AML / KYC / CFT / CIP / Compliance
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 as 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.
Needless to say, if you are a licensed entity, then you are responsible for regulatory compliance.
Who does the ID verification? Do I have to hire a third-party company for this or it is included in the software?
The solution provider does and it is provided in the API.
Aside From the API only to be provided by PLH, are we required to integrate any form of KYC on our platform or apps hence the PLH is the one responsible for KYC?
The API itself would integrate and provide you with the necessary KYC mechanics. You do not need to integrate with any other else.
Who will be in charge of ID verification process or KYC process? Will it be myself or someone else?
The principal license holder (i.e. the solution provider) is responsible for it. Not you. The API has the KYC mechanics built into it.
Commission / Fees / Pricing / FX Rate
Why do the rates vary for the Starter package versus the Enterprise package?
The reason is simple. Economies of scale. the more business you provide, the lower (or better) the rate you get. This is not only true for the money transfer business but is true for any other business you might venture into. As such, the three packages for Remittance-as-a-Service that we have developed, have a slight (albeit noticeable) difference in rates. The lower the barrier to entry, the rates are high. When you provide more business to the solution provider and pay a higher monthly charge/commitment, then the rates are reduced for you.
Do we get the interbank (mid-market rate)?
This depends vastly. In many cases, the Principal License Holder (PLH) is doing settlement with you in US Dollars only with their Correspondent tie-up. That is to say, they are NOT providing the FX rate.
How does this work? Well there are three possible solutions to it
(a). The customer, i.e. the RaaS Client, i.e. you, are not licensed in any part of the world and will be dependent on the PLH’s arrangement that they have for payouts in the various countries you have opted for. In this case, the PLH’s correspondent partner for payout will set the FX rate, and you would have to agree on this (needless to say, you can add your margin on top when you quote to your clients). As the PLH is doing an end-to-end settlement, the rate would be very transparent to you and this rate can vary. Depending on the corridor, the rate could be better than the interbank or mid-market rate, or not.
In most cases the PLH does not have a say in the rate and they honestly do not care if the rate is Mid-Market, etc. as they make their money on the volume.
(b). In the second scenario, the RaaS Client, i.e. 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. This is not always the written rule, your mileage may vary depending on the corridor and the payout partner you work with.
(c). In the last scenario, as a RaaS client, you are licensed and hence you are providing the FX rate to the PLH. In this case, the rate is 100% transparent to you and the FX gain is yours and yours alone to keep. The PLH has already charged you either on the card processing or the ACH for your transaction.
What is the current ongoing rate of the dollar you offer for Euro (CFA) Cedi, Naira through your scheme?
We do not offer a direct rate. The transactions are in Dollar only. Your payout partner offers the rate. If you don’t have a licensed payout partner, one can be assigned to you and then depending on the solution provider you choose, you would be provided with the rate they give. Not us. If would then be a question of your comfort with the payout partner’s rates.
Ria Money Transfer is beating this pricing structure you have listed here: i.e.: I pay no more than $3-$4 when sending by bank account to India. What do you say about this?
We don’t say anything. We sell a white-label service. We don’t sell a ‘lowest’ price on the web. This RaaS service is for those wanting to start their own business with full licensing and white-label. Ria doesn’t offer that.
What I was implying was that if RIA is competitively charging low fees, the only way we could match up would be to find a payout partner with a good rate which we could use to manage our margin and stat in business. Your solution is turnkey, which is good. But, we need visibility into the rate (assuming you will be assigning a payout partner to us) so that we could do a quick math before investing in your solution. Hopefully, I am making sense.
Your ask is very normal. There are two methods of going about this.
- Use the preferred payout partner that the solution provider has.
- Or bring your own.
We prefer #2.
In the case of #1, the only way we will get rates is if you sign the referral contract and pay the referral fee and application fees. Only then does my team go and get the rates for you. This shows the seriousness. We get a dozen or so leads a day, most of them are just duds or fishing for information or trying to learn.
I have to talk to each solution provider, and then ask them to provide the rates and then present them to you. Follow up in the event a solution provider forgets or becomes tardy. No use going into that without a commitment from the party. The contract is based on success, so if nothing works out, you take your fee back (sans application assessment fee).
Flow of Funds
Why is the flow of funds important and why must I make it? Why can’t you make the flow of funds based on our project’s understanding (as you comprehend it)?
The flow of funds is extremely important. You may have worked on it for months, Solution Providers usually glance at it for 5 minutes before making their decision. If you can elaborate on your Flow of Funds (FoF) and transaction set, it would help immensely. Also, we need it from you, for legal reasons, so that nothing was lost in translation and also, the way ‘you’ envisioned it.
You can draw it on a white-board or a white-piece of paper. Use your mobile phone to record while you explain what all is going on, how the transaction is originating, and how the transaction is terminating.
Once you’ve done this, you can WhatsApp this to us at: +13129576797.
Looking forward to your submission.
