How to setup a money transfer business?
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This document highlights the concepts behind a money transfer alliance (or association), working very much like the Uber model (shared economy). In this case it is not a shared economy but shared licenses, shared banking, shared networks, shared everything.
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How to setup a money transfer business?
- 1. Uberization of Money Transfers (Remittances) A collective approach to solving the US money transfer market problem for startups and fintechs
- 3. Our mission is simple: To provide a unified, multi-domain platform for money-transfer. With each participant contributing towards licensing and also benefiting from pooled earnings.
- 4. The problem How can an MSB licensed in one state only, legally on-board transactions from other states? How can an MSB that has corresponding agreements with let us say two beneficiary countries expand into other countries? How can they get more business? How can they get access to a unified platform?
- 5. The problem How can they allow other businesses to benefit from their license without being subjected to any regulatory approval? How can they continue to operate without exposing themselves to risk? Who will put together the alliance and how will it work?
- 6. The common denominator for an alliance solution comes down to basic operating guidelines and agreements.
- 7. The solution Collaborative Network Power Find MSBs who hold licenses for a specific territory Provide a unified platform (that can be multi-domain) Provide a basic transaction set and how its settlement will be done Assign affiliate agreements for generating business
- 8. The solution Collaborative Network Power Find processing partners for payments Establish a baseline KYC/AML program Agree on cross-settlement mechanics (including pricing) Seek legal opinion on flow of funds for transaction set
- 12. How it works Step 1 Affiliate Agreement Sign affiliate agreement with each: ● Platform (Domain) ● Other MSBs in the network Step 2 Define Licensing For each platform, enter the state(s) for which you are licensed for. Step 3 Define Pricing Display your pricing for each client transaction that may be sent your way.
- 13. How it works Step 4 Define Corridors Let others in your network know which corridors you have an agreement with for onward termination. Step 5 Pass-Thru Pricing For transactions picked up by others in the network and passed onto you, provide pricing for such transactions. Step 6 Domain Goes Live Platform provider goes live. Your pricing will determine if transaction come your way or not (as there can be multiple providers competing for the same business)
- 14. Flow of funds is strictly between licensed entities. All of whom have a signed correspondent agreement with each other.
- 15. The most important takeaway is that Affiliates never touch the money.
- 16. Revenue model Affiliate Transaction based ● On every transfer. License Holder Transaction based ● On every direct and intermediary transfer. SaaS Platform Recurring ● Plus small fixed fee per transaction.
- 17. Fact: More than 80% of US MSBs who are MTOs are struggling on all fronts: new business, banking, online presence, licensing, expansion, technology, access to new corridors, competition. Based on a closed survey
- 18. Milestones Partnerships Feb/Mar 2016 Seeking interests from Licensed MSBs, Payment Providers, 3PPP, Correspondent Banks Trial Setups Mar/Apr 2016 Work with select partners for additional proof of concept. May 2016 Launch limited services with select partners. June 2016 Full-fledged commercial launch with multiple partners