Expand Your Money Service Business in Europe without Local Licences or Bank Setup

Most Banks and Money Transfer Operators (MTOs) that handle payouts rely on international partners to send them transactions. But what if you could manage both sides of the corridor and keep more margin?

Watch the short video to find out how:

Oussama breaks down how our Remittance-as-a-Service model lets you:

Launch send operations from the UK and Europe in weeks

Avoid waiting months for licences or bank approvals

Get a white-labelled app and website

Tap into ~€130B in remittances sent from Europe and ~£20B from the UK alone

Looking to grow across borders without the heavy costs? This could be the missing piece to help you do that.

Book a free call with our expert Oussama to explore how this can work for your business:

Episode 2: How to Start a Money Transfer Business – A Practical Guide for Founders | The IPR Podcast

The global cross-border payments industry continues to evolve, presenting new opportunities for remittance startups and financial institutions. But what does it really take to launch or expand a money transfer business in today’s landscape shaped by complex regulations, rising compliance expectations, and rapidly advancing technology?

In Episode 2 of The IPR Podcast RemitONE’s CMO Aamer Abedi sits down with Oussama Kseibati, Head of Business Solutions, to provide a clear, actionable roadmap for anyone looking to enter the cross-border payments space. Drawing from over 15 years of industry experience, Oussama outlines a five-step framework that founders can follow to build a compliant, scalable, and competitive Money Service Business (MSB).

Whether you’re launching from scratch or expanding into a new region, this episode offers foundational guidance to help you navigate the journey.

Understanding the Five Core Steps

Step 1: Research, Market Fit, and Business Planning

Every successful business begins with research. In the case of remittances, this means understanding your target corridors, your competition, your potential client base, and the unique value you aim to deliver. Oussama recommends starting small, focusing on one or two corridors you’re familiar with, perhaps tied to your own community or existing business network. This strategic focus allows you to manage cash flow, compliance, and relationships more efficiently before gradually expanding to new regions or services.

A well-structured business plan plays a key role in setting up for success. It should include realistic forecasting, cost structures, and clearly defined revenue streams, particularly understanding how FX margins and payout partnerships will contribute to your profit.

Step 2: Software That Meets Regulatory Needs

Technology is at the heart of modern money service businesses. From onboarding and identity verification to compliance screening and transaction processing, a reliable software infrastructure is essential. A robust platform should not only support regulatory needs (e.g. OFAC, UN, MAS, and HM Treasury checks) but also provide a seamless user experience for customers.

Oussama points out that choosing the right software provider can also give founders access to built-in integrations with payout partners, payment gateways, and compliance tools. Opting for an end-to-end platform such as RemitONE can reduce development time, streamline operations, and help ensure your system is aligned with regulatory requirements from day one.

Step 3: Apply for the Appropriate Licence

Depending on your jurisdiction and the nature of your services, you’ll need to apply for a financial licence, commonly known as an EMI (Electronic Money Institution) licence in the UK/EU, or equivalent.

Founders should consider their service model carefully:

Do you intend to hold client funds in wallets?

Are your transaction volumes expected to grow rapidly?

Will you operate in a single country or multiple regions?

For many, a Small Payment Institution (SPI) licence offers a more accessible entry point. It allows you to operate legally while building up transaction history and operational credibility, which can later support applications for higher-tier licences like API or EMI.

Step 4: Secure a Client Bank Account

Opening a bank account for safeguarding client funds can be one of the more challenging steps, especially in regions where traditional banks view remittance providers as high-risk. This has led to a wave of “de-risking,” where financial institutions have withdrawn services from MSBs altogether.

However, there are solutions. Letters of intent from banks, demonstrating willingness to provide an account once licensed, can support your application with regulators. Additionally, new digital-first banks and fintech-focused institutions are becoming more open to MSB clients, especially those operating with transparency and good controls in place.

The client account ensures that funds remain protected until the transaction is completed, adding an extra layer of security for both regulators and customers.

Step 5: Partner with Reliable Payout Networks

Once you’ve established your business model, tech infrastructure, and licence, you’ll need to connect with payout partners such as banks, MTOs, or telcos in the payout country, who will complete the final end of the transaction.

Payout partners are critical for determining your transaction fees, exchange rates, and service reliability. In the early stages, pre-funding is common, meaning you’ll need to deposit funds in advance with these partners to enable instant payouts.

Here too, a well-connected technology provider can simplify the process by offering access to pre-integrated partners or facilitating introductions to established networks.

The Role of End-to-End Platforms in Supporting MSBs

Remittance businesses today require more than just a digital interface. A complete solution should connect every part of the remittance chain—from onboarding and KYC to payment gateways, FX providers, compliance systems, and settlement tools.

RemitONE’s platform, for example, supports founders throughout this journey by offering tools for transaction monitoring, sanctions screening, automated compliance, and built-in integrations with various payment partners. The goal is to give new entrants the ability to launch quickly, scale with confidence, and maintain compliance across jurisdictions.

Watch the full podcast for the complete insights and strategies.

YouTube: https://youtu.be/2GChfkdhaMg?si=aWj4NuQvRXl9Ly7W

Spotify: https://open.spotify.com/episode/3dAbpgiDWyKklj3Guteo2F?si=569b6d23ade94344

Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-start-a-money-transfer-business/id1822769031?i=1000718661978

If you’re exploring the possibility of launching your own MSB or expanding into new corridors, speak to one of our consultants. Book a free session here: https://calendly.com/remitone-oussama/free-30min-consultation-website

For questions or guidance, reach out to sales@remitone.com.

