Digital Payments

Senders As Issuers: A New Space For Cards In Global P2P

When InstaReM CEO and Co-founder Prajit Nanu started putting together a global remittance firm for consumers and businesses in 2014, he had been struggling with what he called the entrepreneurial itch for a while. In fact, he told Karen Webster, he registered well over 100 domain names in the years leading up to InstaReM’s founding — just in case he ever decided to fully pursue any of the ideas that occurred to him.

However, ultimately, what pushed him into entrepreneurship once and for all was the same thing that starts so many businesses: real-life friction. In Nanu’s case, it was trying to send money home to his parents in India — and realizing that the process was opaque, expensive and full of mystery around things that really shouldn’t have been, like when the money was going to get there and how much was going to arrive when it did.

After a long, intensive crash course in payments, international money transfers, SWIFT, AML/KYC and a host of other financial service areas, it was clear to Nanu that the international payments market was in dire need of newer, better ideas. Furthermore, the increasing digitization of financial services worldwide meant that the time was right to start offering those solutions. InstaReM was then founded as a four-person operation in a single Singapore office.

“When we first started five years ago,” he said, “our first thoughts were about transparency and how consumers can business could really know and understand what was happening when sending funds.”

Since then, InstaReM has done much work on transparency, though Nanu rather humbly noted that the company was one of a few firms that had made big advances. Today, though, its scope and ambitions are bigger, with a headcount of over 200 people and eight global offices. The firm is now licensed to operate in 35 countries, and able to digitally transfer funds to more than 50.

Tomorrow, Nanu said, particularly in light of its new partnership with Visa as part of the FinTech fast-track program in the Asia-Pacific region, the goal will be to not only offer more remittance services, but change the nature of the remittance product and experience.

Serving Consumers And Business

InstaReM is a cross-border payments company that, according to Nanu, is something of a hybrid. One side of its business is about helping retail customers transfer money from one country to another — something like Xoom. The other side is focused on businesses and banks — in a manner somewhat similar to Currencycloud or Earthport.

On the business-serving side, Nanu noted, InstaReM’s customer base ranges from small- and mid-sized businesses (SMBs) to corporates, enterprises and FinTech startups that send low-value, high-volume payments.

The essential value proposition it offers customers on both sides of the house is simple: InstaReM can move funds (or in a bank’s case, its customers’ funds) instantly and digitally from account to account (retail or corporate) across borders for a nominal cost that the user can see before ever clicking send.

Building that kind of fast, global payments network that InstaReM offers — one that creates one-stop access to every faster payments network on earth  is hard, time-consuming work that has made the firm a “heavily licensed player” all over the world.

As a wholly digital platform that moves funds between accounts, he noted, there are challenges on the retail remittance side of the business. In markets like the Philippines, where cash is 80 percent of the market, figuring out a cash-out solution for the receiver side of the payments is a bridge that must be crossed.

Yet, he noted, conditions in the world are changing. India, for example, was almost entirely a cash-remittance market half a decade ago. Now, the country has not only flipped to a digital majority, but is InstaReM's largest receiver of digital remittances. Since the government has so aggressively enrolled people with bank accounts, there are now literally hundreds of millions of digital endpoints for those remittances from abroad.

“What we see in rural markets is that people will then go to a bank ATM and withdraw that cash for their local spending,” Nanu said.

The trend in both mature and developing markets, he noted, has been toward digitization. Consumers aren’t cashing out as often, as they are moving those funds into digital wallets and spending them directly off debit cards, because it is more immediately and easily spendable that way.

In observing that trend, it became particularly important for the firm to join Visa’s FinTech fast-track program to tap into the “interesting opportunity” that cards could become in the global remittance market.

The Customer As Issuer

There is much to do on the retail side of the business with the card opportunity, Nanu told Webster, but a lot of the innovative punch that the company can pack will be in working alongside its banking partners.

Some of those things, he noted, are easy-efficiency hacks for banks that perhaps don’t have strong card services — and find the prospect of developing them a bit demoralizing. A bank in Singapore, for example, that wants to start issuing cards will be waiting for about nine months to finish that project. Working with Visa, and leveraging really simple things like using pre-approved Visa card designs, InstaReM can get banks up and issuing in four to eight weeks, which is obviously a big improvement.

However, the really interesting stuff, he said, isn’t so much about hacking efficiency as it is trying novel applications of the card technology. For instance, Nanu asked Webster if, in deciding to give someone a gift, would she send that person her credit card number or the card itself. Webster unsurprisingly said this was an unlikely event, and Nanu agreed.

What if, instead, he asked, her bank could offer the ability to issue a virtual card linked to her physical card with a limit she could set? That would turn the cardholder and the remittance sender into an issuer — and change their needs entirely. Why bother to send a remittance at all if one can just as quickly and easily move funds through a card?

“It doesn’t have to be an option that everyone must choose,” he explained, “but the power of working with the [card] networks, and being able to move funds along [those] secure rails, is that it allows us to work with our banking partners on new products and concepts.”

New products and concepts are what global remittances most need going forward. It’s not that the old systems are bad or wrong, though, he noted. InstaReM has not come to bury the SWIFT network, which does extremely well with the large payments it was built to handle. If one is looking to move $10 million across borders between accounts, Nanu said, SWIFT is far and away the right solution.

If one is a business or a consumer trying to move $3,000, though? It’s the wrong tool because it’s just inefficient. For those types of payments, InstaReM is the faster, cheaper solution that will get the funds to the student studying abroad in 10 minutes and not two days.

It’s been a big job, and it is only going to become a bigger one, Nanu noted. However, that’s OK, because five years ago, when he was still just thinking about founding a business, the thing he was most looking for was “an idea big enough to fully develop,” he told Webster.

“And for us,” he said, “we believe we are building a new pedigree for global payments providers, even though we know that’s an ambitious idea.”



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