If you’re a fintech startup planning to venture into the online money transfer (remittance) service and seeking a cost-effective solution to facilitate your launch, you’ve come to the right place. We present three options for fintech startups like yours who wish to pursue the “as-a-service” route instead of acquiring their own licenses at this stage.
Please refer to the table provided below for a comprehensive overview of these options.
| Solution Tiers: | Tier 1: Banking as a Service (or Baas) | Tier 2: Remittance as a Service (or RaaS) | Tier 3: New License for Remittances |
| Summary: | Banking as a Service (BaaS) allows B2B, B2C, and P2P transactions, including card issuance. | Remittance as a Service (RaaS) that allows P2P transactions only. | New License for Remittances. Services not fully developed. Principal License Holder (PLH) seeks a partner to launch the service together. |
| Qualification Criteria | Well funded. Domain knowledge. Industry incumbents are preferred at the helm of affairs. | Decently funded. Domain knowledge. Prefer a solid marketing, customer support, and tech team. | Decently funded. Domain knowledge is not as strong as a requirement as it is with the others. Solid sales, growth marketing, and technology team are required. |
| Will they sign-up with Startups? | Rarely. Only well-funded ones. Guaranteed MTR required. | Yes. You should be able to demonstrate a minimum capital balance. Guaranteed MTR is usually required. | Yes. You should be able to demonstrate a minimum capital balance. MTR is not usually required. |
| What is it that they don’t like? | Short contracts. Inadequate funding. Risk appetite for certain countries and transaction types is low. | Multiple licensing commingled in one offering, i.e. your own license and their license mingled in one single offering. | Short-term commitments. Not well funded. Limited knowledge of the industry. |
| What can we do with this solution? | Use it as a white-label service offering. | Use it as a white-label service offering. | Build Your Own Service. |
| What can we not do with this solution? | Modify the transaction set, product offering, additional countries and/or products or services not supported by the PLH. | Modify the transaction set, product offering, additional countries and/or products or services not supported by the PLH. Start transacting with high-risk countries. | Modify the transaction set, product offering, additional countries and/or products or services not supported by the PLH. Start transacting with high-risk countries. |
| Do we need a dedicated CCO/MLRO? | No | No, (unless you become an Authorized Delegate) | No, (unless you become an Authorized Delegate) |
| How much money do we need to show? | Need to demonstrate $, €, or £ 1 Million or more in available financials. | Need to demonstrate $, €, or £ 250,000 or more in available financials. | Need to demonstrate $, €, or £ 100,000 or more in available financials. |
| Its everything ready in this solution? | Yes. Turn-key, also API is provided for, so you can build on top of it. | No. API is provided for. You must build on top. | No. You are building the solution along with the PLH. |
| What do we need to bring to the table? | Pre-funding Money. Operational Expenses proof. Business Plan. The allied support structure (Customer Support, Marketing, Back-Office, etc.) | Pre-funding Money. Operations Expenses proof. Customer Service. Sales & Marketing Plan. | Pre-funding Money. Correspondent Tie-Up Funds. Technology Stack. Sales & Marketing Plan. |
| Is an API provided for? | Yes. | Yes. | Yes/No. You may have to build the infrastructure to publish the API for consumption. |
| Do we touch the funds (if we are not an Authorized Delegate)? | No. | No. | No. |
| Can we be an Authorized Delegate (Agent)? | Possible, but very rarely approved. | Yes, possible. Need to present a strong case. | Yes, possible only after a couple of months of working together. Need to present a strong case. |
| Time it takes to go live? | 8-12 weeks. | 6-10 weeks. | 6-16 weeks. |
| For startups who are venturing in the money transfer areas for the 1st time, in order of priority (#1 being the highest), what should our approach be? | #3 | #2 | #1 |
| How long does it take to find a provider who will accept (sponsor) us? | About 3-6 weeks. | About 2-4 weeks. | About 2-4 weeks. |
| Are we responsible for Compliance, Reporting, Transaction Monitoring, etc? | No, unless you are an Authorized Delegate. | No, unless you are an Authorized Delegate. | No, unless you are an Authorized Delegate. |
| In the case of Europe or the US, is the license passported to other Countries / States? | Usually, Yes. | Usually, Yes. Some countries (or states) might be missing. Inquire within. | Usually, Yes, but assume minimal passporting. Most countries (or states) might be missing. Inquire within. |
| Do we need to have a Transaction Monitoring (& Management) System? | No, only required if you are an Authorized Delegate. | No, only required if you are an Authorized Delegate. | No, only required if you are an Authorized Delegate. |
| Do we need any AML Software? | No, only required if you are an Authorized Delegate. | No, only required if you are an Authorized Delegate. | No, only required if you are an Authorized Delegate. |
| How can I find out the commercials (term sheet). | How can I find out the commercials (term sheet)? | The commercial fee are usually published on our website. Inquire within. | Completely bespoke as per the discussion with the PLH. |
| How much is our one-time application fee (non-refundable)? | For the US: US$ 3,500 For the EU: € 3,500 For the UK: £ 3,000 | For the US: US$ 2,500 For the EU: € 2,500 For the UK: £ 2,500 | For the US: US$ 13,500 For the EU: € 1,500 For the UK: £ 2,000 |
| How much is our one-time professional referral fee (success based, 100% refundable)? | For the US: US$ 28,000 For the EU: € 28,000 For the UK: £ 28,000 | For the US: US$ 14,000 For the EU: € 18,000 For the UK: £ 18,000 | For the US: US$ 9,500 For the EU: € 9,500 For the UK: £ 9,000 |
—
This page was last updated on June 7, 2023.
–