Meet RemitONE Team in Riyadh, Saudi Arabia: Unlock AI-powered growth

We’re heading to Riyadh to connect with ambitious businesses looking to scale. Aamer Abedi, our CMO, Oussama Kseibati, Head of Business Solutions, along with our partner Anwar Al Murshed from DTCC, will be in Riyadh 15th – 19th, September to explore cross-border payment opportunities with our AI, open banking and blockchain solutions.

Whether you’re expanding into sending markets like the UK and Europe or navigating complex compliance demands, our AI-powered solution can help you grow and unlock new revenue.

We provide the building blocks to future-proof your operations, even if remittances aren’t your core offering, with tools such as:

Automated KYC/AML

Scalable payout infrastructure to new sending markets

Value-added services including airtime, top-ups and utility bill payments

To arrange a place and time, please email us at: marketing@remitone.com

About RemitONE

RemitONE is an award-winning, leading provider of money transfer software solutions for banks, telcos, and money transfer operators (MTOs) worldwide. With multi-channel access, including agent networks, online, and mobile, RemitONE empowers organisations to streamline and scale their remittance operations.

Episode 1: Trump’s Threats to Cross-Border Payments – What It Means for Your Money Service Business

Donald Trump’s return to office has reignited policy debates, with ripple effects already reaching the cross-border payments space. From remittance tax proposals to tighter compliance and crypto shifts, these changes could reshape how money moves in and out of the U.S.

But what do these proposed policies mean in practice—and should MSBs be preparing for disruption or opportunity?

We dive into all this and more in the first episode of our IPR Podcast: Talking Innovation in Payments & Remittances.

Will Deportations of Migrants Impact Remittances? Here’s What the Data Says

Mexicans, a large diaspora and major US remittance senders, may face stricter immigration policies, putting this financial lifeline at risk. The “Remain in Mexico” program has led to nearly 11,000 migrants being sent back, potentially reducing the number of workers in the U.S. and, with them, the flow of cross-border payments. Since Trump’s arrival, 38,000 arrests and 207,000 deportations have been made, according to ICE.

Despite his promise to deport 11 million people, the complexity of the process appears to make that goal unlikely. It could also open a window for some undocumented migrants to secure legal status. However, even large-scale deportation efforts may not significantly alter overall volumes due to the typically lower transaction size of undocumented remitters. The real concern? A remittance tax.

Will a Remittance Tax on US-Latin America Transfers Disrupt the Market?

The remittance tax from the US to Latin American regions is intended to minimise illegal immigration but can cause a significant dent in transactions, impacting money transfer operators, banks, and other players in the payments ecosystem by reducing revenue and lowering demand in certain corridors.

It could also shift the balance for countries like Mexico, El Salvador, and Haiti—where remittances inject nearly $150 billion annually. Families who depend on these funds risk losing critical income. Money Service Businesses (MSBs) may have no choice but to raise fees, potentially driving customers toward alternative solutions like digital wallets and crypto. Interestingly, Trump seems to support crypto, so could this be the turning point that finally makes it more secure and mainstream?

Recent developments in the One Big Beautiful Bill Act have introduced significant updates to the tax proposal. The Senate-approved version has lowered the tax rate to 1% from earlier higher proposals and now limits the tax to remittances funded through traditional cash-funded methods while exempting digital transactions. This change could reduce the burden for many non-U.S. citizens who send money digitally but will impact cash senders more heavily, including some minority groups and the elderly.

The tax also now applies to both U.S. nationals and non-nationals, whereas previously only non-nationals were affected—broadening its impact. A clause that once allowed senders to reclaim remittance taxes has also been removed.

Trump and Crypto: A Game-Changer for Cross-Border Payments?

While Trump has halted any action to progress America’s CBDC, he’s taken more steps to advance the crypto movement, especially stablecoins, which has added a new dimension to the discussion. In a tweet, he unveiled the U.S. Crypto Strategic Reserve, which will include XRP, SOL, and ADA, with Bitcoin (BTC), Ethereum (ETH), and other key cryptocurrencies that will be added to “the heart of the Reserve.” Since the announcement, the value of the first three coins surged by 62%.

The two messages posted by Donald Trump on Sunday, March 2, on his X Social account.

So, what does this mean? Cryptocurrencies offer the potential for faster, cheaper, and more accessible cross-border transfers, reducing traditional fees and delays. While stablecoins—pegged to the dollar—aim to provide price stability, but can still fluctuate alongside the US dollar’s value, which introduces some risks. The broader crypto ecosystem’s growth could open new alternatives for senders, though volatility and regulatory clarity remain key factors to watch.

Stricter Compliance: A Roadblock for Remittances?

The designation of cartels as terrorist organisations, combined with tighter immigration policies, is set to intensify compliance pressures on MSBs, who must now exercise even greater due diligence to avoid any unintended links to sanctioned groups.

For migrants, this means longer wait times, extra fees, and fewer options to send money home. If traditional corridors start shutting down, people will have no choice but to look elsewhere, whether that’s the age-old hawala system or the rising use of crypto.

Keeping up with ever-changing regulations is more than just a headache—it’s a matter of survival. A single compliance slip-up can trigger heavy fines or force a business to shut its doors entirely. Yet, many companies still juggle multiple software tools, manually stitching together fragmented systems to stay compliant.

Our Liveness feature utilises biometric-powered selfie checks, through which remitters can instantly confirm their identity—cutting fraud risks while keeping regulators satisfied. It’s this kind of innovation that makes compliance less of a burden and more of a competitive advantage.

So, if you want to streamline your operations and power your growth, book a demo with one of our experts: https://calendly.com/remitone-oussama/free-30min-consultation-website

Watch the full podcast for the complete insights and strategies.