Can we alter the flow of funds as per our requirements?
No. The flow of funds shall be as per the solution provider’s FoF program.
Can we operate on a funds good & settled model? Please clarify steps of responsibility in the flow of funds.
As per the CFPB (Consumer Finance Protection Bureau) and the way state regulators would look at this, they would like the funds to be released only after the payout party has been paid, i.e. the beneficiary has been paid. This is why pre-funding is used. The license holder holds back on the funds, till such time that proof of delivery is provided for by the payout party. The funds good and settled model is already in play, as no credit is being extended by the solution provider (i.e. license holder) to you, and only the funds that are good and settled are pushed into your account, after proof of payment has been provided for.
HR / Role Related
What is my company’s role defined in all of this? What role do I play as a non-licensed entity?
You are essentially an ISO, and Independent Sales Organization. An ISO with a white-labeled app/website to bring in sales traffic to the licensed providers, for them to process these transactions on your behalf, without you being involved in the legality movement of money.
Is there a special type of company we need to form in to be able to do Remittance-as-a-Service?
There is no restriction. As per the video (if you saw them), you will be treated as an ISO (Independent Sales Organization). You will not be getting a license in your name. You would essentially be ‘sponsored’ for a license that someone already has and they would be the program manager for your company’s product/service. There is no restriction on the ‘type’ of company you might have. An LLC is as good as an Inc. It is important to note, you are not operating as a money transfer company. The PLH (Principal License Holder) is. They have the licenses. What they are essentially doing is running the program, under their licenses, for your brand.
You can even be based outside of the United States. There is no compulsion to be incorporated and present in the United States.
Can my company be incorporated outside the United States for example, even though the RaaS we want is from the US?
You can be incorporated anywhere in the world. You don’t necessarily have to be incorporated in the geography from where you are seeking license umbrella coverage. Though it helps to make things a lot easier if you are incorporated in the same country, but it is not mandatory.
Can we start with our Mauritanian company?
Yes, you can start with a company that can be registered pretty much anywhere in the world, however, US-based entities are preferred.
What do I need in terms of paperwork? Do I need to be an American citizen? Do I have to register a company? Please let know about this two key points so I have a better understanding and start from there?
You do NOT have to be an American Citizen. You can be a foreigner. No issues. You do NOT need to have a company registered in America, albeit it is considered a plus. You could use your company from overseas, albeit approval just takes longer.
Right now I have the idea and the budget only but nothing else regarding documents or structure, I will be a completely new company and as of today I have the money to make the investment but nothing else.
All we assume is that you have a company registered. That’s it. There is not ‘structure’ or ‘documents’ that we need to help you with. In the Also See section of the RaaS FAQ on the website (scroll to the bottom of the page), there is a Due Diligence Documents Requirement.
Let’s say that I start the business, what would be my role in it? Will I be in charge of the back office?
Predominantly, as a company, that is bring provided with remittance-as-a-service (RaaS) as a white-label solution you have three primary responsibilities:
- First level (Level I) of customer support, your client will call you for support. You internally will have basic access to a dashboard to help resolve most of the queries and for Level II and Level III support, you will open a support ticket with the solution provider / principal license holder.
- Your second responsibility is Sales & Marketing. Needless to say your brand, you would need to do sales activities to bring in the clients.
- Third, you are responsible for keeping an eye on your pre-funded account (reserve), with respect to the number of transactions you are doing.
From a transaction processing and management point of view, you do not need a back-office as such.
Do I have to hire staff for this?
Only for sales & marketing and level one customer support. Any additional staff you may hire would depend on what kind of a relationship you are maintaining, and if you are doing to be developing the app / website using the API.
IT / Technology
Do I have to use their technology? Can I not use my own?
If you plan on developing your own App (be it mobile or web), you will then have to use their API. 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.
In other options, you can use their white-label website (which is a responsive website, i.e. will work on the mobile as well as on tablet). You can also opt to use their white-label mobile app only. Or you can use both. It all depends on what you are comfortable with and what you opt for.
The pricing for these four options can be seen here.
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 should you decide to build on top of it.
Can we see a demo of the mobile app?
Here is a demo app as provided by one of the providers: Mobile App Demo.
We have our own technology team and do not want to use your web app or mobile app, can we use our own platform and development stack?
Yes. You can use the API which is provided with each package and build your own web &/or mobile app. You cannot build your own platform, as that is controlled by the solution provider themselves. What they extend out to you are the APIs for which you can build the UI/UX based on the API stack available to you.
The solution provider’s white-labeled web and/or mobile app platforms are optional for you.
Market & Statistics
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.
Operations Related Questions
How long does it take to be up and running for Remittance as a Service?
The answer always is, it depends. But on 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. Needless to say, if you are opting for the API solution and building your app on top of the API, then it comes down to your technical capabilities on how efficiently you can build your app and then present it for an audited approval by the PLH (principal license holder).
