Remittances are a huge market startups are entering, although most are stealth players such as South Africa Remitix. I’ve met their CCO, Ernst Janse van Rensburg, back in May 2014 in Lagos, Nigeria, during the Mobile West Africa conference.
Remittances and their high fees are an obvious target for startups in the emerging markets
The rise of international migration is a major trend. In 1990, 154 million people lived outside their home country, for 232 millions as of 2013 according to a UN report. As a consequence, remittances become a major source of revenue for many countries, rising from less than $200bn in 200 to $511bn as of 2013. For some countries, the money sent back home by the diaspora amount to almost half of the GDP. In the countries we have been travelling to in 2013-2014, remittance is always a hot topic, they account for 18% of Lebanon’s GDP, 5% in Nigeria, 3% in Kenya.
Numbers of international migrants by origin and destination, 1990-2013 (Source: UN)
And remittance is a hot market for startups because it has long been a protected area where only a few monopolist players could play with high fees. Western Union, for instance, takes between 6% and 12% of the remitted amount depending on the countries, and Africa pays the highest toll. With mobile technologies, new payment protocols and crypto-currencies, a lot of opportunities are opening.
Remitix: an affordable and convenient remittance app for the startup, the bank, and the user
Remitix operates in this field, with offices in South Africa, London, and main operations in Zimbabwe, Botswana, and the Philippines. Their software provides white label remittance solutions for banks, and, to a lesser extent, under their own brand.
Take the example of Aduloju, a Nigerian student living in the United Kingdom, and sending back some money to her mother. With Remitix, Aduloju sends a given amount of money. Her mother receives a SMS notification with a voucher worth the amount sent. She goes to First Bank, where a teller will create a dedicated wallet for her (a simplified bank account). Aduloju will pay a flat £5 fee and a 1 to 2% commission on the exchange rate. The profit on the transaction is shares 50/50 between Remitix and First Bank. Aduloju manages everything with an app, which avoids her to carry cash and to wait long queues on evenings or week-ends as it is the case in every big city where migrants remit a lot, from Singapore to London.
What Remitix also adds on top of the payment service is an integrated anti-fraud system compliant with KYU (know your customer) criterias. All the banking data entered into the app at the beginning of the process is matched against the same information in a database of utility bills, bank statements, and even social media graphs and IP addresses. The objective is to avoid money-laundering behaviours.
To add a few statistics and without giving away too much, Ernst boats that “our payments to Zimbabwe are 3% of their GDP”, and their operations in other African countries can be counted by the thousands. Remitix employs about 150 people in Cape Town, 60 in Pretoria, and slightly less than a hundred in their key markets in Africa and Asia.
You can check out two brands using Remitix in white label. Mukuru is the first one, with operations in South Africa, Kenya, Tanzania, Malawi and Zambia. LBC is another service powered by Remitix operating in the Philippines.
You can find back our BRICS startups series here, with amazing stories from Brazil, Russia, India, China and South Africa
More on Startups vs. Remittances:
- Our wrap-up of Afrikoin conference panel on how Bitcoins disrupt the remittance market
- Bitcoins and the Unbanked, another Afrikoin panel summarized here