In this article, we’ve only covered a handful of key points. For a deeper understanding and practical steps to help your business adapt, tune into the full discussion — and don’t forget to subscribe so you’re always on top of all the industry news.

Youtube: https://www.youtube.com/watch?v=zMZm4THw03k

Spotify: https://open.spotify.com/episode/7beXO7FlCs8GyImd6BUypf

Apple podcasts: https://podcasts.apple.com/us/podcast/trumps-remittance-tax-threat-or-opportunity/id1822769031?i=1000716221708

Introducing The IPR Podcast: Talking Innovation in Payments & Remittances

We’re excited to announce the launch of The IPR Podcast, a brand-new series dedicated to bold conversations happening in cross-border payments.

Hosted by Aamer Abedi, this podcast is built for fintech leaders, money transfer operators, banks, and anyone shaping the future of financial services. Each episode features conversations with industry experts on the trends and technologies changing the game — and what they really mean for your business.

You’ll hear stories from the frontlines, discover new ideas, and walk away with strategies you can put into action.

Episode 1: Trump’s Tariffs — What Could They Mean for Your Business?

Next week, we kick off with a timely deep dive into proposed remittance tariffs in the US and how they could affect:

Why certain corridors could become unprofitable

How rising costs may affect customer loyalty

What MTOs can do now to adapt and stay competitive

Subscribe now and be the first to tune in.

Spotify: https://open.spotify.com/episode/7tZYluLixpm6MhwbLQxjzL?si=rqhOGDoHRmuHdFJZUJatZA

Youtube: https://www.youtube.com/playlist?list=PLLqIwD4TK69h8higA91Ba9a1o1GU3sH2c

Apple Podcasts: https://podcasts.apple.com/us/podcast/welcome-to-the-ipr-podcast-talking-innovation-in/id1822769031?i=1000714502161

Be Part of the Conversation

Got thoughts, questions, or ideas for future episodes? We’d love to hear from you, email us at: marketing@ipr-events.com

Want to be a guest?

We’re looking for people shaping the future of payments and remittances. If you’ve got insights or experiences worth sharing, reach out to us at: marketing@ipr-events.com

Trump’s Threats to Cross-Border Payments: What It Means for Your Business

It’s been a short while since Trump stormed back into office, and he’s already shaken things up with his hard-hitting policies—and, as always, he’s not one to shy away from bold and upfront decisions. But with every action comes a ripple effect, and in the world of cross-border payments, those ripples are turning into shockwaves. From proposed remittance taxes to intensified compliance risks, Trump’s latest moves are shaking up how money flows in and out of America.

So, what does this mean for businesses, migrants, and economies relying on these payments? Let’s find out.

Will Deportations of Migrants Impact Remittances? Here’s What the Data Says

Mexicans, a huge diaspora, and one of the major remittances senders in the US, but we may see stricter immigration policies putting this financial lifeline at risk. The “Remain in Mexico” program has already led to nearly 11,000 migrants being sent back, potentially reducing the number of workers in the U.S. and, with them, the flow of cross-border payments. Since Trump’s arrival, 23,000 arrests have been made and 18,000 deportations, whilst it has risen significantly compared to the Biden administration it still remains lower than the peak levels seen during the early crackdown of Trump’s first term.

So, what does this tell us? When Trump first took office, deportations surged as part of his hardline immigration stance. But over time, the wave slowed down. Now, despite his promise to deport 11 million people, the sheer complexity of the process appears to make that goal unlikely. In fact, this could even open a window for some undocumented migrants to secure legal status. But let’s say, hypothetically, mass deportations would happen—would remittances take a massive hit? Not necessarily. Many undocumented migrants are low-value remitters, meaning their contributions wouldn’t cause a drastic drop. What would shake remittance flows, though, is something much bigger: a tax on remittances.

Will a Remittance Tax on US-Latin America Transfers Disrupt the Market?

The proposed 10% remittance tax from the US to Latin American regions is an effort to minimise illegal immigration but can cause a significant dent on transactions, impacting money transfer operators, banks, and other players in the payments ecosystem by reducing revenue and lowering demand in certain corridors.

For countries like Mexico, El Salvador, and Haiti—where remittances inject nearly $150 billion annually, this could be a devastating blow. Families who depend on these funds risk losing critical income, putting entire economies under strain.

If implemented, Money Service Businesses (MSBs) may have no choice but to raise fees, potentially driving customers toward alternative solutions like digital wallets and crypto. Interestingly, Trump seems to support crypto, so could this be the turning point that finally makes it more secure and mainstream?

Trump and Stablecoins: A Game-Changer for Cross-Border Payments?

There’s hope on the horizon—Trump’s pro-stablecoin stance could be the catalyst to reshape cross-border payments. While Trump has halted any action to progress America’s CBDC, he’s taken more steps to advance the crypto movement. In a tweet, he unveiled the U.S. Crypto Strategic Reserve, which will include XRP, SOL, and ADA, with Bitcoin (BTC), Ethereum (ETH), and other key cryptocurrencies that will be added to “the heart of the Reserve.” Since the announcement, the value of the first three coins surged by 62%, while BTC and ETH have climbed up by 10%. This momentum is pushing forward Trump’s goal of making the U.S. the “crypto capital of the world.”

Two posts by Donald Trump on Sunday, March 3, 2025, on his Truth Social account.

So, what does this mean for remittances? Stablecoins offer faster, cheaper, and more accessibility, eliminating high fees and long processing times, making this a more attractive alternative to existing transfer methods to senders.

Of course, regulation follows. Trump’s administration has called for a federal regulatory framework for digital assets to bring clarity. If well executed, this could boost financial inclusion and drive crypto adoption, but if it becomes too strict, it can do the opposite, where it stifles innovation and progression.