Considering that our app is used for other services Can we still use the same PLH API for our wallet Top-Up for services not meant for remittance purposes?
No, this is not allowed. However, a special request can be placed with the solution provider to allow this.
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 in the United States, would you not have to put up the pre-funding money in the payout countries? So, the same scenario here.
Is there any chargeback or fraud protection included for us?
Most of the solution providers have implemented various tools to mitigate disk, such as bank login and balance check for ACH, (address verification service) for the debit card, risk scoring on the users, etc.
At the end of the day, remittance is considered ‘high-risk’ by the banks. This is why banks pass the onus of the fraud/chargeback to you, and hence you would be required to keep a reserve.
In Remittance-as-a-Service (RaaS), If I understood you correctly, I will just simply give you our branding (LOGO) and we will be good to go?
This assumes that you will opt for the website option (see Option # 2), see the various RaaS pricing options here. That is the minimalist approach. You give your logo, and you simply market the website that would be white-labeled for you.
For example, your company is called ABCMoneyTransfer.com – then you market this website. The license holder will run and maintain this website for you. As you learn the business more, you can then opt to go on your own.
What if we want our average transaction size to be $10,000 – is that possible?
The average transaction size mentioned by the client is $5,000. This will be as per the CIP and will be determined after the DD.
Can we originate from Country X and terminate money transfer transactions into the United States?
No. At present, the program (currently) shall only support US origination.
Can my User receive into the US via the same wallet to wallet transfers from the selected payout Countries, and what are the available cash-out channels here in the US?
At present, the arrangement is one-way, US to Country X. In Q2 (hopefully) by 20201, 2-way traffic would be allowed and the payout option would be direct bank account credit in the US only.
Our App is a multi-service application that has other services as well as the cross-border transfer; like E-commerce and Payment Processing. Do we have to restrict those other services we provide to our customers?
Remember all development you do on your app, can have a multitude of services. What is important that when your customer comes to the section in your app for money transfer – there should be NO ambiguity or confusion about the service(s) the customer is available. It should money and money transfer ONLY. Any development you do, would have to pass the audit on the look and feel (as per the guidelines) set by the US Solution Provider (keep that in mind). But to strictly answer your question, there is no restriction on bundling other services on your app, as long as boundaries can be maintained.
I am really interested but I really would like to have higher limits once we start, I keep thinking that offering higher limits will be a great addition to get clients. Maybe US$ 10,000 in ACH is too much at the beginning but could we set up the limits at least US$ 5,000 for debit cards and ACH? And after 90 days we can review if we get higher or maybe lower the limits depend on how it goes, the main idea for me to get new clients is to have higher limits, especially when it comes to sending money to Europe, normally 2K is too small, I face this problem myself and I would like to offer a solution for clients.
Apologies. The limits stand at present. These might be relaxed after a 90 days review.
If I have to pay a bigger reserve or something like that I will be happy to do it if we can have the limits raised to 5K, as I said, only WorldRemit and Western Union offer those limits and that is the kind of company I want to have in the future if everything goes well.
As I cited. You can request a review for higher limits once you are operational and have 90 days of working history under your belt. No service provider is going to unilaterally allow you higher limits from day one. They would like to have a rapport with you and then together you can slow increase the limits as deemed safe by both sides from a risk point of view.
Can we be up and running in 15-days?
The answer is always, it depends. If everything is catered for and supplied without any hiccups, then the answer is yes. Else, it usually takes between 3-4 weeks after the signing of the contract to be up and running on the simplest model, i.e. where you seek a white-label web solution, with no integration, to a payout country that is easily approved.
Be cognizant, you would need to pass the due diligence before your contract can be signed. Due diligence on your initial application can take between five to fifteen days and this is a process no one can accelerate.
Do you provide access to banking for the Remittance-as-a-Service (RaaS)?
If by access to banking you are implying do we provide a bank account in the US for the commissions &/or customer funds to be pushed into – the answer is no.
If you are an ISO, you would need to make arrangement in the US to have your own company incorporated and have a US bank account to receive commissions, or for the solution provider to either SWIFT (international wire transfer) the money across to the correspondent’s bank account in their payout country or the correspondent may have a Nostro account in the US.
Either way, access to banking is not provided for. You have to make arrangements for it, or you can contact us to separately provide you access to banking services.
Why is the limit for the starter package limited to $5,000 per day?
Limits in the starter package are directly 1-to-1 proportional to the pre-funding deposit you place. If your pre-fund deposit is for $5,000 then you get a daily limit of $5,000. The $5,000 per day limit is the minimum. If you place a daily deposit of $15,000 then your daily limit is set to the same amount.
Given the above situation, can the Principal License Holder (PLH) send money to anywhere in the world, provided the bank account is in the direct name of the European License Holder’s name? Yes or No?
Yes. However, excluding the sanctioned countries and few countries that might be flagged by the MSB and/or their bank. Please ask in advance.
