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

Q&A with Industry Experts: Ibrahim Muhammad

Watch the latest videos in our ‘Q&A with Industry Experts’ series, featuring Ibrahim Muhammad, Payments Consultant at Finxplor.

In our interview, Ibrahim reviews the compliance and regulation requirements companies need in order to start, maintain and grow a Money Service Business (MSB).

What next?

Now that you’ve watched our video we want to help you get the most out of it and plan for the rest of 2022.

Tap into our experts and schedule a free consultation.

Video: Mobile Payments and Remittances – Understanding the impact and the opportunities

Continuing our recent discussions exploring the evolution of the remittance sector, RemitONE hosted their IPR EMEA event on 2-3 March 2022. The 90-minute panel session centred around the evolution of mobile payments and remittances and how they are going to impact the industry.

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Ababacar Seck, Managing Director of Africa, RemitONE

Panellists:

Sukhi Srivatsan, Head of Sales, AZA Finance
Edward Chidavarume, General Manager of Business Development, CashPesa
Muhammad M. Jagana, CEO, Kuringo
Clinton Leask, Business Development Lead, Pay@

Time Stamps

00:00 Introductions

06:32 Why does financial inclusion matter?

11:15 Who delivers financial services in the market at the moment?

14:35 What obstacles and legal infrastructure regulations are agents, MTOs and banks facing to catch up with mobile operators in Africa?

24:32 What roles do technology and mobile payments play in financial inclusion? What are the main challenges?

35:02 How will interoperability between Telcos benefit the end users?

42:22 What role do central banks and governments play in financial inclusion?

47:12 How can we improve the user experience and make it seamless for the unbanked population in Africa?

53:54 What progress should we expect to see in the years to come? What advancements need to happen?

Why does financial inclusion matter?

Sukhi: Financial inclusion matters today because it is our greater responsibility to ensure everyone has equal opportunity, whether you are a business or an individual, to access affordable and timely financial services and products. Especially if you look at the world of mobile payments and remittances. We need to empower communities, give them access to basic needs, like food and shelter, but also increase the economic output of the country and level the playing field between developed in frontier markets.

Muhammad: Financial inclusion is one of the fastest ways to change lives, by empowering the unbanked or the underbanked; especially women and young entrepreneurs who find it very challenging sometimes to have access to financial bank accounts. I think digitalisation of the financial system makes it much easier for people, especially in Africa. As we all know today, mobile phone penetration is huge in Africa, and the majority of people know how to use things like WhatsApp, so it makes it easier for them to use their phone and to be included in the financial system.

Who delivers financial services in the market at the moment?

Muhammad: Today, companies like Kuringo and other fintechs are expanding their reach to the unbanked and providing financial inclusion services, simply by offering them an app – they do not need to have a complicated banking system or anything else for them to be able to access the payment systems. But generally, it’s the fintech companies and mobile money operators that are disrupting this market.

Sukhi: I think one important point to highlight here is a provider like RemitONE is looking to bring everything together and do a one-to-many integration. So, through the RemitONE platform, an MTO could connect and push all the remittances with one integration, but in many markets. So, there are fintechs that are really growing in each of these separate markets, but the hardship and the obstacles in each market are so unique. So, I think providers like RemitONE really look at that aspect.

What obstacles and legal infrastructure regulations are agents, MTOs and banks facing to catch up with mobile operators in Africa?

Clinton: I think the biggest challenge is that it’s always difficult for underserved incumbents. So, whether it is mobile apps and mobile operators in Central Africa, or whether it is tier one banks, like we have in South Africa, changing things without regulation or unforeseen market changes is very difficult to do. The way compliance is shaping up these days, those burdens are growing. It is getting more onerous to comply with various things around AML, CFT, FATF, particularly for onboarding and monitoring end customers, especially as new entrants and smaller players catch up – you must comply with these from the get-go.

Muhammad: These are the challenges that can create obstacles because only the big guys are there already. They have a bigger balance sheet and a bigger team. But the good thing is, especially in Africa, there is a lot of ‘plug and play’ technology coming in. If you look at it in terms of, how do I partner with somebody who specializes in providing a platform, who specializes in providing tech, who specializes in something else, and you focus on the user experience, it will help you grow your footprint.

Edward: We’ve also seen the regulator shift into a more risk-based approach when it comes to KYC on customers, which now gives the fintech players the opportunity to come up with solutions that enable them to onboard customers easily with a risk-based approach. You can have API integrations for verifying documents that you get from the customers digitally which makes onboarding easier and cheaper.

What roles do technology and mobile payments play in financial inclusion? What are the main challenges?

Edward: We are now shifting from the brick-and-mortar. The brick-and-mortar banks were the ones dominating the financial services market. But now we’re looking at the mobile app and the way that it’s increasing in Africa – by 2025 it has been expected that at least 80% of the population in Africa will have mobile phones. So, now with the technology and the mobile penetration building within Sub-Saharan Africa, it becomes easier with technology for us to offer financial solutions to these markets where you can offer mobile money solutions.

Clinton: Mobile payments are the future. There is no other way to do this and to solve what needs to be done in Africa in terms of financial inclusion. The devices aren’t a problem anymore, unlike a few years ago. It is really about ensuring that the cost of data is being tackled effectively by regulators across all countries to promote the usage of mobile payments.

Sukhi: One example is if a fintech is starting out and wants to build a mobile app. Initially, there needs to be a focus on building one thing and doing it well and gaining user attraction. And then once that is underway, and you have that retention of users, it is important to start to diversify the products and services you offer. So, not just being able to receive money, and me being able to send it to you in a P2P manner, but also, can I do other things with this wallet? Can I go and can I buy a coffee? Can I go to the merchant? And can I pay for my scarf? So, lots of different things, lots of different use cases. But, the initial steps are to start small, build focus, and then eventually build up and add more products and services. So, you can diversify and create an entire user experience within your product and within your service.

