Value Added Services in Digital Remittance

online money transfer

Value Added services (VAS) relate to the facility that is not the part of core package. It is concepted to add value to customer experience. The main aim of VAS is to enhance usage of offered services by delivering the best possible options. If we take VAS concept in digital remittance, it creates a whole new idea in the vast market of Online Money Transfer.

Best Money Transfer Companies are using value added services to make it easy for their customers to send money globally to their loved ones. Money transfer Companies that are investing in value-added services today, will take much of the gains from the harvest. When it comes to online money transfer, value added services become more beneficial and increase access, affordability and transparency of remittance.

The Opportunity: If a money transfer company is able to work with a local on-ground merchant to offer their products online, while the remittance is being made, you facilitate the entire transfer chain. For purposes of simplicity let us assume when a person sends US$ 1,000 back home, the total revenue for the remittance company is 3%, so this would be earnings of US$ 30.

Most likely the remitted money shall be spent for followings:

  1. US$ 450 for groceries
  2. US$ 100 for utility bills
  • US$ 150 for tuition/school fees
  1. US$ 50 for fuel
  2. US$ 200 for allowance
  3. US$ 50 loan repayment

Now if you have alliances with on-ground partners who can provide groceries and other value-added products/services to you also providing (the remittance company) with a discount, the equation changes dramatically. Let us assume you are about to secure a 10% discount on groceries, then the same remitted amount of US$ 1,000 would look like as follows:

  • US$ 450 for groceries, net income of US$ 45 (discount given by grocer)
  • US$ 650 for the remainder amount of remittances, net income of US$ 19.50 (at 3.0%)
  • Total income earned: US$ 64.50

Although earnings on remitted amount is reduced by 1/3rd (US$ 30 prior and now US$ 19.50), but you have managed to earn income on the money that was allocated towards groceries, thus increasing your overall earnings by 115%.

Whilst the 10% may be out of range for groceries, it is nonetheless a very viable number. Realistically you can expect a 5% cash-back from most grocers. (Khan, 2015).

Remittance companies around the world are offering VAS such as Quick Pay by WU (Thuraya, 2013), to boost their money transfer service. In near future Value Added Services will become a demand and eventually an essential part of Money transfer business. With the passage of time as customers are becoming more attracted to send money online, it will open more doors to the world of value-added services.