For the RAAS service starter package “Daily transactions limits: Your daily limit corresponds directly to the amount of money you have held in reserve for pre-funding. Default is US$ 5,000”. Can we increase our deposit for this particular package?
Yes, your daily limit corresponds to the reserve. If you increase the reserve, the daily limit for the Starter package is equally raised. The minimum value is US$ 5,000 in reserve. There is no upper limit.
Do you provide a settlement wallet/account for settlement?
The answer is No. The settlement partner (if provided by the solution provider), then the settlement account is already taken care of. You simply would need to provide us with a bank account for your commissions where they would be deposited.
If the settlement partner (or payout partner) is one that is suggested by you, then the payout partner has to first have a correspondent agreement with the solution provider and once that is established, the payout partner must either provide a Nostro account in the US (in their name) or a bank account anywhere else in the world, with the account title in their name.
Settle into a US Bank Account (Nostro) via FedWire. Is this an account held in a foreign country? Would that be classified as Nostro accounts?
There are two scenarios in which this can be played out:
(a) You are a licensed payout partner with a direct correspondent tie-up agreement with the US solution provider (i.e. the license holder). In this case, you, as the payout partner, ‘may’ have (on your own arrangement) a bank account in the United States, held with a licensed bank to receive money in. This account is designated as a Nostro account for you, the licensed payout partner.
The US solution provider (i.e. the license holder) that is holding on to your funds, can now push the money into your Nostro account and then that money is now considered ‘delivered’ and settled to you. For the US provider, there is no international SWIFT / Wire transfer. The settlement is quick and usually on the same day (if not the same hour (if FedWire is used).
(b). In the alternative scenario, you are a marketing company that is managing and running the remittance-as-a-service program. The US solution provider already has arrangements with a payout partner (whether through you or not, is irrelevant), and as before in the above-mentioned case, the funds held for the payout partner will be pushed to the Nostro account of the payout partner.
You, as the entity that is running the remittance-as-a-service program, can request the solution provider to push your ‘commissions’ into a bank account that has the same title as your company’s name. This bank account could be in the United States or abroad.
Lastly, if I start with the starter package, how much do you think I have to have in my budget to have everything operatives in the shortest amount of time? Just tell me a number that would an estimate.
Sorry I cannot provide this information. Our start and finish is limited to the objectives around remittance-as-a-service. The merchantability and/or the feasibility numbers around it, is something we do not provide nor comment upon.
Do you take care of all the needed paperwork?
We don’t. We are introducers/brokers You need to have your company and the DD documents sorted out yourself.
Can you send money to a 3rd Country (like China or European Country, etc.)?
You can but only if one condition is met. The bank account to which the money is being sent, must be in the same name of the payout partner with which the US solution provider (i.e. license holder) has signed a correspondent tie-up agreement with.
For example, if there is a payout partner named ABC Transfers in Kano, Nigeria and they request payment to be made in Europe or China into a bank account of their choice. The bank account has to be in the name of ABC Transfers, else the US solution provider will not agree to the transfer.
Transfers cannot be made to 3rd party bank accounts.
Can the daily transaction limits be increased by increasing the reserves? If Yes, how long does this process take?
The daily limits can indeed be increased by increasing the reserve. They are effective the next business day once the funds have been received by the solution provider.
In the event you have your own payout partner (which has a correspondent tie-up agreement with the US solution provider), then the daily reserve requirement is not applicable.
Settle into a US Bank Account (Nostro) via FedWire. If this option is chosen, what component of the transaction is settled here? Are the funds not being sent to the destination country bank?
When a transaction is complete, the US solution provider is essentially holding to you the funds (minus their commission). These funds can be pushed into the local US Nostro account (via FedWire), from where the payout payment will have control of the money, or if the payout partner does not have a US Nostro account, then the funds are sent via international wire transfer, i.e. SWIFT to the bank account in the name of the payout partner in the country of their choice.
All of the money is transferred here (minus the solution provider’s commission).
Are B2B (Business to Business) transactions allowed? If intermediate MNO’s are used, will this be allowed?
No, B2B transactions are not allowed under ‘remittance’ as a service. The model is purely for P2P (person to person).
Can we operate on a funds good & settled model?
A good funds and settled model implies that no credit is being extended, and the funds have been settled into the terminating (intended account). That is exactly the model on how this remittance-as-a-service operates.
However, you cannot and are not allowed to operate the service by asking the solution provider to take the funds that have been settled and push these for further beneficiary delivery.
The US solution provider needs to see proof of delivery of funds (using pre-funding) and only then the funds are released from the United States.
Origination / Solution Provider
Is there also the ability to have cash pick in the US or is it only digital?
From the US – only digital. Online to direct account credit (at the moment). In some corridors, there is a cash pick option. But origination is all online (i.e. digital).
Is nationwide coverage guaranteed?
