The One Big Beautiful Bill Act, enacted in July, introduces new requirements for cross-border transfers. Among these changes is a new 1% fee on cash-funded remittances, a measure that directly affects traditional money transmitters and the customers who rely on them. While intended to strengthen oversight and accountability in international money movement, the policy also raises important questions about cost, customer impact, and the future of global remittances.
We sat down with Stuart Bain, SVP of Product Management at Alacriti, to discuss what this fee means for the remittance industry and how financial institutions can prepare.
Q: Stuart, can you start by explaining what this new 1% remittance fee is and what types of payments it applies to?
A: This is, in effect, a new tax on cross-border remittances and imposes a 1% fee on international money transfers funded with cash, paper checks, and similar physical instruments, like money orders.
However, it does not apply to transactions funded from bank or card accounts.
Q: Who will feel the effects of this fee most directly?
A: Customers using cash at retail locations offering the services of traditional remittance companies (Western Union, MoneyGram, Ria, etc.) will see the biggest impact.
1% might not seem like a huge amount, but someone sending home $500 every two weeks will find they have paid an additional $130 in tax on top of the remittance company fees— for example, Western Union charges a $4.99 fee for cash-funded payments to Mexico, so the cost of a $500 remittance has doubled.
Q: How might this affect pricing strategies and customer behavior?
A: The remittance companies are unlikely to absorb this cost and will simply pass it on to the consumer alongside their standard service fee and the FX rate.
Customers may choose to switch to using non-cash options. For example, a debit card funded $500 payment to Mexico via Western Union has no fees, but can only be made online. Of course, the cost of obtaining and funding a debit card will need to be considered as part of this.
Q: Does this create an opportunity for banks and credit unions to shift toward digital or account-based remittances?
A: It definitely does. Financial institutions can attract new customers and deposits by offering cross-border payment options that compete with, and are cheaper than, those offered by the traditional remittance companies.
Q: What role does Alacriti play in helping institutions navigate this shift?
A: A number of solutions offered by our Orbipay Payments Hub—available now through Convera Integration for cross-border account-to-account (A2A), and soon via Visa Direct for instant payments to cards—that will allow financial institutions to offer cross-border payment options.
Q: Looking ahead, how do you see the cross-border space evolving in light of changes like this?
A: It will be interesting to see whether stablecoins start to play a major role in cross-border payments as a result of this change and the passage of the GENIUS Act.
We may also see some creative approaches to address the ongoing need to be able to effectively handle cash outside the branch network. For example, options to allow customers to fund their account at an FI using cash at retail locations, and then using that account to make the cross-border payment to avoid the 1% remittance tax.
The upcoming 1% remittance tax represents both a challenge and an opportunity for financial institutions and providers: a challenge because new costs may strain vulnerable customers, and an opportunity because digital-first, account-funded solutions can help reduce reliance on cash and preserve the value of remittances. As the market adapts, institutions that proactively expand their digital offerings will be best positioned to support their customers and communities in navigating this change.
Alacriti’s Orbipay Payments Hub helps banks and credit unions embrace this future by providing a unified platform for domestic and international payments—including ACH, wires, real-time payments, and cross-border rails like Convera and Visa Direct.
Read about another important payments industry change in News Update: FedNow® to Increase Transaction Limit to $10 Million in November 2025.
Alacriti’s centralized payment platform, Orbipay Payments Hub, provides innovation opportunities and the ability to make smart routing decisions at the financial institution to meet their individual needs. Financial institutions can take full ownership of their payments and control their evolution with TCH’s RTP® network, the FedNow® Service, Zelle®, Fedwire, ACH, and Visa Direct, all on one cloud-based platform. To speak with an Alacriti payments expert, please contact us at (908) 791-2916 or info@alacriti.com.
