Ruskin Felix Consulting LLC prepared a comprehensive feasibility study and execution plan to understand the money remittance business. We tried to prepare a report focusing on the executive summary, business overview, the industry characteristics, fluctuations and future scope highlighting the market dynamics, industry challenges, growth drivers, industry opportunities and total available market, serviceable available market and service obtainable market. We provided insights on the business model, business analysis, development approach, and focused on the financial viability of the business.
The project aims to develop a money exchange platform that will facilitate easy, comfortable and fast transfer of currency from the Sudanese diaspora in the U.S.S and vice-versa. The money exchange situation between the U.S.S. and Sudan is currently at a standstill, with only a few major money exchanges like Western Union operating in the field. The business aims to create an efficient system for the timely transfer of currency. It is also very costly for money transfer especially with smaller amounts, which makes it difficult for the Sudanese population to transfer money efficiently. With respect to Sudan, there is an added concern about security. Thus, this project aims to satisfy these needs by providing safe and secure transactions with utmost flexibility and convenience with an integrated online digital platform. The main operating base will be Maryland, US with a goal to operate in other states across the United States as well.
The usual money transfer/remittance process has three steps:
- The migrant sender pays the remittance to the sending agent using cash, check, money order, credit card, debit card, or a debit instruction sent by e-mail, phone, or through the internet.
- The sending agency instructs its agent in the recipient’s country to deliver the remittance.
- The paying agent makes the payment to the beneficiary.
This company follows a business model that focuses on the Sudanese population in the United States. A few challenges may arise when transferring money to Sudan to assist the Sudanese community, including high transaction fees, low-tech access, and low remittance amounts. As the trend is to go digital, operating entirely online would be advantageous. With increasing pressure to reduce transaction fees and restrictions on increasing FX charges, large corporations such as Western Union are focusing more on small businesses, offering innovative tools such as hedging and marketplaces for customers to connect. Its network’s 500,000 branches hamper its ability to respond to cheaper electronic transfer services.
The business can be successful if a phase wise approach is taken to expand the business. The initial focus of the business on the Sudanese market can be a good initial approach however due to the lack of turnover and high number of competitors, it will be hard for the business to sustain with focus only on one country. The company should apply the phase wise business expansion stated herein and move towards a multi-currency and multi-currency money transmitting company with high value of tech integration to compete with the modern players in the field. The company should also look at creating a payment gateway at a later stage post the 5-7 years of operations as that will unlock value additionally for the Business.
At a valuation of close to $15 Million, the company can be profitable given the initial cash burn of the company is funded through investors or structured Debt. Key elements to factor in include the compliance requirements, AML policies, FATF guidelines, licensing procedures and KYC norms for money transmitting globally.