Business Idea

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– Business Idea 1. Presentation TawiPay.com is a comparison website for international money transfer services, targeting in particular remittances reaching the unbanked in the global south. Our mission is to empower migrants with transparent information to help them save dramatically on money transfer fees. TawiPay was founded by four young entrepreneurs: Laurent Oberholzer, François and Pascal Briod, and Younès El Biache. With backgrounds in Finance, Marketing, International Cooperation and Web Development, these complementary entrepreneurs joined their efforts with the explicit purpose of having a positive impact.

2. Customer benefits TawiPay is a transparent and independent money transfer comparison website. Users of the service can find services to send money abroad, along with detailed information such as cost, transfer speed and payment types on the sending and receiving side. By accessing this information, they are able to make informed decisions and potentially save on transfer fees. On the other hand, TawiPay offers payment service providers access to highly engaged and qualified users at a key step in the payment process. By reaching out and engaging with these users in various ways, payment service providers can drive sales and gain insights into visitor demographics, competitor data, and in-market trends. TawiPay therefore has a double-sided business model with the following customer groups:  

Users are the visitors of the website who come to compare money transfer services. Payment Service Providers (PSPs) are the companies providing payment services listed on the platform.

Their needs are catered to through different value propositions.

2.1. Value Proposition: User 2.1.1. Finding the best alternative Selecting the country of origin and of destination of the transfer, the users can then see all the alternatives with a clear breakdown of all (and often hidden) costs. It is also possible to filter by payment and reception type (e.g. from a bank account to a mobile banking solution) and time of delivery. Additionally, users can sign up for free and receive latest deals and price change alerts for their corridors of interest. Finding the cheapest alternative for a given corridor is a game changer considering that the difference between the cheapest option and the traditional actors can be quite significant (as much as 12 percentage points).

For example, sending money cash to cash from the UK to Uganda costs twice as much with Western Union than Dahashbili, a competitor. Someone sending GBP 300 monthly would save GBP 10 (4%) on every transfer, or GBP 130 a year. But it doesn’t stop there. The difference can be much higher if the user is able/willing to change her habits: sending money from France to Algeria in cash costs ten times a transfer on a bank account. When the user realizes that the potential savings for someone sending EUR 345 each month could be EUR 25 (7%) on every transfer, or EUR 308 per year, this might be a trigger for change for a better financial situation.

2.1.2. Payment process facilitation Transferring money can be tedious. It’s a long and stressful process, especially when processed online by users that are not accustomed to it. TawiPay plays a central role and starting point in the value chain for online and offline payments. Therefore, TawiPay aims at offering the following features:    

to facilitate the payment process via a deep integration between TawiPay’s and the PSPs’ service to enhance the trust via ratings by the community and certification to help and take along the users via How-to videos and digital assistant to centralizes users’ information in order to reduce the frictions when switching between service providers.

2.1.3. Grouping the transactions In general, the bigger the amount, the smaller are the fees in relative terms. This is why some migrants tend to group their payments with friends from the same city/region in order to reduce the costs. We are considering the options to offer a way to, firstly, organize those grouped transfers and in a second step to collect the amount from different sources and then process the transaction via TawiPay. See illustration 1

2.2. Value Proposition: Payment Service Providers Payment Service Providers benefit from being able to advertise to and analyze their target market. PSPs are offered a three-tier freemium model:

2.2.1. Free listing (“data only”) TawiPay’s objective is to become the definitive source of information on money transfer services and the first step in the money transfer value chain, thereby attracting highly engaged users with a clear intention to use these services. By providing us with their price data, PSPs can have their services displayed in search results to this targeted audience. PSPs with Free Listings can link directly to their website in search results, however users are warned of the existence of cheaper alternatives before leaving the TawiPay website. PSPs are not charged for this service.

2.2.2. Promoter PSPs in the Promoter tier can post sponsored messages (promotional offers, announcements, etc.) for a limited time on the search results of given corridors. This focuses visitors’ attention to Promoter’s services at a key step in the money transfer process when the user is taking his decision on what service to use. PSPs are charged a fee on a Cost per Click (CPC) basis for this service or via affiliate marketing.

