizing Sunny Bank to transfer funds without requiring an account from the sender, while the fee (about $8) remains relatively low. KEB Hana Bank is also providing a similar service by partnering with foreign banks.
By Brian Choi
