This is a guest post by Sanjay Dhawan, Vice President of Finance at EnStream / Zoompass.
I was recently asked to speak at the NETIP Conference about the topic of “How might mobile international money remittances benefit the developing world?”
The answer is complicated, but it all boils down to one simple fact: By reducing the friction (cost) of peer to peer money flows from the developed world to the developing world we can significantly impact lives around the globe. Consider the following:
International money remittance services are a significant factor in funding people in developing countries – mainly through migrant workers or immigrant families the developed world.
- Represent up to 30% of the GDP of some developing countries
- Represent approximately US$674B globally through formal and informal channels
- Certain Canadian govt studies put estimates of the Canadian market at up to $20 Billion – that would make Canada the largest per capita remitter in the world
The typical profile of the recipients of these funds tends to be:
- Female
- Low-income
- No bank account
The current system of location based international money remittance services are:
- Expensive (fees can range from 10% to over 25%)
- Inconvenient for many recipients (short hours, urban locations)
- Security risk – carrying around large amounts of cash with no place to put the funds such as a bank account, and only being able to do cash transactions
One issue is that international money transfer networks may be used for money laundering and terrorist financing activities. Governments around the world need to co-operate with technology and network providers to form frameworks to mitigate such activities
International money remittances via mobile money transfer would solve these issues:
- Fees – Current models are in the 3% to 5% range
- Higher penetration of mobile phones than bank accounts
- Safer and more convenient way to transmit money for the remitter and the recipient
- Potential to reduce grey-market funding
- Additional potential benefit of better foreign exchange fees through formal rather than grey-market channels
A reduction of 10% in average money remittance fees by using mobile money transfer technology could put an additional $65B in the directly in the hands of people in developing nations in a safe and effective manner.
To be clear, we’re not announcing a partnership or plans to open up Zoompass to international money remittances. But it is on our radar and we think that we have a role to play working with other companies, services, and governments both domestic and international to reduce the impediments to money flows around the world.
But tell us:
Are you interested in sending money internationally using Zoompass on your mobile phone? How much? And to where? Let us know – we’d really like your feedback on this. Comment here or send an email to support@zoompass.com.
Thanks,
Sanjay Dhawan – VP Finance, EnStream / Zoompass
