Just like every other business in the market, a new set-up comes with a lot of risks and threats. If we talk about money transfer services, then here are some basic questions that you should ask yourself before jumping into the industry. No matter you want to send money to Gambia or any other country, this article will help you out.
1. What Are The Problems Associated With Money Transfer?
Every business comes with its risks and threats, but when we talk about money transfer companies, keep in mind that there are hundreds of such small companies that are on the edge of shuttering down because it requires a lot of investment. Some ground-level problems faced while starting a money transfer company include:
- Costs for Maintaining Licenses
- Investments for increasing sales and doing effective promotions.
- Facility to send money online.
- Compliance Costs which keep on increasing with time.
- Payout Options
- Brand Management etc.
This list can cover a lot of other things, but these are some basic problems, to give an idea about how hectic is it to start such a business.
2. What is The Analogy Behind Money Transfer Online?
We can take it as an example of understanding the internal phenomenons of a money transfer company. For Instance, when we say how many total banks are in the US? You can answer over 8000 which includes all small, large and struggling banks. But if we specify the questions a little and ask that how many banks are of Tier-1 means having the assets over 500$ billion, then the answer will be 10–20 or maximum 50.
Now come to the Tier-2 banks. These are the banks with assets between 10$ billion and 500$ billion. The answer will be 50–75 only but let’s say they are 150 approximately. Well, it leaves almost 7800 Tier-3 banks in the US (with assets below 10$) which is a massive competition for everyone who is just entering the market. But this problem is not ended yet. The Tier-1 banks usually use software and internal systems of their own. They do not rely on any external party to do that for them.
However, the Tier-2 and Tier-3 banks lease software from commercial top-3 vendors in the US i,e; Cartel, which comes with a massive load of cost. And even after buying the software, all of your investment can go in loss because the competition at the lower levels of banking is a way too much!
3. How Different Money Transfer Businesses Work?
If we talk on approximation, let us say there are 50 companies in every country. Knowing that if there are 200 countries, it makes a total of 10,000 money transfer organisations in the world! Now similar to banks, we have three tiers in the MTO’s too. But unlike banks, the tier-2 and tire-3 companies also have to come up with their software and internal systems which is the greatest challenge for any money transfer organization.
Several companies are efficient to have succeeded in creating their own and reliable system for transfer for payments overseas. For a money transfer to Gambia without any hassle, you can complete your process within seconds. Just a few taps on your phone and your money transfer will be done!