How will interoperability between Telcos benefit the end users?

Muhammad: Today, if you do not have interoperability, a certain segment of society or a certain community will be left out. The cost of doing business or the cost of providing the last mile of the financial inclusion journey to them is expensive. So, to reduce the cost of transactions, interoperability is a must. Lowering costs of transactions, increasing volumes and expanding footprints can lead to people being able to pay for basic things in life that they need. It allows farmers to sell their produce, and they don’t have to travel miles to a bank to cash their cooperative checks. I think the interoperability we’ve seen in the UK, with the open banking system, has really allowed fintechs to explode, much more than any other European or US system. So, it is essential in Africa for governments to look at interoperability as a key to open access to finance, allowing the underbanked to have access to financial inclusion, and allowing the unbanked to come on board.

Edward: It is such a key thing for end consumers. We’ve seen it in South Africa, for the mobile operators it has created a boom in terms of customers because people are now able to upgrade and do things much easier. So, there is a strong benefit for interoperability, not only for the consumers but for the Telcos as well. They will see a rise in transactions for sure.

Sukhi: So, there is a lot of hesitation when it comes to this from many of the Telcos or the bigger players. They’re asking: is my business going to be taken away? Am I going to lose revenue over this? But thinking a bit longer term, you will get more user traction and it will create a better user experience. More importantly, it increases the frequency of a user using your product.

What role do central banks and governments play in financial inclusion?

Clinton: Financial inclusion is quite a broad term and means many things to many people and industries. But, central banks and governments are key in driving financial inclusion. It comes from clear and transparent regulation that needs to be put in place with participation from their side and the industry. So, whatever they are putting into place, they need to ensure firstly, that it is going to be cost-effective for everyone. Secondly, they have to drive competition and innovation. So, we must ensure that there is a level playing field, in terms of how people can tackle it and how industries can get involved. We touched on interoperability quite a bit. We know it goes hand-in-hand with reducing costs and accelerating competition, but also making the offering bigger for everyone.

Muhammad: In addition to this, the role central banks can play is to push for government payments to be digitalised. In the Gambia, they started talking about pensions and a scheme to be paid digitally. I think this will also help push financial inclusion and would allow people to be onboarded much easier.

How can we improve the user experience and make it seamless for the unbanked population in Africa?

Edward: When it comes to user experience, the first interaction that you have with the customer is onboarding. I believe when it comes to the information that the customer must share with a service provider, it is confidential information, and there must be some level of trust. So, the customer must feel comfortable sharing that information and there must be some form of transparency on the product that makes the client comfortable. Also, the experience must be as easy to use for the customer as possible.

Sukhi: You need to make onboarding seamless. Users should be able to start using the platform quickly, whether they are individuals or businesses. For that, you need to balance both security and compliance along with a positive user experience, which a lot of fintechs have done really well. Compliance also plays an important role. So, we cannot forget about what it means to stay compliant with the regulators, what it means to stay compliant with all the financial authority bodies, and how you incorporate that as you grow from one stage to the next as a company.

Ababacar: We know that our population maintains very specific services and all the players who experience growth have very simple to use platforms and, as a result, are successful. People use their mobile phones to connect to others and to sell and pay. Now we also see QR codes that some operators are offering and all of this is very easy to use.

What progress should we expect to see in the years to come? What advancements need to happen?

Sukhi: This is a very exciting question because we can talk about some very creative ways of what the future is going to look like. Obviously, there is a lot of scope and there is plenty of opportunity. But it is going to require a lot of collaboration as we just covered. How can governments help? How can central banks help? How can the regulator help? And how can the fintechs and everybody else work together in this ecosystem? I also think traditional digital currencies and cryptocurrencies are something we all need to be aware of – the adoption is already starting to happen. We see it in many of the markets, but we still have a long way to go. And I am personally very excited about the opportunity here.

Edward: I think the one to watch out for is what the central banks are going to do with the CBDC. The whole ambition is that they are the custodians of these individual wallets and there will be an impact downstream for everyone in terms of MTOs, mobile operators and banks because it is shortcutting everyone out of the flow. So, that will be an interesting one to see.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

What next?

Now that you’ve read our article we want to help you get the most out of it and plan for the rest of 2022.

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Video: Better Together – The money transfer ecosystem

Continuing our recent discussions exploring the evolution of the remittance sector, RemitONE hosted their IPR EMEA event on 2-3 March 2022. The 90-minute panel session centred around the money transfer ecosystem, partnerships and collaboration

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Selim Mohamdi, Business Development Manager, RemitONE

Panellists:

Wayne Gould, Head of Direct Sales and Financial Services, Trust Payments
Priscilla D. Friedman, COO, CrossTech
Muhammad M. Jagana, CEO, Kuringo

Time Stamps

00:00 Introductions

03:55 How significant is the remittance industry and who are the traditional and new players in the ecosystem?

07:55 How does partnering with payment gateways assist money transfer operations?

12:31 Can you provide some examples of other successful partnerships, and why they work?

16:57 What are the developing trends within our ecosystem and what is RaaS?

19:55 What do you see as the future of payment gateways? And what can we expect to see in this space?

27:40 How can MTOs leverage partnerships to expand their networks without necessarily having a presence in that country?

29:55 What are the critical questions to ask when evaluating a payment vendor or a technology partner?

How significant is the remittance industry and who are the traditional and new players in the ecosystem?

Priscilla: The remittance industry has transformed rapidly in the last five years, and is becoming very digital. With this new transformation and globalisation, specifically during the pandemic, many money remittance service providers must focus on digital remittances to enhance their business and provide faster transactions to clients, and agents must also provide services digitally to their clients.