No, nationwide coverage is not guaranteed. We have to still present your case to the solution provider for approval. Based on which solution provider takes your case, that is the offer you will be presented with and any restrictions or deficiencies in the proposal.
What sort of payment processing options are available?
At present only two, debit card processing and ACH processing. For debit card processing you would have to qualify with the underlying merchant processor. Credit card processing and FedWire transfers are not supported.
What does the “Monthly Commitment” imply in the pricing sheet?
The monthly commitment means that the total amount paid by the Client for:
- Monthly Fee
- Debit Card Processing Fee
- ACH Processing fee
For a particular month should at least be US$ 2,000.
If applicable, the monthly commitment does not cover other fee items like AWS fee (if you opt for it), Bank Account Verification fee, website/app maintenance fee (if you opt for it), compliance fee, etc.
Monthly Fee: US$ 1,000
Debit Card Processing fee: US$ 800
ACH Processing fee: US$ 150
Total: US$ 1,950
Total Amount payable: US$ 2,000
Monthly Fee: US$ 1,000
Debit Card Processing fee: US$ 800
ACH Processing fee: US$ 1,200
Total: US$ 3,000
Total Amount payable: US$ 3,000
Which would be the minimum and maximum amount that a client can pay using Debit Card? And How much is the minimum that a client can send using ACH?
Whether you do debit card or ACH, the minimum is US$ 50. The maximum is set at US$ 2,000. Both of these are on a per transactions basis, i.e. minimum US$ 50 per transaction and a maximum US$ 2,000 per transaction. Both for ACH and Debit Card processing.
How can there be a fraud in this (money transfer business)? I don’t know about the business and that is why I asked if it comes with some kind of chargeback or fraud protection for us.
No business is fraud-free. To understand why there is fraud, you have to understand that by law in the United States you are allowed to do reversals up to 180 days from the date of transaction (you can read up on Consumer Financial Protection Bureau).
Some people simply have nefarious intent. They will do the transaction, make the payout happen in the beneficiary country, and then claim, the transaction was a fraud, etc. Sometimes customers don’t understand the charge on their statement and do a reversal without thinking it through. Sometimes, a joint-account is operated and the balance in the account may be $1,800 and the wife has written a check for $1,200 whilst the husband is trying to send $1,500 back home. An NSF (Non-Sufficient Funds) charge occurs. Regardless, the chargeback onus falls on you, as neither the bank wants to take it – neither the sponsor, i.e. principal license holder. While a lot many features are implemented to reduce the chances of fraud happening, the way the US structure for consumer financial protection is set up, it is prone to abuse. This is the nature of the business. You can argue, this way or that way, at the end of the day, the structure is as such, you are responsible for putting up the reserve for any chargebacks, till such time they are investigated, etc.
Can I use my own merchant processor?
No, you cannot use your own merchant processor.
Can we use PayPal, Square Cash, Venmo, Zelle, etc. to collect money?
No. As per the Terms of Service of these providers, collecting money for the purpose of international remittances is not allowed. If you are classified as a money services businesses and/or are engaged in money transmission, you then you cannot use their services for receiving &/or sending money without first obtaining a no-objection certificate from them, otherwise, both your user and you would be in direct violation of the various terms of service and the account(s) and the monies can be suspended and forfeited respectively.
You might want to watch this brief video for further clarification: 3rd Party Payment Apps? It Might Be Illegal To Use Them!
Who is in charge of authorizing the transactions? Will it be myself or someone else?
No. Transactions are authorized by the parties involved, i.e. the Sender, the banking institutions, processing partners, and the payout beneficiaries. As a non-licensed entity (you), you are not involved in the flow of money or its authorization. The whole idea of a sponsored & white-label arrangement is to make sure that the licensed entities involved are the ones who engage in the authorization and flow of funds for the objective that you are seeking under the white-label service.
Can we use our own payment processor?
Only if you are a payment facilitator and have an Agent-based relationship with the US solution provider. The reason is, when you use your own payment processor you are in the custody of funds and hence break the chain of licensure continuity. Your own payment processor is a contract with your company and your processor. The US solution provider is not a party to that contract and neither do they have a primary chain of custody to client funds. Hence the answer is no.
Can I use an aggregator on the Starter plan and use the aggregator to payout to multiple countries (more than the allowed number)?
No. That would be violating the spirit of the offering. You would have to upgrade your plan.
Do aggregators have to be approved and if so, how long does that take?
Yes, aggregators have to be approved. They would go through the same due diligence as a correspondent tie-up would and they too would need to sign a correspondent tie-up contract with the principal license holder. The approval times depend on the complexity of the tie-up and the organizational setup of the payout partner (banks are much more slower than money transfer operators). Assume 1-3 months.
How do I tell the payout partner in my beneficiary country to have a correspondent tie-up with the solution provider?
If you have a licensed payout partner, you would need to tell them, that you are willing to bring international remittances business to them, however, the US counterpart has requested to have a correspondent tie-up agreement (or payout agreement) with the payout partner and in this case would like to get in touch with you, i.e. the payout partner.
