London-based fintech TransferWise’s money remittance services will now be available on six mobile wallets in South and Southeast Asia, extending their appeal to unbanked users and migrant workers with family in the region.
The company’s new partners GoPay, OVO and DANA in Indonesia, GCash and PayMaya in the Philippines, and bKash in Bangladesh count more than 150 million users between them.
“With the launch today, we have enabled these people to receive money internationally. They didn’t have [the capability] before because they didn’t have a bank account,” TransferWise co-founder and chief executive Kristo Kaarmann said in an interview with FinanceAsia.
Using TransferWise, mobile wallet clients can send and receive money with their name and telephone number at an average fee of 0.74% per transaction, eliminating the need for banks in the process.
Founded in 2011, TransferWise has more than six million users in 45 countries and recorded $230 million in profits for the 2019 financial year, according to its annual report. Until now, the company has focused on growth in European, North American and African countries, relying on a combination of partnerships with banks and mobile wallets.
TransferWise is not the first remittance company to leverage mobile payment networks. In 2017, London-based competitor WorldRemit partnered with Android Pay.
Alongside money transfer services, in 2018 TransferWise launched a borderless debit Mastercard for users in the US, Europe and Australia.
The partnerships will make TransferWise’s services accessible to the region’s large unbanked population – estimated at 68% in the Philippines, 59% in Bangladesh and 52% in Indonesia, according to the World Bank – as mobile wallet companies compete to convert users.
According to Kaarmann, many of the unbanked may never sign up for a bank account. “People don’t care about bank accounts if they don’t have them,” TransferWise’s co-founder said.
He has learned from experience. Last year, the company partnered with Kenyan mobile wallet M-PESA to service some of its 37 million users in Ghana, Kenya and Egypt.
In parts of Africa, Kaarmann said, “most people don’t have a bank account but every single person has a [mobile] wallet.”
While TransferWise has experience working with mobile wallets in unbanked areas, the company recognises market-specific challenges. “It’s a different technology [in Africa],” he told FinanceAsia. “The African wallets work without a smartphone. You don’t have apps, your carrier sends you codes.”
The phones may be different, but in both Africa and Asia remittances from migrant workers make up a substantial part of some national GDPs.
Migrant remittance inflows are responsible for a large portion of the wealth generated in Southeast Asia. KNOMAD, a World Bank initiative focused on migration, expects Filipinos abroad to transfer $35 billion – equal to 9.8% of GDP – home this year.
In Bangladesh, migrant workers sent $15 billion to their families in 2018, a number KNOMAD estimates will top $17 billion in 2019, while remittances will account for 1.1% of the Indonesian GDP this year.
The Chinese remittance market is among the most lucrative in the world; in 2018 migrant workers sent $67.4 billion back home to China, according to KNOMAD.
At the moment, TransferWise users can send money to China but cannot receive funds from Chinese accounts due to the country’s strict currency controls.
“It’s about more than just getting a licence,” Kaarmann said. “We have not prioritised offering international payments in China because [they] are very particular about who they let in.”
Instead, TransferWise is turning to partnerships with Chinese mobile wallets to expand its client base. Following the rollout of services in Southeast Asia, the company is looking to integrate with banks and mobile payment apps in China and India.
“Many people use [mobile] wallets in China. So just sending money to banks isn’t good enough,” TransferWise’s chief executive explained. “You should be able to send money to wallets as well.”
Chinese competition to provide transfer services is heating up. In February 2019, Ant Financial – a subsidiary of Alibaba – announced the acquisition of UK-based WorldFirst.
TransferWise holds a Money Services Operator license in Hong Kong, which allows it to provide remittance services but does not permit currency conversion. For that, a Stored Value Facility (SVF) license application is now underway.
Once approved, the SVF will allow the company to launch its borderless debit card in Hong Kong. The card is already available in Australia and Kaarman expects it to be in use in Japan next year.