Nurol: Looking Behind the Screen of Remittance Platforms

Nurol scrolled through his gallery and pulled up a picture of a run-down row of cardboard houses perched on the bank of a still, muddy canal.

“This is where they wash their clothes, and themselves. And here, you can see the shop.”

Another picture followed, this time of a slightly bigger hut; a fan nailed to the thin wall, a TV set plastered on the counter, and one poster hanging lopsidedly in the corner. What exactly constituted it as a shop escaped my understanding, but I let him talk.

“This is where the factory workers gather once the day is over, to buy some drinks and chat with the shop owner. We trained him to become our mobile sales person, and he helps us run things in this settlement. With his help, the workers can deposit their wages in a bank account, and send the money to their families back home.”

Stunned, I stared at the screen.

So this is what the mythical world of “remittances” actually looks like?

With Seedstars World, we stumble across remittance solutions almost every week. In Africa alone, three of our previous local winners are trying to tackle this ubiquitous issue in various ways, from value-based remittances (Mergims), to mobile money transfers (remit.ug), all the way to bitcoin (Beam Remit).

However, since we always run our events in the capital cities, we rarely get to experience what exactly the typical unbanked user looks like.

With Nurol’s photos, everything became more real.

The Face of the End Customer

“We are focusing on the blue-collar workers hired for construction, manufacturing, plantation work, as drivers, or domestic help,” explains Mehedi Hasan, the CEO of MyCash Online, an e-Marketplace for migrant workers, and the winner of Seedstars Kuala Lumpur.

With Malaysians reluctant to take up menial jobs, Malaysia is one of Asia’s largest importers of foreign labour. As a relatively wealthy nation, the country attracts people from neighbouring countries, such as Indonesia, Bangladesh, Nepal, and Myanmar, who seek stability and better economic opportunities to provide for their families back home.

According to the World Bank, foreign workers form Malaysia’s third-largest community, at around 19% of the total population, displacing the Indian community from the top three.

And more than half of these foreign workers are undocumented.

“It is exactly this demographic that we are targeting. The majority of these people are not able to open bank accounts, because their monthly incomes do not reach the necessary amount of 2,000 ringgit ($450) required by the local banks.”

However, while the minimum wage in Malaysia ranges between 900 ringgit ($200) to 1000 ringgit ($220), depending on the specific state, the majority of the migrant workers still earn more money than they would back home.

Just as an example, in Malaysia, a plantation worker can earn an average of about 900 ringgit per month, sometimes even reaching 2,000 ringgit, but back in Indonesia, the maximum would never go above 700.

Still, this is not sufficient for the workers to open a Malaysian bank account.

Managing Financial Transactions

In the United Arab Emirates, where migrant workers constitute up to 85% of the entire population, the employers pay the foreign workers in the form of a prepaid card. In Malaysia, most of the employees get their wages in cash, which they bring back home and store somewhere in a closet. This allows them to have the cash handy for everyday smaller expenses, such as topping up their mobile phones or purchasing food.

Things get a bit trickier when they need larger amounts.

“Take the case of buying a flight ticket,” says Nurol Shamrat, the company’s CFO. “AirAsia, and many other carriers, provide their cheapest flight tickets online to be purchased with a credit card. However, since the migrant workers don’t have bank accounts, the only option for them is to take their stacked cash and find the nearest travel agent to book their flights.

And as you can imagine, the agents in physical stores will never offer them the same deals that you and I could find online, since they have to cover their own intermediary costs. At the end, you end up with people with below average salaries trying to book flights home that are way overpriced.”

That is where MyCash Online comes into play. Structured as a virtual bank account, the migrant workers can deposit their cash with a trained mobile sales person, or “MPS”, who is usually a small shop owner (like the one in Nurol’s picture) located in each of the workers’ settlements.

Specially trained to use MyCash Online, the MPS can transform the cash from the workers into mobile points, which the workers use to purchase local or international mobile top-ups, buy bus tickets, or pay their electricity bills back home.

To accommodate for the different nationalities, the platform is available in 6 local languages (Indonesian, Chinese, Filipino, Nepalese, Bengali, and Indian), and, just in the last 8 months, more than 50,000 migrants used the service to complete 188,000 transactions, worth a total of 3.5 million ringgit.

So, What About Remittances?

Things get more complicated when talking about international money transfers.

As mentioned before, the majority of the workers moved to Malaysia with the vision of sustaining their families back home. According to the Asian Development Bank, from 2005 to 2013, remittances from migrant workers in the region nearly tripled, reaching an astonishing $246 billion.

But without a bank account, how can the workers go about it?

“With remittances, their options are quite limited,” explains Nurol. “They can either go themselves, and visit the licensed money changers in the larger cities, or trust their money to a local friend or supervisor to deposit on their behalf. In the case of the latter, it does not come as a surprise if the family never sees the money again…”

MyCash Online has a solution for this as well. Thanks to a partnership with Metro Exchange, all the workers need to do is ask their local MPS to deposit their money through the platform on their behalf, without any additional hassle.

The authentication mechanism that protects Metro Exchange from potentially remitting fraudulent money, is photo verification. In order to create an account, MyCash Online users need to submit their passport details, and whenever they deposit money to the MPS, he takes their picture, which the MyCash team then compares with the passport photo. If the two don’t match, the transaction simply doesn’t go through.

And how hard was it to get the remittance house on board? According to Mehedi, not hard at all. Considering that Metro Exchange customers were mostly walk-ins to their physical branches, the opportunity to partner with MyCash Online was a clear win.

By agreeing to the partnership, it opened up the previously unreachable population of migrant workers living in rural areas, and brought them online. The digitalisation of the entire process made things much faster as well.

At the same time, this is still a slight grey area. As mentioned earlier, almost half of the migrant workers in Malaysia are undocumented. Now, if you provide remittance services to illegal immigrants, doesn’t it make your service illegal as well?

“Not necessarily. We always make sure that everything we do is lawful,” says Nurol. “There is an “interesting” regulation that allows the undocumented migrant workers in Malaysia to remit up to 3,000 ringgit providing just their passport, without a valid working permit. And considering very few of them can actually send more than that, it makes it very easy for us to facilitate remittances legally.”

Where does this leave us?

We have spent almost two hours chatting with the MyCash team, playing around with their app and website, and learning more about their ambitious plans for the future.

Word about the product is already spreading like wildfire among workers, and now employers want to use the platform to pay their employees online, eliminating the tedious process of dealing with cash.

Recently, the team also started working with AirAsia & AIIS Solutions on a CSR initiative to provide discounted flights to migrants to return back home.

And what is the team most proud of?

“It is amazing to see the unbanked migrants comfortable with virtual money, completely leapfrogging the stage of credit cards. But we are not stopping there. We want to help the underprivileged population access technology and inject their hard earned money into the local economy, rather than keeping it in a closet. The beauty of our platform is that It is accessible to everybody,” smiles Mehedi.

“We are bringing innovation to anyone.”

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If you are curious to meet more innovative entrepreneurs, such as the founders of MyCash Online, get the tickets and join us for the Seedstars Summit in Lausanne (Switzerland) on April 6!