But the industry has become much more than just remittances. With new services such as B2C fuelled by the gig economy and B2B fuelled by e-commerce, those markets are 10 to 20 times larger than remittances. Money transfer providers are using their technology and experience to grow into segments. The traditional players in the markets are MoneyGram and Western Union, and some of the new players are Wise, Azimo and Currency Direct. As I navigate this industry, I learn every day, that new FinTechs are coming into the market with new solutions involving money transfer, digital banks, and many more.

So many different types of partnerships exist in the remittance ecosystem. How does partnering with payment gateways assist money transfer operations?

Wayne: I think the first key thing here is that the payment gateway provider needs to be able to cover all of the payment touch points. For these merchants who did not have payment methods like a simple POS machine to collect payments, they really struggled. Now on the other side of this, we collaborate very well with our merchants, enabling them to collect payments not just face to face, but also helping them digitalise their entire platform.

In addition to all of this, the right payment partner would also allow you to process funds in different currencies, as well as settle them in a multi-currency account. This is a very crucial SLM, simply because with remittances, the competition is quite rife now and margins can be quite low. So, to partner with a payment gateway, who could provide not just the technology, but also a solution that is very cost-effective, is a match made in heaven.

Can you provide some examples of other successful partnerships, and why they work?

Muhammad: Partnership is how we built our entire company. We believe that today, with technology, you do not need to build, you just need to plug and play. What we have done over the last 12 months, as a start-up, was to focus on how to expand our footprint. How do we plug in technology easily? How do we go to market where we are not? It is either you raise a multibillion-dollar fund, or you go and partner with people. Today we have seen instances where technology has made it more accessible for customers and to deliver a vast distribution network. As a result, it is uncomplicated and straightforward because we don’t have to worry about building the technology; we partner with it.

What are the developing trends within our ecosystem and what is RaaS?

Priscilla: So, innovation is improving, as we have been discussing. Digitalisation, the rise in mobile-based platform channels and cross-border transactions, and the decrease in remittance transfer time and cost drives the growth of the market.

RaaS (Remittance as a Service) is a go-to solution for many MSBs, Fintechs and small businesses and is a solution that we recommend to clients in our consulting division. So, we have the solutions that are focused on technology providers, we have some that are focused on licensing and reporting, and we also have some that are providing banking as well. Right now, we are seeing a new trend where we see a one-stop solution. But one point that is important to say is that some clients may already have some part of the solution developed. So, it is good to partner with companies that can marginalise what your need is, instead of just giving everything.

What do you see as the future of payment gateways? And what can we expect to see in this space?

Wayne: Payment gateways will always form and will always be an integral part of card payments because that is what is bridging the gap between our MSBs and their customers who want to pay. In terms of keeping up with trends, crypto is something that is picking up a lot of pace in a lot of areas and blockchain-based pay-outs, are something that is being pioneered by Ripple now. These are things that we’ll be seeing for payment methods of the future when it comes to things like payouts. In the days to come, as businesses start to evolve, requirements start to evolve. It is very critical that payment gateway or technology providers within the payment space can adapt and rise to the demands of our customers and our merchants.

How can MTOs leverage partnerships to expand their networks without necessarily having a presence in that country?

Muhammad: What we have seen, especially with our experience over the last year, is that technology has brought down the cost of integration and there is a lot of interoperability. Now, people have realised that you do not have to be a big standalone and everybody seems to be building their own small, quiet part of the jigsaw puzzle. When there is somebody who has already built a network and aggregator, this is your way in. So, you can just plug into their platform. Our clients from Europe, for example, can easily send money from a wallet or mobile phone account to your bank account, and we can also easily be in about three or four countries just by switching on a plug somewhere.

What are the critical questions to ask when evaluating a payment vendor or a technology partner?

Wayne: I think the first one is do they understand your business? I think that’s very important because everyone wants to help everybody but help needs to come in the right way. To work with a payment provider that understands the ins and outs of the business is very, very crucial. And things like, what certification or who regulates them as an acquirer, or as a technology provider is also very important.

When it comes to things like the technology, and asking them the types of platforms they work with, for the pay-ins and pay-outs, as well as what kind of security features that come with the gateway. Does it offer fraud screening? If it does, what does it run? What does it check for? And so on. These are some questions that could be interesting for an MSB to ask their provider. Another feature, which is quite important, is how soon can they settle their funds? Obviously, with remittances, we understand that funds coming in is as important as funds going out. So quicker settlements are imperative when it comes to this industry.

Priscilla: One of the things that I always ask Fintechs or MSBs who are looking for solutions is how many transactions are you looking to transact to your start-up? Are you a midsize business? That is very important because different payment providers have different tools, and they are also looking for a specific target. In addition, from a payment provider view, one of the questions that I also ask is module customisation, do you have modules for different clients? How flexible are the payment provider solutions in providing modules that are specific to that client’s needs?

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

What next?

Now that you’ve read our article we want to help you get the most out of it and plan for the rest of 2022.

Tap into our experts and schedule a free consultation.

Video: Cryptocurrency as a Payment Method – The new growth potential for money service businesses

In our latest IPR Webinar, our expert partners from BP Ventures LLC joined RemitONE to explore the use of Cryptocurrency as a payment method in the money transfer industry, and how using the USDC can benefit money service businesses as they shift to a more digital way of transacting.

Webinar moderator:

Aamer Abedi, CMO, RemitONE

Panellists:

Jeffrey Phaneuf, Director, BP Ventures LLC
Anthony Barker, Director, BP Ventures LLC
Arif Saleem, CTO, RemitONE

Time Stamps

00:00 Introductions

14:24 What is the next big thing in the ecosystem for remittances?

17:29 How have you seen payment methods change over the years?

19:37 What is USDC? How does it compare to other USD-denominated stable coins?

