Money Transfer Alliance Program

Being a sole, small money transfer operator is a tough challenge these days. Money Transfer Operators (or MTOs) are facing a difficult time in today’s highly competitive world of de novo digital players. Gone are the easy days of automatic income and customers walking in through the door.

In today’s world of derisking, competitive pricing, expensive compliance program and an ever evolving customers base that is slowly shifting from physical to the digital, small Money Transfer Operators are gasping for breath. 

It is truly survival of the fittest. 

Out of a survey I had personally conducted, when normalized, more than 80% of the respondents cited that they question if they will be in business in the next five years or not. It is worth mentioning that the survey was conducted on US Money Transfer Operators only.

I wrote a blog post a couple of years ago, It was called  12 Questions every Small & Medium Money Transfer company should ask themselves.

The questions are listed here for your benefit:

  1. How up to par (with the competition) is your online presence?
  2. How strong is your social media presence?
  3. How much money are you spending on online advertising to solicit clients?
  4. How much money are you spending on your front-end and back-end technology?
  5. How many beneficiary countries do you have access to?
  6. How many new US States are you considering applying for money transmitter license?
  7. Have you done any study on how many more clients you can get if you were licensed in other states? 
  8. Is your ability to expand restricted by lack of capital?
  9. Do you have the capital, resources and time to add new products?
  10. How much business are you slowly losing to new online players who are tech savvy and winning over your customers?
  11. Who is looking out for you and planning a strategy for success?
  12. How long before you go out of business?
  13. Have you given it thought? What will you do when you can no longer stay in business?

As the payments marketplaces have evolved, new players have sprung up, incumbents have adopted newer, more efficient methods of money transfer. Complacency has turned quite a few incumbents into dinosaurs – they just don’t know it yet.

If you’re an independent money services business in the United States, having money transmitter license(s) – Re-read through the questions again.

How do you plan on staying alive? How will you possibly compete?

There are deep pocket funded Fintechs who are disrupting the space for everyone. They don’t care about profits. Their KPIs are measured by the dollar value being processed and the number of clients they are onboarding.

Even some small banks are feeling the disruption wave effect.

In such a market, how does a Single-State licensed MSB or a small MTO possibly compete?

A few months ago, I wrote about the Uberization of Money Transfer. It was not just an idea. It was the culmination of a few years’ worth of work where I saw the same marginalized MTOs / MSBs putting up a brave face and trying to face the headwind of competition.

Airlines have collaborated (Star Alliance), Hotels have done it too (Oyo Rooms, LHW), very recently taxi services (Uber, Careem) and even the lone landlord that used to rent out rooms (AirBnB).

A common-denominator based approach provides combined-power of the network.

Plain and simple.

The mechanics are not complex. Disenfranchised MTOs/MSBs can revitalize themselves, their business and have a much greater outreach, by simply agreeing to a few basic association and settlement rules. It is really that simple. I’ve spent 100s of hours examining this problem.

Today, individual small and medium MSBs and MTOs can leverage their regional licensing and correspondent network and become a part of a larger alliance. 

If you are an independent money transfer business and would like to learn more, contact me and we can have an exploratory call.