Pakistan is one of the largest markets for international
remittance and WorldRemit continues to focus on it by expanding its
operations. Following are the edited excerpts of a conversation with
Country Director, WorldRemit:
BR Research: What do remittance market players compete on –
do they compete on rates, speed, availability of outlets, security of
transfer, or other services
Today, the majority of the money transfer industry in Pakistan is
still ‘offline’ – through money transfer agents, friends or relatives or
through other third parties such as hawala. Similarly, a large portion
of remittances globally are sent offline in cash at high street agents,
who may not even be employees of the money transfer company.
For WorldRemit, I would say that what distinguishes us from other
players within the remittance space is the mission to support financial
inclusion by offering a variety of methods to receive money, with or
without a bank account.
For customers sending to Pakistan, where almost 80 percent of the
population do not have access to a transaction account, we offer bank
transfer, cash pickup, airtime top-up and mobile money. Mobile money
enables people to receive money directly to their mobile phones quickly,
easily and transparently.
Moreover, unlike other digital upstarts, we genuinely serve the whole
world. We operate across 6,500 corridors and 80 percent of our revenue
is generated outside the UK. We’re the leading sender of international
remittances to mobile money services with access to more than 150
million mobile money accounts worldwide.
Also, we bank on our cashless model on the sending side, which makes
us more secure, as it provides a digital footprint to adhere with global
compliance requirements. Pre-transaction, our systems analyses
countless data points looking for suspicious user behaviour and check
users against Know-Your-Customer databases. Our transactions leave a
digital audit trail for tracking unusual patterns, spotting potential
fraud and ensuring efficient data sourcing to fulfill regulatory
requirements.
What are the prospects of increasing remittances through
blockchain channel? Will this channel only divert formal remittance
from one channel to another or will it divert informal into formal?
In an industry which remains largely offline
with the use of informal channels, we want to use technology to digitise
the process and make it easier and cheaper for people to send and
receive money. When exploring new payment technologies such as
blockchain, our test is to see whether it will make sending money a
better experience for the customers.
Blockchain is a technology we will continue to watch; however, we
think mobile money is a more attractive solution for people looking to
switch from informal to formal channels. This is because mobile money
enables recipients to receive money without an internet connection or
bank account.
How can you bring remittance costs down in Pakistan? Which corridor offers the lowest cost?
According to the World Bank, the average global
cost of sending money to Pakistan is 5.38 percent. The top five most
expensive corridors are Singapore, Canada, Saudi Arabia, Norway and
finally Australia. Digital remittances can save both remittance senders
and receivers’ time and money as they cut out expensive third parties
such as couriers and traditional brick and mortar agents. The overall
global cost of remittances is 7 percent but on average, digital
remittances cost 4 percent.
Have you been approached by the SBP survey? What do you think about the survey?
The SBP survey is a fantastic initiative as it
has the potential to use feedback to improve financial services for the
Pakistani diasporas sending money back home. We are always exploring new
ways to make it easier for people to send money back home to their
loved ones.
What is your estimate of the informal remittance market
size in Pakistan – can you give a breakup of the estimated informal
remittance corridor-wise?
As informal remittances are unrecorded; it is difficult to estimate the volumes sent to Pakistan.
The World Bank estimates that remittances to Pakistan hit an all-time
high of over $20 billion in 2018, representing 7 percent of the
country’s GDP. Experts estimate that a high volume of these remittances
currently go through informal channels including friends, relatives or
other non-recorded sources such as hawala.
Do you have an estimate of average transaction size of formal remittance across the key corridors?
It varies but most of our customers globally
tend to send relatively small amounts to cover, for example, health and
school fees. They also rely on our service to get their money quickly
and securely to recipients often living in remote areas.
A typical customer sending to Pakistan tends to send more per
transaction than our average customer. However, those sending to mobile
money wallets through our partnership with JazzCash tend to send smaller
amounts but more frequently
Do you have an estimate of the average transaction size of informal remittance across the key corridors?
We do not have access to this data.
What is your assessment of PRI activities in terms of
arranging tie-ups, marketing activities, training the outgoing labour,
or awareness campaign?
PRI has played a significant role in increasing
formal remittances to Pakistan. This has enabled banks and MTOs to offer
lower-cost remittance solutions for customers, which is something we
support.
What do you think of Pakistan Banao Certificate?
Pakistan Banao Certificates provide an extremely
attractive investment opportunity for overseas Pakistanis. It will
enable the diasporas to invest in the country’s future, and it provides a
competitive return on investment. I believe that maintaining investor
confidence, transparency, security, simplified digital processes and
increasing customer awareness will be critical for the success of the
project.
What are the prospects of digital remittance? What’s the discussion on having a remittance index?
In just less than 20 years, the number of
migrants in the world – that is people living in countries other than
the one they were born in – has grown by almost 40 percent from 173
million to nearly 250 million. The money those migrants send home has
grown even faster, up by 85 percent in the past decade – that’s after
even allowing for a dip following the 2008 global economic crisis.
However, of the $700 billion sent every year, the majority are still
sent in cash, over the counter or at high street agents. Western Union
and MoneyGram – two of the biggest names in the industry – account for
less than 20 percent of market share, but a growing share is moving
online. As 50 percent of the world’s population now has access to the
internet, and with new users coming online every day, we anticipate that
the growth of digital remittances will accelerate going forward.
The money migrants send home has been growing exponentially. At this
rapid pace of growth, the industry is transforming with new players and
new technology constantly entering the market. We support any initiative
that facilitates greater transparency and a reliable source of
information, which might benefit the customer.
No comments:
Post a Comment