With the U.S. the top sender of international remittances, a London-based company believes now is the time to cross the Atlantic and do business here despite competition from established brands such as Western Union and Xoom.
WorldRemit earlier this week announced that its remittance services now are available to consumers in nine states and Washington, D.C., either online or through a mobile app. The company must obtain a money transmitter license to operate in each state and expects to secure all 50 required licences during the first quarter of 2015. Then it can really go about cashing in on the new opportunity developing in the U.S.
“The U.S. is really buzzing about financial services and mobile coming together at the moment and I think for WorldRemit to be a part of that evolving story is genuinely exciting,” Iain Mackenzie, the company’s head of communications, told Mobile Payments Today in an interview.
WorldRemit gives consumers the ability to send money abroad using a computer, smartphone or tablet. Recipients can have funds deposited in a traditional bank account or a mobile money account such as M-Pesa, or simply collect the cash at a participating bank or retailer. Bank account transfers can take one to three business days to clear, while mobile money deposits and cash pickups are available almost immediately. Consumers also have the ability to purchase and remit mobile airtime minutes.
WorldRemit fees depend on the transfer amount and destination. For example, a $100 transfer from the U.S. to Mexico would cost $3.99, but to send the same amount to Nigeria would cost $6.99. For the Mexican transaction, the company charges the same fee as Western Union, but for remittances to Nigeria, WorldRemit charges $3–$5 less than its larger competitor, depending on the sender’s funding source.
Ismail Ahmed, chief executive and founder of WorldRemit, started the company in 2010 as a result of his bad experiences sending money to relatives in Africa while he attended college in London, Mackenzie said. The company earlier this year became a London fintech success story when Accel Partners invested $40 million in a Series A funding round, which stands as one of the largest amounts in the European tech industry. Accel also was an early investor in Dropbox, Facebook and Spotify.
WorldRemit almost immediately used the money to expand its destination list to 15 countries in Latin America, and to help kick-start its efforts in the U.S., where it now has an office in Denver (right in Western Union’s backyard).
“I think of the things that attracted Accel to us is that we’re a very global service,” Mackenzie said. “It’s a general attitude in the company. We try to service as many markets as possible.”
WorldRemit’s services are now available to senders in 50 countries and recipients in 110 countries — significantly more than Xoom’s 30 destinations.
Mackenzie said WorldRemit will tout that global reach to differentiate itself from competitors. For example, Xoom users cannot send funds to any African country, while WorldRemit boasts Nigeria as one of its top recipient countries. Nigerian migrants in the U.S. sent some $6.1 billion in remittances to their home country in 2012, according to the World Bank.
But Xoom, Western Union, MoneyGram have an advantage over WorldRemit with an established customer base in the U.S. Still, the World Bank research suggests there should be enough customers to go around as this corner of the financial services industry continues to grow.
International migrants in the U.S. sent some $123.2 billion in remittances to their home countries in 2012. Worldwide, some $529 billion in remittances crisscrossed the globe that same year. India received the largest share of remittances at $69 billion. Some industry observers believe those figures are on the conservative side, though.
WorldRemit will attempt to establish its own customer base in the U.S. without a flashy marketing push, using vehicles such as Facebook ads to target potential users, Mackenzie said.
“About 10 years ago, you would’ve had to launch a massive marketing operation on a city by city basis,” he said. “[With Facebook] you can get an incredible head start going direct … with very personal messages to people anywhere in the world.
“It’s certainly something that’s worked in our favor and given us the ability to get potential users worldwide from our base in London.”
Mackenzie believes that the convenience provided by technology also can help WorldRemit win customers in an indirect way: Even where Western Union services are prominent, many migrants who send remittances must still vist a check cashing store where Western Union services are prominent.
“We’re not out there saying technology will do the job for us,” Mackenzie said. “We’re out there saying that it’s an incredible thing that you can be sitting on the bus in downtown Washington, D.C., and you decide to send mobile money to someone in the Phillipines using your smartphone.
“We think people will come to recognize that experience.”
And that experience is now available to iOS device-users. WorldRemit released an app on Thursday for the Apple operating system, which comes just a few weeks after its app for Android devices dropped on Google Play. Consumers worldwide have downloaded the company’s Android app more than10,000 times and have made it one of the top financial apps across nine countries, WorldRemit said in a press release.