Crypto in Crisis: What’s shaking the market?

The cryptocurrency market took a plunge over the weekend, and while crypto is no stranger to volatility, this time the drop wasn’t just about digital assets—it was about politics, economics, and the shifting global financial landscape.

A major trigger was the Trump administration’s new tariff hikes on imports from Mexico and Canada, which sent investors retreating from risky assets like Bitcoin, creating a domino effect across the sector. Then there was the regulatory uncertainty. The U.S. government’s new restrictions on crypto exchanges and stablecoins fuelled distrust, prompting even more selloffs. On top of that, fresh inflation data and Trump’s aggressive trade policies led to a reassessment of potential Federal Reserve interest rate cuts, putting even more pressure on risky assets like crypto.

Ironically, part of the turmoil can be traced back to Trump’s own cryptocurrency summit on March 7. The announcement of a strategic bitcoin reserve—a government-controlled stash of digital assets initially caused Bitcoin’s price to drop by 6%. While the move signalled greater government involvement in crypto, it left many investors questioning what that would actually mean in practice. The market’s uncertainty around this policy likely contributed to the larger crash that followed.

Stricter Compliance: A Roadblock for Remittances?

The designation of cartels as terrorist organisations, combined with tighter immigration policies, is set to intensify compliance pressures on MSBs. They must now exercise even greater due diligence to avoid any unintended links to sanctioned groups.

Whereas for giants like Western Union and MoneyGram, who move billions to Latin America, the stakes are high. Stricter AML (Anti-Money Laundering) and KYC (Know Your Customer) regulations will be unavoidable, but for some financial institutions, the risk might be too much. We’ve seen this play out before where banks pulled out of Somalia’s remittance corridors when terrorist groups gained traction, leaving thousands stranded without access to funds. Could Latin America perhaps face the same fate?

Keeping up with ever-changing regulations is more than just a headache—it’s a matter of survival. A single compliance slip-up can trigger heavy fines or, worse, force a business to shut its doors entirely. Yet, many companies still juggle multiple software tools, manually stitching together fragmented systems to stay compliant.

This approach isn’t just inefficient; it’s risky. When regulations shift overnight, you need a solution that evolves with them. That’s why we built an all-in-one platform with compliance at its core. Unlike other providers, we continuously adapt to market trends and regulatory changes, ensuring you aren’t left scrambling when new rules emerge.

Take our Liveness feature for example. With biometric-powered selfie checks, remitters can instantly confirm their identity—cutting fraud risks while keeping regulators satisfied. Plus, through our platform, regulators and central banks can track all inbound and outbound transactions, ensuring total transparency.

It’s this kind of innovation that makes compliance less of a burden and more of a competitive advantage.

So if you want to streamline your operations and power your growth, book a free demo with us and let’s discover how.

Bank of Ceylon (UK) Limited and RemitONE Join Forces to Revolutionise UK-Sri Lanka Cross-Border Payments

September 2024: Bank of Ceylon (UK) Limited, a fully owned subsidiary of Bank of Ceylon Sri Lanka has prudently partnered with RemitONE, a global leader in cross-border payment technology solutions. This strategic alliance is expected to significantly improve Bank of Ceylon’s competitiveness in the UK-Sri Lanka corridor, heralding a new era in their 80-year history. The collaboration marks a pivotal moment in the bank’s ongoing efforts to digitalise its services and meet the evolving needs of its international customer base. The collaboration is particularly momentous as the bank approaches its 75th anniversary on 1st October 2024, marking a significant milestone in its longstanding legacy.

The partnership addresses Bank of Ceylon’s pressing need for an enhanced online presence and expanded customer reach. By adopting RemitONE’s cross-border payment software, the bank is set to advance its technological capabilities and offer a more streamlined, user-friendly service to its loyal customers.

For RemitONE, this collaboration represents a strategic expansion into the South Asian market, reinforcing its position as an innovator in cross-border payment solutions. The partnership underscores both entities’ commitment to embracing digital transformation in the rapidly evolving financial services sector and helping facilitate money transfers for customers at affordable rates.

As international cross-border payments continue to play a crucial role in Sri Lanka’s economy, this partnership is set to deliver substantial benefits to both individual customers and the broader financial ecosystem. Soon, Bank of Ceylon customers can look forward to a more accessible, secure, and seamless money transfer experience.

About RemitONE

RemitONE is the leading provider of money transfer software solutions for banks, telcos, and money transfer operators (MTOs) worldwide. Organisations of all sizes use the RemitONE platforms to run their money transfer operations with ease and efficiency by reaching out to their customers via multiple channels including agent, online and mobile.

For more information on RemitONE, please email sales@remitone.com.

Innovation in Payments and Remittances (IPR) Global 2022 – Brought to you by RemitONE

RemitONE was pleased to bring to our great industry the Innovation in Payments and Remittances (IPR) Global event at The Westin Hotel, London, UK, that took place from Wednesday 19 to Thursday 20 October 2022.

IPR Global is the ultimate hybrid event for those passionate about transforming the money transfer industry. The event brings together global industry stakeholders, visionaries and business leaders to make informed decisions and drive positive change in the industry.

The IPR Global event featured 30 prominent industry speakers, including leading experts from Al Fardan Exchange, JMMB Money Transfer, Moneygram, RemitONE and many others from the money transfer supply chain.

Over 1000 online and 100 in-person attendees took part in the expert panel sessions, training courses and networking breaks at The Westin Hotel and on the dedicated online platform.

Watch all the panel sessions on-demand here.