23:29 Why use the USDC stable coin as a payment mechanism? 

28:27 What is the fear that MTOs may have using USDC? How do we address this?

31:31 How can we address the bank account issue?

34:45 What are the benefits of using USDC as a payment mechanism for the individual users?

37:54 What’s different from paying with a stable coin instead of traditional methods?

40:19 What is the cost to the MTOs?

43:10 How do we take advantage of the Moneygram USDC opportunity?

44:03 Risk profile of USDC vs. cash or card?

44:56 How can USDC as a payment mechanism decrease Chargeback rates & Fraud?

45:47 Margins are compressing for MSB’s, how does using USDC help increase revenues?

47:14 Are users going to use stable coins & can we settle it?

53:05 Next steps, how can we implement USDC as a payment mechanism leveraging RemitONE?

59:48 What procedures and policies need to be in place to enable USDC?

Please let us define the terms blockchain cryptocurrency stable coin and token.

Anthony: So, Blockchain is a word that you’ve probably heard in the news everywhere. It comes from Bitcoin which has a technological system where that verifies blocks of transactions (the blocks come every 10 minutes) and computers all over the world. Right now, in Bitcoin, there are over 5000 computers, called validators, that validate the transactions.

An example of a cryptocurrency is Bitcoin. Cryptocurrencies typically use blockchains. So, the ones you might have heard of might be Ripple, Stellar, Bitcoin and Ethereum. The difference between a stable coin and a token is that a stable coin is typically tied to the value of a currency. So, the one we’re talking about today is called USDC.

USDC is a stable coin issued by Circle Corporation, which is a US-regulated financial institution. It’s audited by third-party auditors. So, these are stable coins, they’re tied one to one. And in theory, you should be able to cash out $1 of USC for one US dollar.

Why Stellar? What, in your opinion, distinguishes Stellar from other blockchains?

Anthony: Stellar and Ripple would have been built up, really to focus on the international cross-border payments. At that point, Ripple was closed source; it was owned by one corporation and was really focused on promoting its XRP token, which was issued mostly to employees, founders and investors in Ripple. Then I compared it to stellar, all of the software was open-source from the beginning, and that seemed to me to be a better platform to build on where you can add additional value.

The volatility in the cryptocurrency markets, as evidenced by the fluctuating Bitcoin value graphs, can make a money service business, which obviously wants prices to be as stable as possible, extremely nervous. How does cryptocurrency as a payment method solution, that BP Ventures and RemitONE are proposing here, address this concern of volatility?

Anthony: Bitcoin and Ethereum are mostly used on these offshore contract-for-difference trading platforms, which are highly leveraged. So people are individual traders are trading at it at a 10 to one ratio or a 100 to one ratio, so you can have 100 bitcoins controlled with your one Bitcoin. So when the market collapses it has a tendency of going up very quickly and down very quickly now. But stable coins, because they’re tied to the US dollar or Euros, they are much better for remittance companies.

If you look at the bailouts that occurred in 2008, when major companies like Barclays and other major institutions went bankrupt, they had to have government intervention to save the whole ecosystem. If you look at cryptocurrency, to give them some benefit of the doubt, it’s still running. There are still transactions clearing, there’s still settlement, and the USSC dollar is still worth $1. So it is growing, and its funds are based on US Treasuries. So they’re not sitting their money in some risky offshore thing. All of their funds are in short-termed US Treasuries. So USDC is safe. With other Cryptos, there are different levels of risk.

What is the next big thing in the ecosystem for remittances?

Jeffrey: I think given the recent announcement of Moneygram’s cooperation with Stellar to offer USDC the cash in cash out, we believe that digital crypto blockchain powered payments is potentially the next big thing in the ecosystem. We’ve been involved in Stellar blockchain for a number of years. I think the fact that MoneyGram has confirmed their entry into this space, certainly confirms that using USDC as a payment mechanism on Stellar blockchain has some merits.

Arif: One of the big problems in remittances is the friction at different levels when you’re talking about international transfers. And any new technology, that can reduce that friction and reduce the cost associated with that friction, is definitely going to become more important as time goes along, especially if regulatory and other concerns can be addressed and delayed. So in that sense, it does appear as though one-to-one-backed stable coins offer a very friction-free international transfer.

USDC – what is it and how does it compare to other US-denominated stable coins like USDT and even CBDCs that aren’t mentioned?

Anthony: There are two main issuers in the United States as regulated institutions, one’s called Paxful, and the other one is called Circle. Its price equals one dollar. It hasn’t really fluctuated from that, in the past four years. It’s managed by something called the Circle Consortium, which is a group of companies that oversee the financial standards for stable coins and ensure there’s transparency around the one-to-one backing. That means for one USDC created there’s $1 held in reserves typically in a bank, or in US Treasuries. Now, USDC is available on multiple blockchains. And this is where it gets a little bit confusing for remittance companies. So there’s multiple blockchains around that are all competing, they’re vying to get adoption by users.

Why should the MSBs the money service businesses use the USDC stable coin as a payment mechanism?

Jeffrey: We believe that there are several compelling reasons why USDC as a payment mechanism is interesting for MSBs. One is that it’s fast, meaning that funds are received within 3 to 5 seconds, versus a payment that you would receive, let’s say, by a card processor that sends us the funds up to 15 seconds after the transaction was performed on the long side. So that’s one reason why we’re advocating USDC as a payment mechanism.

The second reason is that we think it’s better regarding decreasing both fraud and chargebacks. USDC payments are irreversible. And so again, my experience and depending on the MSB, we had significant chargebacks, we had fraud related to customers that would come back and were requesting a chargeback, which ultimately, and in some cases meant that we were out of the money at the end of the day. So this is where the USDC payment as a payment mechanism avoids this.

What are some of the fears the MTOs have the MSBs have about using USDC? And how do we address these fears?