How many beneficiary countries can I have?
Depending on the package you choose, the number can vary from one to many. Please see the Remittance-as-a-Service (RaaS) Comparison table for more information.
Can we make payments into China?
We will need approval for China payout after we complete the due diligence of both the customer and their payout partner (if that is the case).
Can we pay directly into a bank account into Nigeria (for the payout partner)?
This depends on the solution provider. Some are okay with direct payments (SWIFT) into Nigerian bank accounts, some are not. It varies as per the banking partner they have. Please inquire. Payout into Nigeria is approved, however, direct wire to a Nigerian A/C could be an issue from the originating bank end.
Can my daily limit corresponds to the reserve amount I have with the Payout provider in settlement Country and Not in the US if the PLH is using the same correspondent tie-up or Payout Provider in settlement Country?
If you have an agreement with a payout partner in a specific country, say Payout Partner ABC in Country X, and the US Solution Provider “also” happens to work with Payout Partner ABC in Country X, then the question you are asking if your deposit with Payout Partner ABC would correspond to the daily limit that is set by the US Solution Provider.
The answer to this is – it depends. If the Payout Partner ABC in Country X will intimate to the US Solution Provider that they will not require any pre-funding from US Solution Provider for purposes of the payouts done on your behalf – then the US Solution provider could waive the limit entirely or make the limit equal to the deposit that the Payout Partner ABC in Country X is will to cover you for.
What happens under a RaaS program when you want to use a specific provider in the beneficiary country?
There are two options you can exercise:
Option A: The PLH (Principal License Holder) may already have an existing relationship with a settlement & payout partner in the beneficiary country, so which brings us to two further cases:
(i). You like their rates/network, and decide to carry on, or,
(ii). You do not like their rates/network and decide not to carry on with their existing provider and ask them to reconsider option (B).
Option B: You can request the PLH to establish a new correspondent tie-up with the preferred partner you would like them to work within the beneficiary country. Please ensure this during the time of your negotiation with the partner. PLH reserves all rights not to enter into an agreement, however, in most cases they oblige if you have a solid case.
In the Pro or Starter package, can I increase the number of payout countries?
You cannot increase the payout countries until 90 days of being up and running. After 90 days you can request for a review.
What is the procedure to use our own payout partner in the payout country?
This is something that is asked of us a lot. Please refer to this frequently asked question: Who is providing the payment rails to the countries we plan to send money to?
For which country/countries is remittance-as-a-service (RaaS) available?
The new and revised pricing packages for RaaS are currently only available for the United States. We will be expanding this to Canada, the United Kingdom, and Europe as well in the coming months.
If a RaaS Client themselves are a licensed money transfer company in say Europe and they have extensive agreements with all the payout countries (in say Africa), will the principal license holder agree to sign an agreement with the European Money Transfer Operator? Yes or No? If Yes, please explain.
Yes, they will have to go through the DD process and enter into a Payer Agreement.
Given the above scenario, where the European partner is responsible for the payout, is pre-funding still required? (not the reserve, but the pre-funding?) Yes or no?
Yes. However, the pre-funding will be managed by the MTO by paying out the transactions in advance. If they themselves are the MTO that is payout out, then pre-funding is not required?
If I opt for my own payout partner who also happens to be an aggregator, are the country limits still applicable to us?
Yes, the country limits would still be applicable and in order to increase the country limits, you can simply upgrade your package and pay the difference.
What are the restrictions in using an aggregator?
In order to use an aggregator of your choice, you must have the aggregator sign a correspondent tie-up agreement with the solution provider.
When we use an aggregator, do we need to get the payout countries approved?
Yes, all payout countries must be approved by the solution provider. Without such an approval, you risk ceasing your account.
Can we use an aggregator for our payouts?
Yes, you can, however, as cited before, your aggregator must have a correspondent tie-up agreement with the US solution provider (i.e. principal license holder) and also obtain an approval (no objection certificate) for all the countries for payouts.
Can we propose our own payout provider?
Yes, in order for that to happen, please be cognizant of two things. The solution provider may (or may not) accept your request for a correspondent tie-up. Though in most cases they will, they do have the option of saying no to you. Secondly, any pre-funding done would have to be borne by you.
Typically a correspondent tie-up agreement takes anywhere from 3-6 weeks to be completed. Depending on the workload (on either side) this could be longer. Such timelines must be taken into account.
The correspondent tie-up is a formalized process and a contract. It is not something that can be rushed. The following two videos below help you understand how the process works.
The due diligence (DD) documents for a payout partner vary from solution provider to a solution provider.
Watch these videos for a better understanding about correspondent tie-ups.
- What is a Tri-Party Correspondent Tie-Up Agreement?
- What is a Correspondent Tie-Up & Why it is necessary?
You can read up more about the due diligence documents here.
Can money be sent outside the USA?