The Growing Money Transfer Industry: Unlocking new revenue streams and seizing opportunities

Partnerships and Interoperability in the Payments Ecosystem

Mobile Money and the Utilisation of Super Apps

IPR Course: RegTech for Compliance in the Money Transfer Industry

Building Operational Resilience in a Digital Industry: Security, KYC and Compliance

Saving the Crucial Role of Agents and Banks in the Remittance Industry

Does Blockchain have a Future in Payments and Remittances?

IPR Course: The Ultimate Guide for Start-Ups

What next?

To discuss any of the panel sessions or to get more information on how RemitONE can support your Money Service Business, get in touch with the team at sales@remitone.com

Video: New Tech in an Old Business – The new products redefining the best in class.

Continuing our recent discussions exploring some of the challenges and opportunities being faced by the remittance sector in these uncertain times, RemitONE hosted a webinar on the 23rd of June 2021 regarding the new products that are currently redefining best in class practices and the technology that drives them. The panel was made up of experts from both RemitONE and our friends and partners in other global companies. In case you missed the webinar, here is a summary of the key insights.

Webinar moderator:

Oussama Kseibati, Head of Services at RemitONE

Panellists:

Walter D’Cruz, Director at Moneo Solutions and CEO at Livil Ltd
Stone Atwine, Founder at CEO at Eversend
Nelson Irizarry, Co-Founder and Chief Operating Officer at Paykii

What new technological advancements are now being utilised in the traditional remittance industry?

Walter: I was really looking forward to answering this one because I believe a lot of technological advancement is being driven by external forces like the regulators, banking partners and the market. For me, it’s about who adopts the technology faster and the technology I’m talking about specifically is regulatory technology like ID verification, KYC transaction monitoring, open banking, instant payments, digital payments, digital banking, artificial intelligence and, of course, blockchain. For me, those are the main drivers. The challenges companies are facing, however, largely stem from the ever-evolving beast that is compliance and the costs associated with it. A lot of fin-techs out there are reducing that cost whilst providing excellent services and as we move through this new environment, traditional remittance companies are going to have to play a big game of catch-up.

We know that regulation and fraud are the biggest challenges in the industry. What new tech is out there to overcome these challenges?

Stone: Regulation is a big pain, especially for those of us trying to upgrade across multiple countries on the African continent. Being a new-age player, we tried to do everything electronically and what we’ve seen in the software we use for everything from onboarding and compliance to KYC and anti-money laundering is that there are some major advantages the traditional players might not have noticed. For example, it helps us with integration and analytics so you can figure out if you’ve got 30 thousand or 50 thousand customers and how many of those customers did KYCs. In terms of fraud, we’re seeing many interesting solutions too. We’ve built a tonne of fields internally in Eversend alongside a new technology that allows you to spot potential fraudsters from their email address, phone number or even the gadget they’re using across different applications. I think the thing that really changes the game though is the ability to do all the required KYC diligence remotely without actually being close to the customer. We’ve seen improvements in liveness checks, for example, so that when somebody signs up on their telephone you can take a short video selfie and the technology now can figure out if this person is who they say they are.

Oussama: It’s also about customer experience; the better we have these solutions in place, the quicker it is for you to onboard someone not needing to be there. So they are on their mobile phone and take their picture and all the checks are done instantly so you can onboard them right there and then.

What have traditional remittance companies had to do differently as a result of this new technology?

Walter: You can’t replace a physical asset like cash; you have to go through to the digital world which offers a simple way of banking and topping it up with cash. Look at some of the challenger banks like OneZone where you can top up to £300 or £500 a month in cash. You go to a top-up agent, put your money in and it’s in your account within minutes. The cash economy is working right now still because there are older generations looking at crypto and digital currencies right now the way generations before looked at credit cards – with nothing but disbelief and trepidation. But there will come a time when cards are replaced by instant payment and there needs to be a roadmap in place to help these customers understand the new normal.

How do you see the utility bills payment sector in relationship with the MSB space, post-pandemic?

Nelson: Everyone has bills to pay. You’re talking about 40 billion payments a year based on households around the world and that’s just looking at basic utility services. Anywhere between 20% to 30% of funds that are being sent by remittance are being used specifically for bill payment services. I think the question we have to ask is who’s going to pay for it? Is it the sender or the recipient? From PayKii’s perspective, we actually play both sides of it. Our platform is a global digital platform with one API integration and we offer both domestic and cross border services in over 30 countries. But cross border bill payment is really our bread and butter. Because people want the ability to pay bills directly back home, either for control, security or peace of mind. There are three key challenges with bill paying in a cross-border context. The first one is awareness as most individuals do not know they can pay bills back in their home countries for themselves or for their loved ones. The second is commitment, which involves getting them to understand what is the value or bill payment by creating a more holistic view of managing the customer. The third challenge is regulatory fees but it’s slightly different from the regulatory challenge you’ll face in the money transfer world due to how different countries regulate bill payments.

Do you consider that the new adoption of technologies like blockchain may play a major role in both regions or are they typically regional focused?

Walter: I think they are going to be very regionally focused. If you look at Africa, there are certain countries where there’s been significant adoption of crypto often relating to their existing currency. In Nigeria, for example, example, there’s been 80% adoption. So it’s not about boiling the ocean here we have to really focus on corridors and where there’s a supporting regulatory framework. As far as blockchain is concerned, I think blockchain means so many different things to so many people and it’s often misinterpreted or misrepresented. For me the application of blockchain is not just about the value of an asset or funds; it is a complete 3D picture that you can build around a transaction.

Do you think that Cryptocurrencies can be a solution to solve settlement problems for intra-Africa cross-border remittances?