Jeffrey: I think there are probably two particular items that obviously that come to mind. One is regulatory concerns when using cryptocurrency or stable coins. And that basically would be contingent on what jurisdiction the MSB is in and do they require any specific or additional licensing. The second item I would say is in the banking sphere. And MSBs normally are always susceptible to banking relations just in normal times. So certainly, bank relations are precious and MSBs may fear an impact if they offer USDC as a payment mechanism.

From an MSB perspective, as long as they meet the regulatory criteria, all they have to do is sign up with an entity like Circle to gain access to USDC and have this BP Ventures payment gateway enabled for their end-users?

Jeffrey: That’s right. To be able to assist those that have issues getting a USD Circle account, BP Ventures can assist at that stage. But for larger MSBs, yes, we would certainly recommend that they would just open the USD Circle accounts. And the fact that we’re going to have this integration directly into RemitONE means that there’s no setup fee, they’re off and running. And it should be really a compelling new payment mechanism to be able to offer MSBs customers.

What’s different from paying with a stable coin versus these traditional methods today?

Arif: So essentially, the payment process remains the same for the end-user. So, the same flow would happen, when using the BP Ventures gateway for collecting the USDC, it’s just that instead of providing your card details, you would instead be providing the wallet numbers from which the funds would be paid and the wallet to whom the funds are going to go. So, in that sense, the payment process is very similar, there’s not really a great deal of difference in terms of flexibility. One of the things about USDC tokens is that you don’t have to be in the US to use them. You don’t have to have a USD account to use USDC tokens – you could be in any country as long as it’s legal.

And what does using USDC mean, in terms of increasing revenues for our MSBs?

Jeffrey: With USDC, you get the funds immediately, you reduce your charge chargeback and fraud rates, meaning that you’re not at a loss in those areas. So, your revenues basically should go up due to the fact that the fee proposed is either for free or after 10,000. USDC is lower than cards means that your revenues again should go up, because hopefully the transaction is going to be more profitable.

And finally, are users going to use stable coins?

Anthony: So with BP, we have a certain approach that basically we think that an MSB should roll it out step by step. We’re pushing the acceptance of the USDC as the first step for MSBs. The second one is to actually as an MSB sell the USTC. So, customers can come online and actually buy the USDC and you can mark it up. Now the third step that MSBs may do in the future is actually settled with correspondence using USDC. We think that that’s going to happen in the future. We tried it previously, with tempo in the Philippines, we had it working to the Philippines, Nigeria, and Brazil. That worked. It’s just not quite there at the critical mass yet. So that’s why we’re really recommending it as a risk-based approach.

Jeffrey: We think there are a lot of compelling reasons to try it. And we’re going to try to make it from a technical side, as easy as possible as seamless as possible to incentivize people to use it, and to make the financial reason to use it as well, a compelling reason. So, we’re optimistic that it is a very viable way to make a payment.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Q&A with Industry Experts: Saiful Alom

Watch the latest videos in our ‘Q&A with Industry Experts’ series, featuring Saiful Alom, Technical Customer Success Manager.

What challenges do MTOs face when transitioning from brick and mortar to a digital business model?

In our first interview, Saiful offers insights into the challenges facing Money Transfer Operators in the industry when transitioning from brick and mortar to digital solutions.

How can MTOs streamline processes and eliminate errors when sending transactions via agents?

In the second interview, Saiful explores the challenges faced by MTOs when sending via agents.

How can banks streamline processes and eliminate errors when paying out transactions via agents?

In our final interview, Saiful reviews the challenges banks face when paying out via agents, especially with regard to multiple pay-out partners.

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Video: Compliance and AML for Money Transfers – Everything you need to know

Continuing our recent discussions exploring the evolution of the remittance sector, RemitONE hosted their IPR EMEA event on 2-3 March 2022. The 90-minute panel session centred around compliance and AML for the money transfer industry.

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Oussama Kseibati, Associate Sales Director, RemitONE

Panellists:

Richard Spink, Sales Director, GBG
Gabrielle O. Micheals, Senior Compliance Officer, Nairagram
Imad Chishti, Director of Payments & Compliance, Evantagesoft
Ibrahim Muhammad, Payments Consultant, Finxplor Consulting Services

What are the main challenges facing MTOs regarding compliance and regulation?

Gabrielle: Well, it has to be adaptability. We all understand that countries have different guides, let’s say in the UK you have FCA and in the US BSA. Sometimes when you have certain partnerships with other MTOs in this jurisdiction, it doesn’t keep up because there is that difference. The risk when it comes to businesses is knowing what you want to do. For instance, how can we work to create an effective program and how can we implement this program in a way where it protects us, our service, customers and clients. What I always would put in first is, why do you want to have a risk assessment on your operations. You need to know the first thing that you want to achieve, and that is to detect and prevent your system or your company from money launderers in any way as they always find ways of looking after our abilities, and then using that, to aid our own needs.

What is digital ID? Why is digital ID necessary? How does it impact KYC and AML?

Richard: It’s different now from what it will be. In practical terms, digital identity at the moment is an idea which has been delivered in a few countries, but it’s not global. We’re certainly not at that point where it’s making any difference whatsoever to AML and KYC processes. At the moment in terms of the landscape for digital ID, the processes are delivered in slightly different ways in different countries. Digital ID at the moment essentially means confirming proof of ID proof and address.

At GBG we ran a survey on this a year ago, in which we found for most people that means something like presenting a driving license or a passport. In 10 years we can expect the process to be the same but using a mobile phone number, and email address and a biometric and the biometric that was typically used in that process at the moment is a Face.

Particularly looking around AML Compliance, what are we seeing in Pakistan and the Middle East region?

