The business opportunity presented by international mobile remittance

In the U.S. and most of the developed world, the “mobile revolution” has long been over.
Mobile technology is a regular part of everyday life. But in the much larger developing
world, mobile is only beginning to realize its enormous potential, with mobile adoption

The vast majority of these populations do not have access to a banking system and lack a
way to transfer cash. But the network capabilities of mobile devices make them ideal for
P2P payment and remittance functionality. Ubiquitous mobile devices in developing
countries will open up limitless opportunities for small businesses and individual
entrepreneurs to add new revenue streams and provide a high-demand public service as
facilitating agents for digital P2P and remittance payments.

Rapid development in people-friendly technology

The new revolution in P2P and remittance services is being driven in part by rapid
developments in technology. Technologies such as NFC have shifted the speed and security
with which individuals can make payments and transfer money to other individuals. At the
same time, the fast pace of software and application development means that useful
products such as digital payment applications are becoming more versatile, offering secure,
user-friendly versions for an ever-expanding variety of devices.

Explosive market growth

The volume of P2P and remittance transactions around the world is enormous and growing
at an astonishing rate. According to a recent report on the digital finance industry sector,
P2P digital payments worldwide are expected to reach at least $65.8 billion in 2018. Then,

by 2022, they are expected to nearly to $133 billion, an annual growth rate of over 19

Nearly 100 million people use P2P money transfers currently; by 2022, that number is also
expected to nearly double to 188 million, the majority of them remitting money from
developed countries to countries in Asia, Africa and Latin America. The value per
transaction for P2P money transfers is increasing as well, reaching an average of $362 in

Data from the Bangladesh Bank shows that in just a single month, February 2018, over 162
million mobile financial services transactions took place in Bangladesh, an average of 5.4
million per day. P2P transactions during the month amounted to BDT44.28 billion, or about
$530 million.

P2P preferred over banks

While conventional banking channels are still popular due to consumers' traditional trust
in banks and the wide variety of other services banks can offer, P2P digital payment
options are putting increasing pressure on banks' market dominance because they offer
advantages conventional banks have difficulty matching.

P2P digital payments can be transferred in a matter of seconds, compared to at least one
business day for most banking systems. P2P outgoing and incoming transactions are far
more accessible, available with a mobile device anywhere there is a servicing agent. And
because there is far less infrastructure involved in a mobile payment system, transaction
costs – which are reflected in fees charged to customers – are significantly lower, generally
averaging 0.15 percent to 0.5 percent of the transaction value, compared with 5 percent or
more at most banks.

Business opportunity favours new entrants

An in-depth analysis by Asian Entrepreneur detailed the advantages enjoyed by new
entrants into the P2P digital payments space, which bodes well for entrepreneurs looking
at being a transactions agent as an additional income stream.

First, the advances in technology lowered startup costs for businesses in the financial
services industry by nearly a thousand times in the decade between 2000 and 2011, and
these costs continue to fall; lower costs for service providers and less complex processes
naturally mean greater ease of entry for prospective partner agents as well.

Second, as P2P digital payment applications become more accessible, volume growth in
unsanctioned and unconventional channels, which has outpaced growth in conventional
channels such as banks for a number of years, is being transferred to sanctioned channels.
These channels include P2P digital payment systems, because regulatory oversight by
central banking and monetary authorities surprisingly favours non-bank systems. While
government regulators have become increasingly concerned about digital security and
money laundering and have imposed new regulations and standards to address these, P2P
digital payments designed with this in mind face much lower compliance costs and are able
to roll out much more quickly; Asian Entrepreneur found that costs associated with
compliance averaged about 1 percent for new entrants into the market, compared with
about 4 percent for established players.

All of this means that a P2P digital payment system provider like Fama Cash is able to offer
partner agents a gateway to additional income streams that integrates almost seamlessly
with their existing businesses, giving them the opportunity to enhance their business
model easily and at a low cost.

Overcoming risks and challenges

While mobile payment systems are in high demand and being adopted at a fast rate, there
are naturally concerns about their security, reliability and sustainability. The industry has
had to diligently address these, not only to comply with strict financial regulations, but to
maintain a competitive advantage.

In terms of security, traditional tools such as unique passwords and transaction
identification codes are being supplemented by even more sophisticated capabilities such
as fingerprint scanners and facial recognition. Thanks to developments in mobile
technology, these functionalities are increasingly available on even lower-end mobile

Improved security helps to increase customer trust in payment applications, as does the
constantly improving training and familiarisation with systems and procedures being
provided for partner agents. The constant development in the technology helps in this
aspect as well, making processes simpler and more direct, eliminating intermediaries that
might be potential choke points.

Liquidity is another significant risk, one that directly affects customer trust and business
sustainability. In general, P2P payment systems work by using a pool of funds created by
incoming and outgoing payments in each country in which the system operates. In order to
securely maintain liquidity – to ensure that customer funds are always available when and
where they are needed – the payment system provider needs to ensure that a sufficient
reserve of funds is accessible. Successful payment systems achieve this through direct
funding from investors and cooperative arrangements with subsidiary businesses,
guaranteeing that customers and partner agents will always have funds available when

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