What is Remittance-as-a-Service (RaaS)?
1 Answer
Faisal Khan
Answered 02/Dec/2020
Remittance-as-a-Service or RaaS is a term that was coined by myself in 2013. The quest was to find a legal method to be able to offer white-label remittance services to startups and incumbents alike for the US market (which is fiercely guarded, complex, and expensive to operate in).
At the time, circa 2012, white-labeled money transfer services were literally non-existent. The ones that were available, were simply out of reach of the vast majority of startups and incumbents, even banks from emerging markets, due to the prohibitive pricing structure that was available at the time.
If you wanted to enter the United States market for remittance-as-a-service (or money transfer-as-a-service), the odds were stacked against you, unless of course, you had deep pockets.
Even if you did, those who did manage to get going, the results were short-lived. In 2013, the United States government, particularly the Department of Justice, launched something called Operation Choke Point (see Wikipedia Entry). This led to the start of the bank's de-risking process, which many attribute to Barclays UK that started closing down the accounts of money transfer operators (the most infamous case of that of money transfer operators sending money to Somalia).
Whilst Operation Choke Point officially ended in August 2017 (under the Trump Administration), but the damage had been done. It set a precedent that was mirrored and copied the world over and there was not was to reverse the wave.
This really got us thinking, surely that has to be a better way to serve the international money transfer market? All these hurdles and problems naturally created market demand. The market needed a pre-packaged solution for the entire value chain of the money transfer business.
We literally worked diligently for over two years refining what we eventually became to call ‘remittance-as-a-service‘. Many doors were shut on our faces, many emails and calls went unanswered, but we did not stray from our mission. After 127 rejections (yes, you read that right, you can watch the video story at: Want Results? Just Don’t Give-up!), we were finally able to piece together what we aiming for.
A packaged solution, that encompassed licensing, compliance, AML, banking, payment processing, and white-label web presence for the money transfer market.
No wonder the quote, “The dream is free. The hustle is sold separately.” was something we could resonate with.