Imad: We are seeing two major aspects that are creating an impact. One is that ever since this pandemic started, there is a drastic change in customer behaviour. From Pakistan’s perspective, the regulatory estimates that the formal and informal remittance channels are somewhere between $40 to $60 billion. This huge gap between the two channels is what MTOs, regulators and banks have been trying desperately for the past many years to somehow move informal remittances towards formal channels by offering incentives.

The second thing that we are seeing happening is that with the rise of fintech, banks are being challenged significantly. In our understanding MTOs ability to improvise and innovate is much faster than any conventional traditional bank possibly due to the kind of environment that banks are in. The key difference is that banks are compliance and risk driven. So, they will not act upon anything unless they have full assurance from their compliance and risk that everything is by book. As opposed to MTOs and fintechs’ who are very customer-driven.

What is being done to help the clients face literacy in terms of the technological side?

Imad: We feel that changing our customer behaviour goes hand in hand with the motivation, why would customers want to use something new or something different than what they have been using in the past. We have been using different incentives, some incentives are being offered in partnership with the government so there are a lot of lucrative subsidies that the government is providing not just to MTOs but also the customer.

Are E-wallets big in Asia or is that something that’s catching on?

Imad: Two things have revolutionized the financial industry. One is the rise of E-wallets. And the second is biometric verification. So now the whole population adult option is biometric verified, and there are roughly 45 million registered mobile accounts in Pakistan right now from a population of 120 million with an adult population of 70 to 80 million. You can see that compared with 15 or 16 million bank customers mobile wallet density is much wider.

How can regulators balance evoking trust for consumers whilst avoiding stiffening innovation in the industry?

Gabrielle: Well, regulators are awakening key innovations in the industry, and also carrying improvements. We can see some cases where a new regulation comes out it gives new ideas and birth to new technological innovation that comes forward. People are beginning to try different things.

Would you say stakeholders like the Central Bank in the remittance industry have also invested heavily into tech as MTOs and Fintechs have?

Gabrielle: I won’t say they have all adopted the whole culture of being completely Technological. If banks have I don’t think we’ll have many issues and it’s just a case of plugging your API. I think everybody it’s still in the process.

Oussama: I think that’s one thing I look forward to in the future, while things become more centralized and people become open to APIs, it would be just easier to connect everyone. And again, pass information through. So rather than you need to report to the authority every month, your system will simply push that information through overnight. It removes that human error or a part of it. Again, they only have access to that part of the system that they need the information on to see velocity checks and things like that. It’s a positive thing to at least hear that, particularly in your region they understand that technology is the way to go.

What are the individual different tools within IDV?

Richard: Identity verification Traditionally meant physically, or physically looking at a proof of ID in a proof of address document. Lots of businesses will still do that whole face-to-face verification. COVID has changed that landscape. If you think about IDV it’s the process of checking, providing proof of address, and digitising that has delivered two core pieces of technology. Confirming someone lives at their address has traditionally been the quickest way to run this process.

However, it only works if the source of data confirming that someone lives at their address is good, if the data isn’t any good there’s not much point in trying to use that data. All the new technology is around proving identity by using an identity document but also proven to look at as part of that process

Imad: We are developing some data-driven decision tools for making real-time AML decisions, and we are making some tools for real-time customer profiling aggregation of data. We are interestingly working on face verification, and voice biometrics, this is especially important for countries like Pakistan where the infrastructure is not good, the more you go outside urban areas infrastructure is dependent on telecom services.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Open Banking and Payment Innovation

One of the latest trends to hit the money transfer industry in the UK and Europe is Open Banking. Based on the use of Application Programming Interface (API) technology – and initiated by PSD2 in 2016, the Open Banking movement allows banks to make their customers’ financial data shareable and enables third parties to access real-time financial information.

As a trend considered by many to be revolutionary in the money transfer industry, it’s important to analyse the advantages of account-to-account payments; the opportunities Open Banking can hold for banks, third parties and consumers; and finally, the challenges facing the use of Open Banking technology.

Fundamentals of Open Banking

Put simply, Open Banking is a framework that allows institutions to share financial data safely and securely with consumers and third-parties. Using APIs, licensed third-parties can gather financial information, integrate this data or even push payments directly from customers’ bank accounts to third party systems including mobile apps and online portals

Account Information Service Providers (AISPs) can fetch read-only financial data which allows them to compile customers’ financial information, make recommendations, provide intuitive services and more. In comparison, Payment Initiation Service Providers (PISPs) can make direct bank transfers – or ‘Account to Account’ (A2A) payments – from bank accounts.

Key features

With recent surveys suggesting that over 86% of financial institutions are aiming to use open APIs to enable Open Banking in the near future [1], it’s no surprise that Open Banking offers a range of benefits to third-parties and consumers alike. For example, A2A payments have notable improvements to UX, including the removal of conversion barriers; these improvements result in a more efficient transaction journey, allowing consumers to make payments through their own banking app without the need for inputting card data.

Direct payments initiated by PISPs also have a higher transaction acceptance rate (95% in comparison to up to 14% failure rate for card transactions [2].

However, aside from these beneficial features, a key advantage of Open Banking for all involved is the reduced fees in comparison to card payments. A2A payments don’t involve transaction fees or operational costs, saving users up to 80% on fees in comparison to card payments [3].

Another benefit offered by Open Banking that seemed to excel in its rollout is that of security. With a significant increase in card fraud as a result of the rise in digital payments and remittances in recent years, the need for a more secure transaction experience was overdue. With Open Banking, this risk appears to have been reduced, with PSD2 and the UK’s Payment Services Regulations (PSRs) keeping Open Banking services in check.

Finally, similar to what we’ve seen with the rise of technology instruments such as E-wallets and Super Apps, Open Banking and Open-Source technology facilitate a wide range of new opportunities across not only the payments industry, but other verticals too. The collaboration between established banks, Fintech companies, third parties and software providers (such as RemitONE) encourages the integration of services to create new and improved propositions [4].