Yes. The money can indeed be sent outside the US, but only to the bank account designated and in the name of the payout partner, with whom the US solution provider has a correspondent agreement signed with.
Which payout countries are available at present?
At present, the list of payout corridors and their rates can be seen here: Payout Corridor Rates.
As always, you can opt to bring in your own payout partner, but you must go through the process of becoming a correspondent tie-up with the US solution provider.
Payout Partner Provided – Is this only in the case of a white-labelled offering?
All instances of remittance-as-a-service are white-labelled by de facto. The payout partner is simply the settlement process in which the solution provider is working (i.e. the countries in which they are working and the specific types of payouts they are able to do). Whether or not you opt for API and build your own app, or use the solution providers white-labelled app, has no bearing on the payout corridor. They are offered as-is.
The list of payout corridors can be seen here: Payout Corridor Rates.
Can we propose our own payout provider? How long does due diligence take, Are there any extra costs associated? What is required of us and from the payout provider?
Yes, you can propose your own payout partner. As pointed out in the FAQ, the process can be anywhere from 3 weeks to 6 weeks (depending on how busy the solution providers are). The due diligence can easily take 3-4 weeks. Usually, there are no costs involved.
A sample of the due diligence documents requirement can be seen here.
Referral Fees, Contracts & Packages
Is there a discount for startups?
The Starter package is developed predominantly for startups and new entrants. It allows an easy entry into the arena of the money transmission world with full licensing and compliance without stressing you financially.
Does your referral guarantee a signup with a PLH or just an Introduction?
No it does not, hence it is called a success-based agreement. The final say is with the solution provider after having done your due diligence.
Can we opt out from this referral contract if the process of signup exceeds your stated timeline or if we are required by you or the PLH to provide additional information or Money not mentioned in our previous conversations and in such cases can we request a full refund of whatever amount already paid?
No. The referral contract is good for one year. We have no control over your signups. It all depends on how ready your documentation is as per the requirements of the solution provider.
Other than the application fee which is non refundable, the referral fee would be refunded in full if you do not sign-up.
In the event your recommended PLH decides not to work with us for any reason prior to the Coverage signing will you refund the 25% initial referral deposit back?
The referral fee is refundable in full. However, for remittance-as-a-service the payment schedule is different.
We charge differently as per the packages. See below for details
One-time Application Fee applicable to all package, Starter, Pro, and Enterprise. The application fee is non-refundable.
Starter: US$ 750
Pro: US$ 1,000
Enterprise: US$ 1,500
Amount Due when you sign the Referral Agreement:
Starter: 100%, i.e. US$ 7,500
Pro: 50%, i.e. US$ 7,000
Enterprise: 25%, i.e. US$ 7,000
What does it mean e-wallet included?
Remittance business is a straight-through processing (STP) business, i.e. the funds have to either sent to the beneficiary or returned back to the customer within 96 hours. The funds cannot be held (in an e-wallet) of any kind. When we cite that an e-wallet is included, it means that you have the ability to hold money with the solution provider, as opposed to simple straight-through-processing. In simple words, you get stored value as well as STP.
If I start on the smaller plan like Starter and then upgrade to Pro? how will that happen?
Simple. You need to first let us know of the enhanced countries you plan to cater to. The solution provider will confirm. Once that is done, we will then agree at some future date to switch you to the upgraded plan (with a lower transaction fee). You will have to pay our referral fee difference and that pretty much is it. The same is applicable to upgrading from Start to Enterprise or from Pro to Enterprise.
I need clarity on how much is due upon signing the referral agreement and how much is due when signing the Coverage Agreement?
The following fees are due when you sign a referral agreement:
One-time Application Fee applicable to all package, Starter, Pro, and Enterprise. The application fee is non-refundable.
Starter: US$ 750
Pro: US$ 1,000
Enterprise: US$ 1,500
Amount Due when you sign the Referral Agreement:
Starter: 100%, i.e. US$ 7,500
Pro: 50%, i.e. US$ 7,000
Enterprise: 25%, i.e. US$ 7,000
Contract says all fees paid are not refundable does this statement invalidate your refund policies referred to under “How We Charge“?
The Remittance-as-a-Service is not subject to the regular pricing that we have on our Regulatory Coverage Table.
If the information stated in Point 9 (in the contract) is the basic factors of Clients qualification what happens in the event the clients is not qualified or is disqualified?
Your qualification factors are determined directly by the due diligence by the service provider and the parsing of the information you had provided to us when your initial query came to us.
Barring your application fee, which is non-refundable, any other money you have paid is refunded in full.
If the product or services of your referred PLH do not fit our business needs and we decide to decline do we get a refund?
No. Once you sign up with the service provider, the contract is deemed completed. It is up to you in the initial period to assess if what is being provided by the service provider meets your needs or not.
Would a legal contract not have details of commercials specific to our business?
It would. It would be the EXACT copy of what you see on the web, added as an addendum.