Stone: At Eversend we’re already using stable coins to move value across different studios based in different African countries. You really need to move values pretty quickly, especially if you aren’t going to have tens of millions tucked away in capital across different markets. We’re doing this internally though, so the customer doesn’t actually see anything to do with crypto or stable coins but we use them amongst ourselves to make sure that everything balances out in different countries. For these solutions to work we need modern systems as with old systems you’d have to use US transfer, which would take 3 to 5 days. That means we can reduce the amount of capital we need just by using this almost instant system of stable coins. I see the future of remittances going into stable coins, at least in the short term.

Customer loyalty can be a challenge in the remittance space. What new products and technologies should MSB’s consider to strengthen their relationship with the end-user?

Nelson: I’m not an expert in remittance space and I certainly can’t predict the future but what I will say is that where before you tended to have a lot of companies that were specifically focused on remittance, over the past few years fintechs have broadened everyone’s horizons. They have forced everyone to look at remittances in a slightly different way. So, the question is, what can dedicated remittance companies do to retain customers when the dynamics of the industry have changed so much and so rapidly? I think the first thing is to look at the customer holistically and ask how you can best manage that person’s financial health. Beyond helping them send money home, what else of value can you provide to help them manage their financial health?

Stone: We’re doing a lot of things internally around retention and one of those things comes back to little everyday payments. The idea is that to keep people coming back you give them the ability to quickly buy something like phone credit and bundle that in with a lot of other relevant financial services, giving them more value and more reason to stay. We also have a measure we call the “care factor” and this is essentially a measurement of the virility of our app through people telling their friends about Eversend. We try to ensure that every user is going to lead us to at least one other new user and this is done with the incentive of referral rewards so the inviter and the invitee both get a small amount of money when the invited person becomes a paying customer. We’re essentially giving our marketing budget directly to our consumers and it seems to be working.

We also know that bank de-risking is a major challenge for many businesses. What technological innovations exist to overcome this challenge?

Walter: You can’t really overcome the challenge of having a physical connection to a bank. No tech can achieve that. However, regulatory technology can de-risk your relationship with the bank by staying ahead of the game. Unfortunately, you’re never going to avoid de-risking until money businesses fully get behind PSD2, which for some reason they still seem quite reluctant to do. All you can really do is manage your volumes and cultivate banking relationships specific to the vertical markets you are going to operate in. Because certain banks will have the systems in place to focus on a certain corridor, whereas other general banks may not. The major challenge for banks is that they are typically rendered moribund by legacy systems – old IBM apps that they developed in the 70’s and 80’s that are still running some of their core business applications. So for them to adopt newer technology is very difficult because it doesn’t fit into their workflow. That’s where fintechs comes into the equation because we know what we’re doing with new technology. The problem, however, is that fintechs lack the trust of established banks and this is something that’s going to require greater collaboration. Until that happens, de-risking is just going to be a matter of doubling up, or tripling up, or spending a lot more effort in managing your relationships. But certainly being ahead of the game in terms of compliance and KYC gives you a big advantage.

We have seen the rise of everything from blockchain to instant payments and mobile money in recent years. But what changes are we going to experience in the next five or ten years?

Stone: What I see as the future of remittances and finance as a whole is some kind of central location from which somebody can get all of their financial service needs met. So if you’re sitting in a cafe in Paris and have to pay your grandmother’s electricity bill in Uganda, the platform that you use should be the same platform from which you pay your Amazon or Netflix bill. What we are seeing is that amalgamation of financial services I think that’s really going to be the future – all in one, borderless apps. You want to be able to offer more than just remittances, you want an app somebody can use to trade stocks and crypto and send money back home. The more touchpoints, the better!

Do you think the current regulatory frameworks welcome or stifle new technological innovations in the industry?

Nelson: Part of the issue is that regulators have bigger fish to fry and they rarely make the rules of the game clear, so to speak. So it poses a challenge for us depending on where the client is located and operating. Bill paying is a small ticket item that I think most regulators just haven’t thought about, which leaves us specifically in a rare position where we can move ahead but we have to do so cautiously as we can never be 100% sure if or when the regulators will suddenly decide we’re a concern. When you want to make sure you are crossing your t’s and dotting your i’s, it’s hard when that’s not the primary focus of the regulators themselves. But I guess that allows wiggle room for playing around, testing boundaries and seeing what works. And as always, working with consultants who are very good in the remittance space can make sure you understand the stadium that you’re playing in, if not the game itself.

Walter: It honestly depends on where you are as there’s no such thing as consistency. You’ve all no doubt seen the recent events in China and the impact that has had on the price of crypto. The biggest impact on the market in terms of innovation is going to be the introduction of central bank digital currencies because in a way that’s going to really legitimise their use. Then of course you have open banking, which is definitely going to happen on a wider scale. I think the advent of digital currencies will push open banking. They go hand in hand, after all.

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Video: Trust vs Innovation – Finding the regulatory balance for a stronger Money Transfer sector

Continuing our recent discussions exploring some of the challenges and opportunities being faced by the remittance sector in these uncertain times, RemitONE hosted a webinar on the 24th of June 2021 regarding trust vs innovation in the money transfer sector and finding a strong regulatory balance. The panel was made up of experts from both RemitONE and our friends and partners in other global companies. In case you missed the webinar, here is a summary of the key insights.

Webinar moderator:

Aamer Abedi, CMO, RemitONE

Panellists:

Ibrahim Muhammad, Payments Consultant, RemitONE
Kathy Tomasofsky, Executive Director, MSBA
Farook Al-Jibouri, Founder and Executive Director, Cyber Code Technologies

The financial services sector has always been one of the most heavily regulated industries but what are the key compliance regulations and challenges that we commonly see across all jurisdictions?