With new open-source technology and fintech enablers like RemitONE, consumers can have more control over their apps, and offer more services to their customers. Making use of RemitONE’s established Open Banking partners also allows Fintech start-ups, money transfer operators (MTOs) and banks to utilise new technologies and offer their customers a safer and better experience.

Considerations

Open Banking has certainly gained traction over recent years and the benefits seem to be providing innovative solutions for common issues in the payments and remittance industries. However, as with all developments, it’s important to analyse the challenges presented by the introduction of new technology for both the clients and consumers. For example, the main challenge facing Open Banking is security, particularly as A2A payments are more often being utilised by smaller Fintech companies [5].

Final Reflections

It’s clear to see that Open Banking plays host to a range of key benefits for banks, third parties and consumers alike in all industries. It can offer lower fees and enhanced user experience, paving the way for collaboration between traditional and modern players in the payments and remittance industries.

However, the challenge of implementing new technology continues to be a essential part of the digital revolution. In the coming years, it will undoubtably be of interest to see how the Open Banking framework, PSD2 and Open-Source technology will continue to evolve, and where it will take the Payments industry.

References

[1] https://www.finextra.com/blogposting/20777/four-ways-open-banking-can-benefit-financial-institutions

[2] https://recurly.com/blog/benchmarking-minimizing-credit-card-transaction-decline-rates/

[3] https://truelayer.com/openbanking/open-banking-payments-vs-other-payment-methods/

[4] https://www.openbanking.org.uk/wp-content/uploads/Open-Banking-A-Consumer-Perspective.pdf

[5] https://www.comparethecloud.net/articles/opportunities-challenges-open-banking/

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Video: The Rise of Digital Remittances – How to capitalise?

The panel consisted of experts from both RemitONE and our friends and partners in other global companies. In case you missed the discussion, here is a summary of the key insights.

Webinar moderator:

Oussama Kseibati, Associate Sales Director, RemitONE

Panellists:

Richard Arundel, Chief Evangelist & Co-Founder of Currencycloud
Assad Alawneh, Owner at Alawneh Exchange
Luke Flomo, CRO of Vyne Payments
Walter D’Cruz, CEO of Moneo Solutions

We have seen a drastic change in the payments industry in the last five to six years, especially in E-payments or wallet payments. In your view, what have been the main developments in the industry. Do you think these developments are to stay? And is the growth of digital payments sustainable post-COVID.

Richard: There’s a lot to unpack in that question. And you’re right, there’s been a load of change over the last five or six years in the payments industry. Firstly, we’ve seen huge advances in core technology. And, in particular, customer trust in this technology. We’ve seen, especially in the MTO and the remittance space, a rapid rise in digital-first MTOs, which has driven more established MTOs to respond by rapidly introducing some conditional initiation funding capabilities. Nearly a third of incumbent remittance companies have now become digital. And the pandemic has obviously accelerated the kind of these digital trends.

I think, on the technology side, more and more of these products and services delivered by technology and accessible by API’s so the menu that remittance companies can choose from has just gotten bigger and easier to read. In terms of mobile banking, as well, mobile apps and mobile banking downloads are going up 50% year on year, and people are preferring this digital method.

Another area where I’ve seen a huge change in development is customer expectation. There was already a rise pre-pandemic as a digital company, but you add on the impact of COVID and this heightened digital expectation and we’ve seen a huge shift to digital products. And it’s driven these traditionally non-digital companies to think much more digitally. So, there’s this new age of competition.

What new technological advances are now being utilized in the digital remittance industry, particularly in your area or space?

Assad: I’d like to talk about the main elements of the technology, which is considered API. I think that the development of the API’s makes significant changes to the industry and to how we connect with partners – we connect with other services and provide the services in a different way. API’s are now a key driver for FinTech and for the payments industry. Without the API’s we wouldn’t be able to provide digital payments or even mobile applications, or payments through the mobile application, sending and receiving the remittances through the API or through the mobile application.

I think as well, this will increase the volume of the transaction because I think FinTech companies, now, their main development they have is the API because they can connect to any other service providers in the industry. Through the API’s, we can even improve the customer journey with the service. So, we have been able to provide payments through them with the application because we are able to connect to payments because if you want to provide a mobile application, for example, to send my resume by application, you need a way to pay for the transaction through your bank account or via the debit card. So again, this is connected through the API’s, and this technology as well.

Where does open banking fit into all of this? How does it work? What are the benefits for money transfer businesses?

Luke: The UK open banking framework that’s been created has helped in many respects, and gained access to payments infrastructure. But I think one of the key problems is the fact that the banks today aren’t incentivized to open up their back end in terms of all that information and data, because they’ve spent years and years capturing it. And now essentially, PSD two, as stipulated, they need to now open up all that data for free. And I think one of the big points that we need to work with these organizations from a FinTech perspective across the board is how do we help them to monetize that data to a certain extent, and how do we then consume it in a really accessible way, that means that we can reduce friction for a consumer.

I think one interesting fact is that about 80% of the UK population have now got a smartphone and about 78% of adults are now digitally banked, and 14 million of them have got a digital-only bank account. So, there’s a real demand for this as a utilization of payment infrastructure. Many of you may be aware that open banking hit the 5 million consumer mark. So, consumers are utilizing this type of technology on a day-to-day basis. It’s now up to us in our costs across the globe to start allowing consumers to utilize this payment method in all the different use cases and scenarios.

How can employers leverage technology to expand their networks without necessarily having a presence in that country?

