Frequently Asked Questions about Commission / Fees / Pricing / FX Rate
- Why do the rates vary for the Starter package versus the Enterprise package?
- Do we get the interbank (mid-market rate)?
- What is the current ongoing rate of the dollar you offer for Euro (CFA) Cedi, Naira through your scheme?
- 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.
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 method of going about this.
- Use the preferred payout partner that the solution provider has.
- Or bring your own.
We prefer #2.
In 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).