JIT Remittances…

My left eye twitched. With my left hand on the phone and right hand reaching for my wallet in my back pocket, I picked the mobile on the first ring. Any happily married man would agreeably do the same when the dial screen flashes her name.

It was a little unusual for an early morning call at 0915. I heard my wife sobbing and I had to pull out of my Monday morning team meeting to attend to the emergency. Her favorite maid’s son, a long haul driver had met an accident 1400 miles away from me. The savior had contacted our maid explaining how an immediate operation was deemed by the local hospital as necessary. In our part of the world where the public medical care system fails to reach the mark, such emergencies usually have to be dealt with-in the personal eco-system. This situation required me to transfer the basic operating expense to a town, the existence of which needed me to Google it. Bigger, however, was the challenge of remitting funds to this far off place, even though I work in the payments realm and know of many options.

Pakistan is completing 10 years of being introduced to the agent banking/branchless banking deployments. The country is the home to some of the world’s best and fastest growing mobile money deployments. With 350,000+ agents covering the larger geo footprint of Pakistan (881,913 km2), the target of increasing and diversifying financial access points of agents, atm, pos and branches form the core of the National financial inclusion strategy. The banking agent network in aggregate performs more than 5 million P2P remittances per month with an average transaction size of ~$40. A Recent change in regulatory policy allows the cash out limit to be increased to ~$450 from the agent network. This opportunity can be seized but not without the challenge of having physical cash availability at all times.

Agent network seemed to be an obvious choice but I could not risk the availability of the cash at the location especially at 0915 when my beneficiary had to collect it in real time. It was not a case of financial access point but a challenge of making the cash available at the payout location. The same challenge has haunted the utilization of banking agents for cash payout of home remittances, where the average transaction size is about $350.

With the “war against cash’, there is a debate on the longevity of the ATM business. The fact is that to date; ATMs have proved the cheapest 24×7 location for cash availability. Their deployments will slow down but we are going to have at least 4.3 Million ATMs globally by 2020. The banks are constantly looking at improving the utilization of these deployed ATM assets. Research shows improvement in operational cost per ATM i.e. cost per transaction and cost per replenishment when the number of transactions increase. A further improvement when these assets generate revenue from off-us transactions.

Before I talk about the famous cheque and bank relationship, I have a confession to make. Although I evangelize digital payments and make most of my payments digitally, I love the simplistic approach of a cheque and have butterflies in the stomach to think that they will soon be gone. When I saw, billionaire industrialist Linus Larrabee (Humphrey Bogart) baiting Chauffeur’s daughter, Sabrina Fairchild (Audrey Hepburn) into leaving his playboy younger brother in my favorite classic ‘Sabrina’, I was introduced to cheques. A ‘bearer cheque’ is encashable to the amount written at the bank branch, after the writer’s signature are verified. The cashier typically gets the bearer to sign at the back of the cheque and keep a copy of his photo id for record.

DigiCheQ our latest verified money transfer service closely emulates the experience. It leverages the magic of Mobile Connect (see my previous blog post ) and allows money transfer from sender to a verified Mobile number instead of an account number. The sender is able to create a digital cheque from his internet/mobile banking and host the cheque in the cloud (DigiCheQ platform hosted on #Azure cloud). The receiver is notified of the issuance with a one-time password which can be input at a payout ATM along with a Citizen ID number to withdraw cash. Mobile Connect pairs the CitizenId and the receiver’s mobile for verification, at the time of withdrawal (in real-time). This addresses the challenges of fraud and AML reverberating in the agent banking cash-outs regime.

The fast growing 3G/4G mobile network is addressing the network challenge associated with ATM deployments beyond the metro towns. This has enabled Pakistan to commission the highest ATM in the world at 15,397 ft by National Bank of Pakistan. With a far reaching ATM network, high uptime, 24×7 operations and cash availability, the utilization of DigiCheQ is deemed to grow both for the payout of domestic and international remittances.

Since the past few years, I am seeing the mobile wallet teams in MFS providers focusing their innovation efforts to build adoption of mobile wallets both in the banked and unbanked world. The premise is simple, facilitate the banked customers to pay their domestic household workers and the recipients can transfer the money back home. Being a part of the same network is cheaper but the possibility of exchange between account-wallets or wallet-account is also enabled via IBFT (see earlier blogpost). When we envisaged DigiCheQ, we targeted the missing case of Connecting Banked to the Unbanked. Why are those who are yet to join the network be excluded from the digital transaction infrastructure? The power of DigiCheQ allows you to encash the cheque at an ATM with only your mobile number. Would you have a mobile wallet/account you also have the option of redeeming your DigiCheQ into your account, the option and more that I will be the subject of my next blog.

Domestic remittances using the agent network is typically a 3-5% fee income model for the mobile money provider where the revenues are split between the agents and the MM provider in a 60-40 split favoring the agents. Banks acting as Issuers and/or Acquirers in the DigiCheQ infrastructure will have the ability to utilize the ATM/CDM infrastructure for earning upto 0.5-1% from the fee income on DigiCheQ origination and withdrawal.

Mobile Connect is live with 52 mobile operators in 29 countries reaching East & South Asia, APAC, Europe, MENA and Latam. With our early deployments live with China Mobile, other operators including Mobilink, Telenor adoption is in progress. DigiCheQ is now expanding to integrate the Mobile Connect APIs of global operators to enable JIT remittances i.e. Just In time Remittances for all those who were expecting a political post!

Would you need to understand a detailed commercial case as an Issuer, Acquirer or Telecom Operator and want to join the DigiCheQ network, please reach me at [email protected] or WhatsApp +923008235898.

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