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Money Transfer Operators: 5 things to consider before selecting your next remittance market

With the abundance of information and knowledge available at your fingertips, it is challenging for Money Transfer Operators (MTOs) to pick the next market. Keeping a simple and focused approach is not easy when you get pulled in multiple directions. Expanding to a new market takes a lot of grit, market research, and flexibility.

What works in one market can prove to be inadequate in another, hence it is essential to understand the market dynamics and adjust your plan accordingly.

With limited tech and business development resources, how do you prioritize and ensure your next market launch is successful?

Having worked closely with over 50 Money Transfer Operators to help them expand their footprint across 55 countries globally, here are the top 5 things we recommend to MTOs who are looking to venture into new markets:

1. Total Addressable Market (TAM)

  • Know the total addressable market size and its YoY growth. How big is the market in terms of remittances? Is it rapidly growing or staying constant? 
  • Is the market cash, mobile wallet or bank account driven? Morocco, for example, is a cash-driven market so launching cash payouts to Morocco, or Egypt makes more sense than mobile wallets
  • Having this information at the forefront will help you better assess the market potential in line with your growth plan and develop your go-to-market strategy accordingly

2. Think about it by ‘corridor’

  • Map it out by ‘send’ markets to ‘receive’ markets i.e. France to Senegal, Italy to Morocco
  • If you’re going to launch Senegal as a receive market, make sure you have French-speaking send markets ready to go i.e. are you prepared for customer expectations when it comes to local language or PR in the preferred channels
  • Generally, adding a ‘receive’ market is a lot easier than a ‘send’ market because ‘send’ markets require licensing, customer support (in the local language) and infrastructure to acquire local payments from your users. Adding a ‘receive’ market has fewer hurdles especially if you’re partnering with the right provider who has solved most of the pain points already.

3. Market Dynamics & Licensing

  • Are you seeking your own license in the market or working with a licensed partner? If you need your own license, understand the timeline and include it in your roadmap
  • Are there macroeconomic challenges in this market? Is there a parallel market i.e. how are market rates derived and are remittances done via informal channels? If they are done via informal channels, how easy is it to migrate those users to your platform? In addition to Product/Market fit, you also need to think about distribution and your customer acquisition plan
  • Markets can have unique compliance and AML requirements. Try to uncover these early on and see how they fit into your user journey

4. Who are the existing money transfer operators?

  • Understand the current landscape – which MTOs are already offering the corridor and channel? What is the user experience like including cost, settlement time, recipients’ experience and how many clicks it takes to complete a payment?
  • What problems are you solving in the new corridor? If you launch the same corridor and channel, you’ll need to ensure you have a competitive advantage to attract users

5. Partner with the right payout provider

Finding the right money transfer operator partner

  • How many redundancies does the provider have in the payout market/channel?
  • Look at their KPIs: latency, current volumes, SLAs
  • Does their API meet your requirements? Will one integration unlock many markets? 
  • Do they have SDKs available for quick and easy integration?
  • Competitive FX and transaction fees are a no brainer but look beyond that – does the provider offer rebates for volume milestones, or marketing resources and support to help you grow volumes? This shows the provider has a long term investment in the partnership and wants to support you to grow your business

This is a big investment of resources so make sure you select a payout provider with whom you can build a long term partnership.

At AZA Finance, we work with money transfer operators like yours from 115+ countries to build and accelerate their operations around the world with better foreign exchange, treasury management, and cross-border payment solutions. We offer instant settlement, competitive rates and round-the-clock customer service to help you successfully launch and grow your next market.

Every MTO is different so think about which of these factors are relevant to your business and critical to your company’s objectives. What is your end goal? Is the market large enough to help you meet these objectives? What additional resources or investments will you need to make to break into the market?

This will help you accurately assess if the market is the right fit for your business at the given time.

For more information about how we can help you expand your footprint in frontier markets, reach out to us.

Written by:
Sukhi Srivatsan
Country Director- UK

AZA Finance

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