2.2.3. Premium Listing Premium Listings give PSPs a more substantial presence on the TawiPay platform. Premium PSPs manage a profile page containing a description of their company, an overview of their services, and additional relevant content such as agent locations. By providing users with a more complete and attractive description of their services, PSPs can translate more views into sales. Additionally, analytics services give PSPs insights into visitors, competitors and in-market trends. PSPs are charged a fixed monthly fee, as well as a variable fee on a Cost per Click (CPC) for this service. See illustration 2

3. Market USD 406 billion were sent home by migrant workers in 2012 (a figure forecasted to increase to USD 500 bn in 2013) and dozens of billions are paid as fees to payment service providers (PSPs). Around 76% of global remittances are flowing towards developing countries.

3.1. High prices The global average price to send remittances is estimated at over 9% for 2012 by the World Bank. This amount has been stable (with only a very slight negative trend) despite the G2, G8 and the World Bank’s combined efforts to lower the costs.

3.2. Payment service providers The big and traditional players in the remittances market are Western Union and Moneygram. Their dominance is particularly striking in Africa, where the two giants control 65% of the continent payout locations. Nevertheless, this market is ripe for disruption. Emerging technologies and new business model resulted in a wave of new and often cheaper services. The enormous adoption of mobile banking technologies in Kenya and Philippines, to take only two examples, makes it possible to easily reach the un- or underbanked. The maturity of online payments in western countries also resulted in new online services to send money (e.g. Skrill, Xendpay, Worldremit) internationally, even if the receivers withdraw in cash. Business model innovation also occurred in the remittances market. For example, Regalii proposes to buy commodities in the destination countries for the recipient instead of sending the money with more costs. Transferwise helps migrant save on conversion fees by matching and netting people that want to send money in the opposite direction in a given corridor.

3.3. TawiPay’s focus To validate our business model and value propositions, we will firstly focus our efforts on the corridors between Europe and Sub-Saharan Africa, and in particular the English- and French-speaking countries where a substantial African diaspora lives. This is for several reasons: There is a large dominance of big companies and the world’s highest average fee in Sub-Saharan Africa, and therefore a high interest in finding alternative and cheaper services. $43bn were sent to Sub-Saharan Africa in 2012, with Europe as one of the main senders.

There is a large potential for social impact. Indeed, recent surveys show that most of the money sent home by Sub-Saharan African migrants is spent on education, health care, buying land, building houses, starting business or improving farms. See illustration 3

4. Competitors Several actors already propose some sort of comparison services for the money transfer markets and can be grouped in different categories:

4.1. State-funded initiative: Based on the G8 and G20’s will to increase competition and lower remittances prices, the World Bank proposes several comparison websites: remittanceprices.worldbank.org, sendmoneyafrica.org, sendmoneypacific.org, envoidargent.fr, sendmoneypacific.com, mandasoldiacasa.it Their weaknesses: Low traffic - based on some traffic estimator services (Alexa, Quantcast), the World Bank’s flagship website, remittancesprices.worldbank.org, has only an estimated 6000 visits per month. User experience - the information is often hard to understand and analyze, the payment service providers are not linked directly (users have to search them on Google)

4.2. Foreign exchange comparison website Several comparison website focused on comparing foreign exchange services also offer comparison featuring some money transfer operators on their website. We identified three of them: MyCurrencyTransfer.com, FXcompared.com and money.co.uk/moneytransfer.htm Their weaknesses: Completeness of results and information: many corridors have only two or three service providers listed and not all the information are provided: conversion fees, type of services, time of transfer are sometimes missing. User experience: the information is often hard to understand and analyze, the payment service providers are not linked directly (users have to search them on Google).