Kathy Tomasofsky: I would say that one of the most important things we see across all jurisdictions is rules concerning your customer (KYC). They may vary in different areas in terms of the level of detail, but all of the regulations ask for the companies to know their customers to prevent money laundering. The second area is risk management. As you enter into the business, understanding your customer profile, understanding the risks, and setting up the appropriate controls in order to effectively do business.

Ibrahim Muhammad: In terms of the ongoing situation; the pandemic had led to a lot of changes and this has pushed regulatory bodies into leaning more towards digital. However, in some markets, people might not have been able to adapt due to lack of infrastructure, so there have certainly been challenges. Broadly speaking, in terms of common regulations we can put it into two baskets: One is the AML (Anti-Money Laundering) and the other is the compacting of terrorist financing. In both these instances and in all jurisdictions, it always comes down to KYC, transaction monitoring and sanction screening.

Farook Al-Jibouri: Particularly when it comes to the Middle East, we do share the same difficulties globally but there are other unfortunate issues and circumstances unique to the region. What I see after the pandemic is a greater diversity when it comes to the Middle East and the level of maturity in the adoption of transformative financial services like Fintech. Some countries have been eager to jump on board but others are still living a hundred years in the past. Still, it’s a cash market where regulators have minimal impact when it comes to controlling the environment. This is what’s driving different regulators in the region to adopt more of a regional approach. The Middle East is ultimately a hot spot when it comes to AML and anti-terrorism. In fact, we are very much leading the way in those areas. The challenge, however, is in how you control different regions and balance them equivalently when there is such disparity in terms of digital adoption.

Is it fair to say that regulators are all for innovation in the Middle East? And is it also fair to say they are taking a lot of inspiration from UK and European regulators?

Farook Al-Jibouri: That’s a complicated question that I couldn’t really give one straight answer to. As I already said, the level of diversity in the Middle East is enormous. There is, however, global pressure from other regulators to bring all of the countries up to the same level and in some cases, those local regulators are simply not doing their jobs. Political complications are slowing the adoption of digital in some situations too. Again, it depends on the specific region. In Saudi Arabia, for example, it was announced recently that the first completely digital bank has been officially licensed by regulators.

Aamer Abedi: I know that when it comes to supporting Fintech start-ups, there is a lot of government support for these businesses in the UAE and Saudi Arabia. Is it fair to say that regulators from the UAE and Saudi Arabia are helping to lead the way in terms of pushing innovation? Perhaps. I believe they are also taking a lot of inspiration from European and UK regulators.

Kathy Tomasofsky: While the Middle East may have different regions that are working at different levels, here in the United States we have forty-nine different entities within a federal regulation and it’s very difficult to navigate. It’s a complex structure and it varies from state to state. For example, the state of Wyoming is very friendly to blockchain and virtual currency but you’re not going to see that in every state.

How far are we from the ubiquitous federal money service license like you have in Europe in the US or the Middle East?

Kathy Tomasofsky: As far as the US is concerned, I’ll answer that question in two parts: The first part is that over the last two years, there have been some movements towards harmonising on a single license. There are currently twenty-nine states that have bonded together. So, if you’re a start-up company and you come into the states, you can have what’s called your level one documents; your financial statements and business plan. These will then be reviewed by a particular assigned state and the twenty-nine other states will say “Okay, we’ll accept these” and it’s as simple as that. Also, we’ve been working with other regulators on harmonising the money transmission law. We expect to have a draft of that sometime this summer, so perhaps beginning in 2023, 2024, we may see a more uniform law.

Farook Al-Jibouri: In the Middle East it can go in different directions. In some countries, opening a bank is extremely easy and in others, you simply can’t do it because the number of banks versus the market has already been defined by regulations. If there is any kind of new license or sub-license, it would be given to the established banks. In other countries though, we are starting to see the licensing of newer digital banks.

How are we doing in terms of open banking in the UK, US and the Middle East?

Ibrahim Muhammad: It’s interesting to see how the US market operates across states. Now, with the UK of course, we’re following the PSD2 standard, and from there we now have open banking. We are enjoying the benefits of PSD2 and though we don’t have passporting rights in the EU we can still redo the applications since they follow the same regulations. So that makes it easier for companies in the UK who would like to expand into EU markets.

Kathy Tomasofsky: In the US, I would honestly say we’re not there yet. There are indirect discussions coming through but we’re not in those open banking discussions like the UK has at this point.

Do you feel that the money transfer industry always plays second fiddle to the payments industry?

Kathy Tomasofsky: I think the introduction of digital and Fintech has made the government more supportive of the whole idea of global payments, whether it’s consumer to consumer or business to business. The fact that remittances fall under that umbrella gives us that support. In general, though, I think it’s more that the banking industry is less inclined to be supportive. It’s very challenging for a company to get a bank account here. There are some things that passed this past January with regard to the strengthening of AML programs and some items there that may help as far as de-risking is concerned, but that remains our pain point here. During the pandemic, these remittance businesses really were a lifeline for many US constituents, and I think that that helped to strengthen the profile of the companies as well.

Post-Brexit, has the government’s stance changes towards the MSB sector? Are they viewing us differently now?

Ibrahim Muhammad: Not exactly, in fact, the FCA has been quite open to supporting innovation in this space and that’s why they were opening up to a lot of Fintechs and new players establishing themselves in the UK. So for the UK specifically I’d say the government has actually been quite supportive.

The concerns that regulators cite can often be addressed by technology. What areas of technology are there in the industry that ensure we meet compliance?

Ibrahim Muhammad: They look into different areas when it comes to transparency; they look into the complaint handling process, incident reporting and the overall system checks and controls you have in place. Of course, AML is one component, so when they do company assessments, they cover all those areas. This assures them of how transparent that entity is towards its customers.

