Former refugee aims to upend $444B market
london — Refugee, economist, entrepreneur — Ismail Ahmed has played many roles in his odyssey from war-torn Somalia to London’s FinTech frontier.
But one event stands out: In February 2010, he used a $200,000 settlement from the United Nations to start online money-transfer company WorldRemit Ltd. It has since raised more than $145 million and today sends cash to 142 countries.
This week, WorldRemit plans to connect its service to Android Pay, the digital wallet owned by Alphabet’s Google. That will make it easier for its 2.4 million customers to send money with just a couple of taps and take Ahmed a step closer to becoming a force in modernising the way $444 billion a year in remittances are sent to developing economies.
“What we’re seeing is a convergence of payments, messaging apps, telephony and remittances,” says Ahmed, 57. “The shift from the informal to the formal, from cash to cashless, is where we want to be.”
Ahmed and his more than 300 employees are at the forefront of a push to rewire an industry little changed over the decades. People still line up at Western Union offices to send funds to faraway relatives, pay hefty fees to have banks do it, or trust their hard-earned cash to black-market networks. And it still takes hours or even days for the money to arrive.
Since 2011, the number of people using digital cash on smartphones to collect wages and pay bills has jumped fivefold to more than 500 million accounts in almost 100 nations, according to GSMA, a London-based trade group. Sending mobile money internationally costs less than three per cent per transaction, about half what traditional transfer firms charge. The cash materialises in recipients’ mobile phone accounts in minutes, and they don’t need banks to use it.
WorldRemit says it handles three out of four intercontinental mobilemoney transfers. But it’s facing challenges that technology might not be able to overcome. Western Union, which dominates the business with 500,000 agents in 200 nations, is mounting a digital counteroffensive. Governments are erecting roadblocks, even in the US, where President Donald Trump has talked about taxing remittances sent to Mexico.
Perhaps no threat looms larger than running afoul of anti-moneylaundering rules. WorldRemit, licensed by the UK Financial Conduct Authority and similar bodies in other nations, is responsible for ensuring its system isn’t used by criminals and terrorists. It must satisfy more than regulators. The company still needs banks to handle transfers for customers who don’t use mobile money, and for years those institutions have been derisking by dumping clients who might expose them to compliancerelated dangers.
“That is a big singular risk,” says Harry Nelis, a London-based partner at Accel Partners, a venture capital firm that invested $40 million in WorldRemit in 2014. “One of the ways you could go belly up very quickly is breaking the rules, and the bank yanks your account and puts you out of existence.” — Bloomberg