FAQs for Remittance-as-a-Service
These are the most commonly asked questions on the Remittance-as-a-Service offering.
How long does it take to be up and running?
The always is, it depends. But on an average you can be up and running in 4-5 weeks if all of your information, technology and monetary factors are ready. Most clients are up and running in 6-8 weeks.
Is there a discount for startups?
The principal license holders are in this for business. The prices provided to you are approximate. In some instances, depending on your business plan, etc. you might get a discount. But all this is determined after you’ve gone through the evaluation, and the service provider has had a chance to talk to you. Haggling in this business, especially those who are constantly asking for discounts, is looked down upon.
For a “freshly founded” startup, does that mean that we can only qualify for the max rate and work our way down to the Average or Low? If not, Is there any information that can be shared in the initial stages to help determine what we can qualify for?
You get down to the average if you are doing between $1MM to $5MM per month. Anything above that, and you would qualify for the lowest rate. But all this depends on your 90 days consistent output and the provider that works with you. That is pretty much the only qualification criteria. As a start up you will not qualify for average, or low.
Do we get the interbank (mid-market rate)?
The solution provider does NOT care if the rate is Mid-Market, etc. as they make their money on the volume. You have to understand two possible scenarios, and for each scenario, remember, the FX rate is quoted by the Beneficiary country’s bank. (a) The Solution provider may already have an established relationship with a correspondent Money Transfer Operator or a Bank in the Beneficiary country. Whatever rate they quote, would be provided to you. There is no vagueness in this. It is 100% transparent. You, may or may-not like this rate. (b) You may want the solution provider to work with an alternative provider, with whom the solution provider may not have a relationship with. Once the relationship is established (between 1-3 months), then you can benefit from the rate. Mid-market rate or the interbank rate is in many cases usually not available, as for that to happen, transaction volume needs to be high. Startups rarely qualify for something like that. Think daily transaction volume starting at $25 Million or higher. There is no way to assess that pre-hand. However, once you are introduced to a provider, then you can assess these rates & numbers to your liking.
Why do I have to put up the pre-funding money?
Pre-funding money is always put up by the entity that is generating (or originating) the transaction. In this case, the solution provider is generating the transaction, but they are doing so, for you, on your behalf, as you want to be in this business. As that is the case, you will have to front the pre-funding money. No solution provider is going to put up their own capital for you to benefit from. If you were to get your own licenses, you would have to put up this money? So, same scenario here.
How will I compete with others in the market?
Almost every solution provider that we work with, is cognizant of the market prices. It would be meaningless if the rates provided to you were not in line with what the market demands. The wholesale rate provided to you, are very price competitive. Enough for you to make money on top, whatever margin you wish to secure. There is nothing in the process that would make you sign up and only later you find out you are in a contract with really bad rates with which you cannot compete. The negotiation and rate transparency between you and the solution provider will be direct. It is up to you to determine if what the rates being provided to you, is something you would like to sign a contract on.
Do I have to use their technology? Can I not use my own?
You will have to use their API or web (if you don’t have a web service ready). Everything is provided for by the solution provider, so that they manage the compliance, payment processing & settlement, transaction management, ID/KYC, etc. You simply have to use their API and develop your UI/UX on top of it.
Who is responsible for anti-money laundering? Know your customer? compliance?
The solution provider is. That is the beauty of this setup. You are not legally responsible for any such issues like AML, CFT, PF, KYC, KYCC, CIP, Compliance. All the 3-letter acronyms you can throw at it, the service provider is responsible for it. You are not responsible for such areas.
Is an API provided for?
Yes, an API is provided for you to do your own development on. Your app will be powered by the service provider’s API.
How many beneficiary countries can I have?
First time RaaS customers are restricted to five countries. Later on, as they become more acclimatized to the market and the comfort level is attained, you can request more beneficiary countries to be added. There may/may-not be a charge for this, depending on your service provider?
How much commission would you charge me for finding me a service provider for this remittance-as-a-service?
You can see my rates here: Money Transfer Operator License Coverage Consulting Fees.
How much does the Remittance-as-a-Service (RaaS) cost?
The answer is, it depends. Here are broad ranges and the charges you would be expected to pay: Money Transmitter License Coverage Financials.
How much money would I need to start this RaaS business?
I cannot answer that. However, I can tell you that you would need to have approximately US$ 75,000 to enter into the business (this includes limited pre-funding), but does not include my consulting fees.