Money transmitters are in the business of putting smiles on the faces of people in distress in emerging markets -Peter Ojo
Money transmitters are in the business of putting smiles on the faces of people in distress in emerging markets and just like Kodak was in the business of storytelling but wrongly held on to the chemical film and camera production business narrative for decades, those involved in transferring money over distance must view the act of moving money as a means to an end. This understanding can help the players recalibrate their services by leveraging on tokenization.
Understanding the psychology of Immigrants
Immigrants, who form the large remittance audience, have stories before leaving the shores of their home countries. The psychology and emotional affinity of an American born person who sends money to pay bills is different. Immigrants, no matter how successful they are in a foreign land, have special ties with the people back home, a cultural need to recognize the roles played prior to their departure. They must assist their families, cater to their parents and offer signs of gratitude to those who made their dream of departure a reality.
Immigrants alone can comprehend this intricate and complex web of relationships and the prevailing custom of sending aggregated money into the hands of a trusted intermediary who will then distribute it according to a sender’s wishes, is a cultural mismatch, a tradeoff of privacy to save on fees.
Money transmitters, after succeeding in obtaining a highly expensive multi-jurisdictional money transmitters licenses, must still go through many layers of service providers and processes before the money gets to its final destination. There are bank charges, credit card processing fees, account verification fees, armored vehicle fees, compliances costs, licensing fees to government regulators, association fees to show legitimacy and a host of other costs expected in the course of running the business.
Tokenization can change the very character of money transmission. Tokenization can change sender behaviors, increase volumes, reduce costs, increase agents and partners revenue and provide far greater transparency to regulators. This concept is not a new phenomenon. For decades Western Union has used a similar method, a tracking number called a “Money Transfer Control Number” or MTCN and this number is worth real money. Still, with fresh thinking, industry knowledge and an understanding of the capabilities of new distributed technologies, tokenization can provide a service that is a cultural match, one that puts smiles on people’s faces.
What Blockchain Enthusiasts Fail to Understand about Money Transmission
Blockchains were conceived and developed in the western world. The pioneers had a better mousetrap (or a better something) but where was its value in the near term? What would be the first real use cases, the first pain points solved? The sophistication of developed nation financial infrastructure meant there was less to improve upon, what exists today delivers market satisfaction. Thus the first use cases for the bitcoin blockchain were often remittance plays that leveraged the asymmetry of this good infrastructure against far poorer infrastructure in receive-side nations. The relatively simple act of transferring a digital asset, such as bitcoin, would upend existing industry mainstays who gouged customers with high fees. In a pure digital world with constant connectivity and exchanges offering liquidity in local currencies, it works, but in a world where people want cash on their terms, actual customer experiences brought more frowns than smiles.
Any blockchain solution with the idea that tokens or coins will be delivered to the recipient is wishful thinking in the next five years. Solutions providers should instead use their token or coin products to solve specific problems in the long chain of money transmission before dreaming about how their solution will replace banks.
Money Laundering, or Sender Building a Secret House?
The current money transfer system treats senders of multiple large transactions as criminals by creating a situation of ‘money laundering false positives’. Money transmitters following the strict rules spend countless hours investigating senders, banning them from their services because they send large and multiple transactions, yet unable to determine any wrongdoing. Money transmitters and banks would rather close the account of the senders rather than risk regulatory penalties. Positive change must first come from the innovators who then educate regulators; the maxim is that regulation follows innovation.
Where Have All the Service Providers at Gas stations, Pharmacies, and Small Grocery Stores Gone?
Since the enactment of stringent rules, banks have clamped down on money transmitters irrespective of the fact that they are licensed to conduct money service business. Well crafted distributed ledger solutions are a way forward, to bring far greater transparency and giving regulators unparalleled insight into the transactions and bring back these small corner service providers as crucial stakeholders in the digital-to-cash ecosystems.
A New Approach to Tokenization from REMCO, $20,000,000 Pilot Shows Promise
REMCO’s tokenized blockchain solution has considered all the intricacies by drawing on decades of experience moving money globally, listening to recipients, senders, money transmitters and agents. This new platform from VTNGLOBAL, INC. which has 15 years of experience in emerging market remittance and payment industries, unleashes the distributed ledger’s promise to money transfer services.
Advantages:
· Speed at agent. REMCO has re-engineered the processes, simplifying the role of the agent to selling a prepaid voucher, as opposed to starting a specific transaction, and this frees agents and partners to focus on their core business and receive higher commissions.
· Freedom. The REMCO solution allows senders the freedom to send money to multiple people at a fraction of the cost and be able to put smiles on the faces of many people back home.
· Profits. Remittance organizations can boost revenue by tokenizing their transactions. The solution allows remittance companies to record more sales, more revenues now that senders can increase the number of transactions. Immigrants can increase the frequency of money they send home as fees are far lowered per recipient.
The REMCO RemittanceToken is an open source solution that operates on a private permissioned network using a programmable token to transfer value by leveraging on direct API connections with the destination banks and mobile wallets in various jurisdictions. The system allows pre-authorized partners to generate tokens on the network for distribution to end users or their agents. These tokens can be programmed with various denominations and currencies, and buyers/senders will use a mobile or online website to initiate the value transfer.
Conclusion
Regulatory bodies should have no fear of the blockchain technology, but rather they should see it as a new tool that is inherently transparent and open, even in cases where pseudonymity is in-built. Tokenization of value that is leveraged on distributed ledger capability can bring about unparalleled and never before seen insight into global and local transactions.
Peter Ojo
https://www.linkedin.com/in/peterojo/
Join the mission
http://remcosoftware.org
http://www.remittancetoken.io