Farook Al-Jibouri: In the past six to nine months there has been a wide deployment of technological systems all across the Middle East but one of the problems is the lack of data. Certain countries probably have a full database but others do not and when you don’t have that database you have to rebuild it. As far as compliance tool deployment is concerned, in some countries, AML is being deployed and pushed by certain regulators but with a specific mandate rather than certain standards. Adopting these systems is definitely going to help in reducing the bureaucracy in the process. Because using certain technologies such as AI and blockchain we can see compliance happening on the fly through automation, rather than being checked manually or via a certain bureaucratic process.

In terms of technology, the US is the most powerful nation on Earth. But when it comes to our payments industry, the US arguably can’t compare with Europe. Why is this the case?

Kathy Tomasofsky: In the US, each state has its own perspective on what’s the best way to serve the consumer. Also, in defense of the regulators, there are so many new kinds of companies and technologies they have to keep learning how to regulate properly. If you look at Bitcoin, for example, some states are regulating virtual currency and have specific laws on their books while others are covering it under general money transmission and some haven’t even taken a pass at it yet. Ultimately, we have lots of interesting products that are being developed and the regulators need to understand what they are, how they work, where is the money going, who holds it, and how to protect the consumers. Then there’s the fact that, at a big-tech level, both sides of the administration are sceptical of companies like Facebook and Google and what they will bring to the US.

Aamer Abedi: It’s not just scepticism at a government level, it’s the big banks too. I know Jamie Dimon, the CEO of JP Morgan Chase is very anti-Bitcoin. You can see these large investment banks being very anti-crypto, but I heard that some of these investment banks have already started preparing proposals for their own cryptocurrencies.

Facebook applied for a money transfer license in Spain a few years ago so you can now use WhatsApp to send money. You have companies like Apple and Google that have money transfer licenses and they’re operating under some sort of regulation. So, should our industry be worried?

Ibrahim Muhammad: The tech giants are definitely jumping into the remittance space and from what I see in the UK and the EU they will have a fight on their hands with the established players. Now, it depends on the approach the big techs take. They might acquire one of the large players and then enter into a partnership or it could be that they establish their own remittance identity since they have a huge customer base to draw from.

Kathy Tomasofsky: In the US I do think that, to some degree, we will see some of the smaller MTOs either disappear or merge with others due to the cost of compliance and licensing. But we’ve also seen in our market research that the selection by a consumer for a particular MTO is often done out of loyalty and is not just price based. I think we’ll see that with age, the younger consumer who’s grown up with technology will be that consumer who is more inclined to go to an Apple or Google Pay transmitter because they will feel a certain loyalty. Even here in the US, in traditional banking, we’re seeing that generation not having traditional bank accounts.

Farook Al-Jibouri: When it comes to the payments industry, what’s happening with the gigantic tech firms is very noticeable and not only in the US. If you look towards China, for example, WeChat predominantly controls the exchange of money over an instant message application and I do think that Facebook took the approach they did because of the success of WeChat. In the Middle East, we don’t have tech firms, but we do have telecom operators who know the technology, and those operators are actually very forward-thinking in terms of bringing those digital wallets and instant money transfers to their customers, particularly in parts of the region where they can get around regulations.

What do you think are the top compliance priorities in the post-pandemic age for any MSB?

Kathy Tomasofsky: In the post-pandemic age, we have seen such an increase here in the US in the remote work area. So security is a big compliance priority for us. We’ve seen specific states here in the US; New York and California, for example; where companies are required as part of their AML program to define what their security requirements are. We’ve seen an abundance of new phishing scams and email fraud here too, so that whole concept is important.

Ibrahim Muhammad: The top priority would be to keep things running steadily despite all the disruption. Because the pandemic has really given rise to something unprecedented. We all know has it has accelerated digital adoption. So, from a compliance perspective, I would say we need to keep pace and adapt to the latest technologies while ensuring that we cater to the needs of the people.

How do we build trust in the industry now, given where we are?

Farook Al-Jibouri: One of the things the ecosystem needs to be ready to build consistently in a post-pandemic world is communication. We all realise now that physical communication is not really there anymore. For example, here in the UAE, we’ve been working with financial companies located a few blocks from here that we’ve never met face-to-face. So, modern communication will be key in re-establishing that flow of data between the technology provider from one side and the receiver from the other side. Also, post-pandemic, you have to be agile with whatever challenges the financial system throws at your feet.

Ibrahim Muhammad: Trust and innovation shouldn’t be competing; they have to go hand-in-hand. Regulatory bodies need to understand what innovation actually brings to the table and how they can ensure that this innovation does not cause any sort of issues with the consumers or stakeholders. It has to be a balanced approach and they have to work in a very collaborative manner. Regulatory bodies need to be more aware of what’s happening in the innovation space, and they should really understand the needs and then set up the regulations accordingly.

Kathy Tomasofsky: I think you have to build trust and communication but I would also add education into the mix, and that goes back to my earlier point – the regulators have so much coming at them that they need someone to help facilitate it all. At MSBA, we represent the services of eighty different companies; from companies that sell prepaid cards to small MTOs. Being able to present such a diverse group to regulators helps to accelerate that communication and education, and helps to build trust.

Our thanks to Kathy, Ibrahim, and Farook for their words and their time.

RemitONE’s award-winning compliance platform is used and trusted by leading banks and money transfer operators (MTOs) all over the world. Our Compliance Rules Engine™ is one of the world’s first business rules-driven compliance platforms. You can simply input the rules set by your regulatory authority and the engine uses its sophisticated algorithm to enforce them.

What next?

Now that you’ve read our article we want to help you get the most out of it and deep dive into the trends and predictions shared.

Tap into our experts and schedule a free 30min consultation.