Richard: I think, firstly, if you’re looking at expanding your network, one way to do that is expanding the number of kinds of pay-out corridors or countries you can send money to, which ultimately expands your user base within the country that you’re working in. The second way you can do that is maybe looking at collections as well as payments, for example, we talked earlier about the current rise of e-payments or e-wallets. And thirdly, partnering with companies who can use technology to leverage their licenses and the compliance and their regulation, which enables you to expand on a global basis without necessarily having a presence in the country.

How can crypto and blockchain assist NGOs in facilitating cross border payments?

Walter: Firstly, I sat and watched the first panel today, the first session on digitalization and, you know, a lot of that crossed over to what we’ve been talking about today, which leads me to believe that actually it’s not about crypto and blockchain assisting MTOs, it’s about how they’re going to migrate into the digital world. And blockchain is just one technology platform that will support that move.

However, in today’s world, the cost of compliance is getting higher and higher. And that’s where I see crypto coming into it, in terms of reducing that cost of compliance. In actual fact, the cost of sending money or moving value is going to get cheaper and cheaper, yet the cost of compliance is going up. So that’s where blockchain can assist, it’s not so much in the transfer of value, because it’s a currency right? The value is whatever the market perceives to be. What can you include in that blockchain that will enable better compliance, better transparency, and therefore fewer people or humans touching it, therefore driving your costs up?

Oussama: I think one of the issues with Bitcoin was people are not using it as all it was built for – as a currency. Now it’s obviously more of an investment. And that’s where we see the volatility of it and of course, what’s happened. If crypto is pegged to a fiat currency, then absolutely. But then we get into the question of regulation; is there enough regulation? Is there going to be more regulation? Is it going to help people bypass some sanctions?

What are the critical questions when evaluating a payments vendor gateway provider that we should be asking?

Luke: It really depends on what you’re trying to achieve. In essence, I think most organizations are looking to acquire new consumers, retain existing consumers and make life as simple and as easy as possible for both the consumer and themselves in terms of working practices and UX and UI. So, I think the key thing you should be thinking about or contemplating when looking at a payment gateway and acquiring a vendor or an alternative payment method is where am I operating? Where are my consumers based? And can that organization support me in those specific territories, either with local payment knowledge, insights, data, as well as connectivity? If you’re operating outside of the UK, there are other alternative payment methods to the likes of credit cards, debit cards, and e-wallets, and there are specifically wallets and payment methods in certain territories.

So we know that regulation is one of the biggest challenges in the industry, what new tech is out there to overcome these challenges? Specifically focusing on fraud as being one of the biggest challenges.

Assad: I think for the regulator how do you identify the customer, and if you go back to the rational way where the customer will come to you and present his ID and you can see him in front of you face-to-face, and then you can know this customer is the one dealing with you. And when it comes to digital payments and online payments you have to identify the customer digitally. In order to identify your customer online and have the data available, you can verify the ID verification, you can do it online.

Now, we can do video conferencing, and you can do even voice authentication in order to identify your customer. There are also companies providing the service – again, without the API’s, you will not be able to do this online verification and online customer KYC. Regarding fraud detection, I know they’ve been using big data optimized to analyze the fraud as well. I think artificial intelligence as well as is being used to identify fraud just from legitimate transactions for legitimate customers as well. As I said the video conference can take a live selfie in order to make sure that this person is the same person. So, there’s also technology now helping us to identify customers and again, to be compliant with the regulators and to avoid fraud as well.

Oussama: In terms of regulation and transaction marginal what’s interesting is it depends on which region you’re in. But what also looks quite interesting are the steps that each region has been taking or will have not been taking. As an example, in Jordan, they don’t request any particular reports, they just request if there have been any suspicious activities. Whereas on the other hand, I know that the FCA in the UK do request a specific report and it has to be at those specific intervals. Furthermore, in Dubai, they’re coming up with lots of new regulations, but they again asked for specific reports in specific formats.

Additionally, with AusTrack, the regulatory body for Australia that we’ve built into our system, now produces the AusTrack report and posts it straight to their website. I think it’s quite good because they’ve made those APIs available, so they’re trying to make compliance a little bit more attainable. And again, getting that information directly from the MTO themselves by being able to post that. I just think it’s a much neater way and it opened up the market for people because if they’re abiding by these regulations, that’s fine. So that was what was supposed to happen with PSD two, everyone’s supposed to abide by PSD two, and the banking was supposed to open up for everyone, which unfortunately didn’t happen.

What does the future look like? Will cryptocurrencies replace major hard currencies in international payments?

Walter: I don’t know what the future looks like. No, it changes every moment. But certainly, in certain corridors, crypto or digital currencies will replace hard currencies for international payments or remittances. Whether it be central bank-issued digital currencies, or the likes of Bitcoin, or some specific tethered or stable coin, a token program, most definitely.

But, I think it’s inevitable. It’s going digital and you can’t stop that. I think the big challenge is it isn’t going to replace hard cash in the High Street, no chance. Certainly not in the developing countries where cash is still a big, big way of paying and exchanging goods and services. That’s not going to replace cash, but certainly in developed nations like Europe and the UK.

Richard: I think the underlying technology is really interesting. I also think it depends on time horizons. In the last few years, maybe crypto has been a solution looking for a problem. I think it’s about time now that certain cryptocurrencies or blockchain technology go more mainstream. And you’re going to see more applications for it. And I think there are definitely solutions out there that can use a blockchain-driven solution, whatever crypto or stable coin that might be.

For more information or to request a free consultation with one of our money transfer specialists, please email marketing@remitone.com

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Preguntas y respuestas con expertos de la industria: Selim Mohamdi

Vea la última serie de preguntas y respuestas con experto de la industria, Selim Mohamdi, Gerente de Desarrollo de Negocios, RemitONE.

En nuestra entrevista, Selim explora la relación entre la aceptación de los pagos móviles y lo que esto significa para las transferencias de dinero en efectivo, así como el papel de las criptomonedas y blockchain en el proceso de remesas.

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