Despite being worth over half-a-trillion dollars annually, remittances are an oddly invisible part of the payments ecosystem to most people — even those who otherwise know it quite well. We all might know that money may make the world go around, but what makes money go around the world is just a little bit more mysterious.
"It’s actually hard, even for industry experts, to get to know the business, because most people who are in the industry or writing about it don’t actually use the products and send money,” noted Matt Oppenheimer, CEO of Remitly.
Because while there are various reasons a consumer might want to send money cross-border, Oppenheimer noted, the most common user group is workers living abroad and sending money home to relatives. And while this is not a small group of people, or a small amount of money, it is a segment of the market apart from the mainstream — and thus one that is either missed, underserved or poorly served by the standard channels. And that, Oppenheimer notes, is where Remitly comes onto the playing field.
“Quite simply, we’ve built the best mobile solution to send money internationally,” he said.
Oppenheimer came up with the concept for Remitly while working for Barclays Bank in Kenya when he realized that the process sending money, particularly in the developing world, was both expensive and painful, but also absolutely necessary.
“I saw how far that money went once it was sent back to developing countries,” Oppenheimer noted, “So I moved back to the U.S. in May 2011 to start the business.”
And that business has gained traction. As of the writing of the article, Remitly has raised $22.5 million to date from high-profile funders like Jeff Bezos’ Bezos Expeditions, Founders’ Co-op and DFJ. In September, Remitly was also able to raise $12 million in credit from Silicon Valley Bank to help the firm scale its international service.
Offering a much lower cost for money transfers (about 2 percent, as opposed to the normal 6.3 percent to 14 percent offered by its competitors like WesternUnion or Citibank), Remitly has also quickly found and grown its user base.
"We’re now transferring more than $500 million per year and we’ve just completed our millionth transaction, which makes us the largest independent digital money transmitter in the U.S., so we’re helping a lot of customers and hopefully doing a lot of good for the world as well,” Oppenheimer noted.
A good that Remitly is now expanding by adding another country to their service network. Until yesterday, Remitly was only an option for customers sending funds from the U.S. to India or the Philippines. As of yesterday, the firm announced it is adding Mexico to the lineup as well.
“Mexico is the largest remittance corridor in the world. The U.S.-Philippines is about $10 billion, the U.S.-India is $12 billion to $15 billion. The U.S.-Mexico corridor is worth more than $20 billion,” Oppenheimer told PYMNTS. “There is a huge amount of demand and a lot of customers who work very hard who come to the U.S. largely with the purpose of having higher earning power and supporting family back home.”
Remitly can now offer those customers an easy-to-use experience that is all accessible from an Android phone — and also easier and cheaper to access than the system today. It’s also a system that is customized to mobile. Using things like biometric authentication, and frequent alerts and updates, the goal is to make a system that is easy, transparent and inexpensive to any customer to use without having to venture further than their own pocket.
"We talk a lot about delivering on promises so our customers can deliver on promises to their loved ones at home,” Oppenheimer noted, “What I always tell people in general is our business comes down to trust. A lot of the features you see, leveraging mobile sounds like a simple thing, but delivering on promises to customers in a much more meaningful transparent way."
That has meant going slower at times than would be any entrepreneur’s first choice, he noted. Bringing the service to Mexico has been a goal for Remitly since Day 1, but actually being ready to go there took a long time. This, the CEO noted, is part of the firm’s basic DNA — and something he believes is fundamental to anyone in the heavily compliance-dominated money transfer business. Fast is flashy, but slow and steady not only wins the race — it makes participation possible.
“We did all the heavy lifting early days, the first 18 months of the company, to get the money transmission license in place. We’re a licensed money transmitter operating in 45 states, and also getting the other security and risk systems that customers are really interested in place,” Oppenheimer said. “We see that as a real competitive advantage for us, because we started doing it in the right way and it’s how you scale up a big money transfer business.”
"We really can focus on doing the right thing, on building the right experience for customers. Sort of like how Facebook did in early day with colleges. You get the product right in a few big markets with the right customers and then continue to scale globally. This is part of our strategic plan to bring the product to new customers."
Getting the product right in Mexico, Oppenheimer noted, means meeting the population where they are, which is often unbanked, or very underbanked. While on the sender side of the equation users need a bank account and/or debit card to initiate a transfer of funds, receivers need neither.
"We partner with large FinServ institutions like the largest bank in Mexico and others to be able to deliver funds as cash across the nation,” Oppenheimer said. “So in the context of Mexico, for example, we have over 10,000 cash pick-up locations, as well as further locations at most major banks."
The banked-unbanked balance is shifting, Oppenheimer noted, especially in Mexico, but that shift is gradual, and he expects it to be in the developing world. Meaning that cash-out network on the receiver side is key.
“We also offer really fast bank deposits in Mexico on the receive side because we do see a secular shift happening with the digitization of money. That’s an exciting thing and something we look forward to be a part of,” Oppenheimer said. “But until that develops more fully, we do have a really solid and competitive cash out network that customers can use.”
Going forward, Remitly says it plans to continue doing what it is doing now: building its international footprint and attempting to scale its mobile-customized remittance platform.
It is an interesting time to be in the remittances game, he noted. About six weeks ago, in what has to be a first for presidential primary politics, remittances became a political hot button when Donald Trump proposed seizing them to build a wall between the United States and Mexico.
On the one hand, Oppenheimer couldn’t help but be happy to see remittances in the news.
"I think anytime there is $500 billion being sent, that’s globally — there’s $123 billion coming from the U.S. each year — people are going to talk about it, people are going to focus on it. I think that’s a good thing,” Oppenheimer noted.
On the other hand, seizing remittances to Mexico as a plan — no matter how unlikely or far-fetched — is not exactly an idea the CEO of a remittance firm on the eve of expanding into Mexico wants to see taking hold.
"I think people will have different political stances on it, but I feel the experience of the migrant and people who move thousands of miles from where they are born to work are part of the U.S. story, and it is a part we are excited to be part of,” Oppenheimer said.
And, he says, a part they are excited about making easier, cheaper and more accessible for more users in years to come.