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International money transfer costs set to drop

Kampala, Uganda | JULIUS BUSINGE | Catherine Wines is a Co-founder of World Remit – a global money transfer company. She spoke to The Independent’s Julius Businge about the trends in the international money transfer market.

How big is your business at the moment? 

WorldRemit processes more than one million transactions a month and has 3.5 million customers. Our business in Uganda is growing rapidly, driven by our partner network. We are proud to partner with 11 major Ugandan financial institutions including leading banks like Centenary Bank, Standard Chartered, and Stanbic Bank; mobile money services like MTN mobile money and Airtel money as well as a range of microfinance partners offering cash pick-up services. We have noticed that Ugandans are increasingly sending mobile-to-mobile remittances, which have grown by over 150% between October 2016 and October 2018 reflecting East Africa’s status at the top destination for mobile money remittances worldwide.

Of what importance was the financial inclusion week that you attended in Kampala recently to your business?

I co-founded WorldRemit in 2010, and over the last eight years we have disrupted an offline sector that has underserved millions of migrants across the globe by bringing it online. It is our vision to accelerate financial inclusion through our digital service.  Attending Kampala’s Financial Inclusion Week strengthens our resolve to accelerate inclusive finance for the benefit of our customers across the globe. One billion of the 1.7 billion unbanked people in the world already have access to a mobile phone – meaning they potentially have access to financial services for the very first time.  Mobile money is an expanding industry and is an extremely strategic part of our business with more than a third of our global transfers and just under half of our transfers to Africa going to mobile money services.

The average cost for senders of remittances stands at around 7% which is higher than the average 4% cost that is recommended by the G20 and the UN. When should customers expect the 4%? 

The global average cost for sending money is around 7.1%. To send to Sub-Saharan Africa, it is 9.4% according to the World Bank. Money transfer services like this were built for a different time – an offline world. At WorldRemit, we want to use our digital model to drive down these costs. When using the WorldRemit app or website to send US$200 to MTN or Airtel mobile wallets in Uganda it costs our customers US$2.99, which is 1.5% of the total transaction. This fee is significantly lower than the average cost. Competition and digital innovation will continue to bring down the costs for the benefit of the customer.

 Why should people trust your service?

Once you have made a money transfer, you can easily track exactly where your money has gone. You can call customer service or even more quickly take advantage of our new ‘track your transfer’ feature on the WorldRemit app. You have to simply tap on the ‘track your transfer’ on the transfer confirmation screen and then be taken to the transfer status screen to check the transfer status. Our system gives customers instant notifications on the status of their transactions.

What opportunities does digitisation of businesses offer to money transfer ventures like WorldRemit?

Whilst the US$600 billion (Shs2trilion) remittance market remains predominantly cash-based, this market is beginning to move online. By 2021 it is estimated that around 60% will be online. Increasing cellular subscriptions, the rise of mobile-to-mobile remittances and the convergence between social media and money transfers are the main factors driving the digitisation of the remittance space.

How does Uganda compare with other markets in this line of business?

Uganda is one of the top five remittance receiving countries in Africa for WorldRemit, in addition to Ghana, Nigeria and Kenya. The World Bank estimates that the country received over US$1.4billion in remittances in 2017, accounting for 5% of its GDP. This figure will continue to rise, and WorldRemit will play a key role in driving this growth. Top send countries with WorldRemit to Uganda include the UK, Sweden, Australia and the United States. Now having secured all 50 state licenses in the US, we expect remittances sent from the US to Uganda to continue accelerating. We are continually expanding our partner network to meet our goal of connecting 10 million people in emerging markets by 2020.

FILE PHOTO: Catherine Wines

What new offers should your customers expect in the near future?

WorldRemit has launched inter-African money transfers, enabling customers in Africa to send as well as receive money transfers to 145 markets to drive down the cost of remittances (an average cost of 9.4% for sending US$200, according to the World Bank) and advance regional integration. This new service will first launch in East Africa.

 What is the appropriate strategy for running a global business?

To build a global business, you must follow global trends. South-South trade, migration and remittances are on the rise, and regional integration within the global South is accelerating. We see this as a key strategic area of growth for our business. To capitalise on these trends we are launching receive countries as send countries.

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