Page 38 - State-of-the-Industry-2013

State OF the induStry 2013

TexT BOx 9
innovations anD new business moDels for
international remittances*

At GSMA 2013 NFC and Mobile Money Summit, MMU invited Marius Dano from Bics, Gregg Marshall from Western Union, Eric Barbier
from TransferTo, Jerry Ejikeme from Sochitel and Daniel Aranda from Ripple Labs to discuss innovations and new business models
in the area of international remittances. The session was moderated by Andria Thomas from Dalberg Global Development Advisors.
This article highlights some of the key points discussed on stage.

Developing countries received over $400 billion in remittances in 2012 according to a World Bank report. In these markets, using
mobile money for international transfers represents a tremendous opportunity that would beneft both customers by making trans-
fers quicker and more convenient, and mobile money providers by creating a new source of funds for mobile wallets. However, while
the number of deployments has increased from 8 to 32 over the past 3 years, transaction volumes remain low and Andria explained
that a number of challenges have slowed down progress in this area.

Western Union and Bics’s HomeSend are the two major hubs, connecting 70% of the mobile money deployments that support
international remittances. When Gregg Marshall and Marius Dano were asked to share their thoughts on what would be required for
international remittances over mobile money to take of, they mentioned four critical factors:
• The need for a critical mass of active mobile money users in receiving countries;
• Greater customer acceptance on the sending side;

• The importance of interoperability to allow transfers between diferent types of accounts
(bank accounts, mobile money accounts, etc);

• The need for more enabling regulatory frameworks.

IN RECEIVING COUNTRIES, A LARGER CRITICAL MASS OF ACTIVE MOBILE MONEy USERS IS NEEDED

One of the lessons that Gregg Marshall has learned working for Western Union Digital is that international remittances over mobile
money won’t take of until there is a critical mass of active mobile money users in receiving markets.

Indeed, active mobile money users very quickly realize the beneft of using their mobile wallet to receive money from abroad. How-
ever, international remittance does not seem to be an attractive enough proposition for non-mobile money users to open a mobile
wallet. In this context, a larger number of mobile money users is needed in receiving countries for international remittances to be
successful over mobile money.

DEVELOPING CUSTOMER ACCEPTANCE IN SENDING COUNTRIES IS CRITICAL

We hear a lot about how difcult it is to raise awareness and to educate customers on using mobile for money transfers in develop-
ing countries. However, it is just as challenging to develop customer acceptance in sending countries, and we know that it is the
sender rather than the recipient of a remittance who decides which channel to use.

To address this challenge, it is important to focus on the senders – typically economic immigrants -, trying to understand who they
are and using distribution and marketing models they are comfortable with is critical. Partnering with MVNOs in sending countries is
another way of solving the acceptance problem. In Europe for example, MVNOs’ customer bases are composed mostly of migrants
who regularly send money home. MVNOs also have large distribution networks in sending countries and are particularly strong in
the areas where migrants live. Some partnerships are already in place, for example between Bics, MTN and Lycamobile on the UK-
Ghana remittance corridor.

However, international remittance to a mobile money wallet was not the only model discussed. Both Sochitel and TransferTo found
that by replicating a user experience that senders are usually familiar with, sending airtime, the need for customer education was
reduced. International airtime top-ups appear to be a complement rather than a substitute to international money transfers, and it is

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