Can we review the commercial and legal viability of the whole project and revert as soon as possible?
The commercials are ALREADY on the website. That was the whole point of it. Each and every single price point is mentioned.
What does the ‘introducer’ fees include?
The introducer fees are more than just finding a licensed financial institution for you to work with. It typically involves a few hours or pre-screening work and then an equal amount of work goes into talking with financial institutions who will sponsor you for your business case. Once the introduction is being made, you will have direct access to the LFI (licensed financial institution) to conduct various activities like sign a non-disclosure agreement with them, perform due diligence (both ways), look at the legal drafts of the contracts you will be signing, share your transaction set, the flow of funds, have a look at the API (for tech integration) and negotiate & discuss your term sheet.
Which service do you recommend for an startup up company to start off with? Maybe the basic and then upgrade to pro? Or starting directly with the pro service plan?
Simplex-to-Complex. Always recommend that you start with the Starter plan and then slowly as your marketing and sales efforts pick up, then you expand upwards towards the Pro or Enterprise plan.
How much commission would you charge me for finding me a service provider for this remittance-as-a-service?
The referral fees are clearly mentioned on Remittance-as-a-Service Pricing Page and on the Comparison table page.
How much does the Remittance-as-a-Service (RaaS) cost?
Detailed costing of how much does RaaS cost has been provided for. Your monthly cost options can be seen here, and sample calculations for US$ 250, US$ 500, and US$ 1,000 can be seen on their respective pages.
How much money would I need to start this RaaS business?
Other than the stated costs , we cannot answer that. However, we can tell you that you would need to have approximately US$ 75,000 to enter into the business (this includes limited pre-funding). Anything less would seriously stress your business, especially sales and marketing efforts.
In the end, it is up to you and your network. How well you can market your service and how you can get clients.
Barring your referral fees, realistically what is the most minimum amount we can start a money transfer business with?
This is a tough question, it depends on which provider will work with you. Barring our fees (which can be a minimum of US$ 7,500 or a maximum of US$ 28,000) this is what you typically should prepare for: (i) Reserve Requirement: US$ 5,000 (minimum) (ii) Pre-funding Amount: US$ 5,000 (minimum), (iii) One-time Setup Fees: US$ 2,500 (minimum), and (iv) Monthly Fees: US$ 248/month (minimum). If we take these amounts, then you’re looking at a minimum of US$ 23,000 approximately to go live. This is assuming you would make your own app (using the API) and also there is no room for sales and marketing budget.
If I am on an old pricing plan, can I request to be shifted/moved to the new more economical pricing plan?
The answer to this is not straight forward. The reason being, is because you are already tied into a commercial contract with your existing provider.
If you want, you can exit that contract, but that may have financial repercussions for early termination. Please check with your solution provider first.
In some instances your existing solution provider might be the very same solution provider offering these new remittance as a service pricing packages. If that is the case, there might be a possibility to downgrade or readjust your contract.
If we are on another pricing plan, what happens if we want to come over (switch) to this pricing plan?
You can certainly switch, that option is available to you. However, once you switch, the rates and conditions applicable to the new RaaS plans would be applicable to you. Whether it is a net benefit for you or a net loss, please do your calculations prior to switching.
What will be the ‘actual’ monthly costs for me? The spreadsheets are slightly confusing?
Please visit this page to get an exact assessment of what your monthly costs will be, based on the option you choose: What is your monthly total?
In reviewing the fees we wanted to know if we grow fast, will we be able to move from Starter to Pro, and Enterprise as volumes grow and then only pay the incremental once-off fee?
Yes. The upgrade is simply a matter of paying the differential. The revised rates take up to five (5) business days to take effect. With respect to payout corridor, technical and development perspective, the solution provider will review and provide fresh timelines for those (if applicable).
What Is / How-to
What does remittance-as-a-service mean?
Remittance-as-a-Service means that everything is outsource to a licensed financial institution that has the necessary money transmitter licenses and provide all the facets of running a legal money transfer business in the US. This includes licenses, banking, payment processing, compliance, AML, KYC, reporting, transaction monitoring, settlement, payouts, etc.
Please watch this video: So You Want To Start A Money Transfer Service? (Remittance-as-a-Service)
What is the downside of Remittance-as-a-Service?
The downside if you will, is that the customer legally belongs to the principal license holder (PLH). Barring personal information like DOB and SSN, you can contract with the PLH to provide you with the customer data, i.e. share it with you. The other downside is the rates. Needless to say there is an intermediary party providing you a service, so the rates are higher than what they would be had you been a direct owner of the license yourself.
What does it mean when it says $2,000 monthly minimum? What is this minimum for?
The monthly minimum is the guaranteed business for the ACH / Card Processors. Due to the nature of remittances as being classified as high-risk, the processors after they underwrite you, would like to have a minimum viable business guarantee from you. This is why they impose a minimum monthly commitment to you.
This page was last updated on November 11, 2022.