4.3. Our competitive advantage Three months after the launch of our first version, we have already made great contacts with the World Bank, academics at the Graduate Institute Geneva, and influential diaspora members. We are also in discussion with five important online Payment Service Providers: Skrill, Azimo, XendPay, and WorldRemit. The contacts and the data we are collecting reinforce our position and will soon make us essential partners in the market. Our competences and experience in web development and marketing also put us in a good position compared to our competitors. See illustration 5

5. Business model mechanics 5.1. Reach a wide audience Leveraging the new digital channels based on a good understanding of their mechanics will enable us to reach a large number of potential users. Here is a short overview of the user acquisition methods at our disposition: Diaspora networks Our target groups are well interconnected via official associations or informal networks. Our goal is to identify influential diaspora members and enable them with information and tools to spread the word within their community. Link building and Search engine optimization While searching for information about money transfers and comparing the rates, users ask questions on forums, consult specialized websites, research information on search engines and ask their peers on social networks. Understanding our users’ online behavior and source of information allow us to position TawiPay’s value proposition where and when potential users need our services. Press TawiPay’s story and mission statement are media friendly. After a soft launch in Switzerland, we targeted specific blogs and groups of Swiss entrepreneurs and tech-enthusiasts that shared our pressrelease. The news spread quickly and we were contacted by journalists at Bilan, Le Temps, RTS, Dukascopy TV and Homme d’Afrique as well as a set of niche online newspapers. Partnerships Several actors share the same vision and objectives as we do. Building win-win partnerships will enable us to reach their audience. For example, embassies know the impact of the money sent by their compatriots. They will see the advantage of sharing our tool with their networks. Similar strategies can be applied with consumer protection associations, institutions (like the World Bank), and companies offering complementary services targeting the same audience.

5.2. Focus on conversion and retention Driving traffic to our website is the first step, converting these visitors into users and then giving them incentives to come back is another story. We therefore focus a lot of our efforts on monitoring the conversion rates. Since our launch in late August 2013, 30% of the 4000 visitors of TawiPay made at least one search on our comparison engine, and again 30% of those who searched clicked on a link redirecting to a PSP’s website. Percentages that have nearly doubled since we launched an updated version. In order to keep in contact with our users, we offer them to submit their email address in different calls to action. We don’t need users to come back on our website, which is a significant effort, but we will directly provide our service in their inbox. When new information or promotions are available for their corridor of interest, we will then send newsletters with a simplified version of a result page also containing the promotions and affiliate links.

5.3. Referral and virality Users are our first ambassadors but they have to be incentivized to spread the word. The first step is to build a referral system: it needs to be easy and effortless to share the news with the adequate material and wording. Then, referrers want to see their impact and get something in exchange. Then, we are building features that are viral in the core of TawiPay. For example, to organize a group payment with friends to send a higher amount and thus save on fees, I need to invite my friends on the platform. Such features would have the same kind of effect as Doodle.

5.4. Price data Once we attract a reasonable volume of traffic on our website, we gain in bargaining power and attractiveness with Payment Service Providers. Although we are already in serious discussion with the most innovative PSPs, traditional actors will need more than an interesting concept to make the move. The first step is to gain access to their price data via partnerships in order to improve both the breadth and depth of our database. We will then be able to offer additional services to our users and begin a virtuous circle.

5.5. Monetizing the audience and data Asking the data first is part of a foot-in-the-door sales strategy. It is free to be referenced on TawiPay and everyone benefits from it, but we can then offer them additional services as described in the value proposition for Payment Service Providers. TawiPay’s advantage is to be one of the first steps in the money transfer value chain. We therefore have a power of redirection and we will monetize it via: Promotions Banners and advertising are often monetized in Cost per Click (CPC). As the money transfer industry online generates a lot of volume, the competition in advertising is really interesting. For example, the average CPC for keywords like “Send money abroad” is between 5-15CHF. With 220 corridors and three major search options (amount, type of payment, type of reception, speed of transfer), we have several thousand customizable banner positions that we can auction. Affiliate marketing With affiliate marketing, the PSPs will reward us a commission based on the transaction the user we redirected will make with them. A typical affiliate deal would be around 10-15% of the first transaction and then 1-2% on the PSP’s commission for the next transactions. Fix monthly fee The amount of the fixed monthly fee for premium listings is not yet determined and will be adjusted over time.

6. Looking forward A comparison website is only the first step and the best way to acquire a large audience and a position in the money transfer value chain. In the long term, we want to leverage this position to handle the payment and then have a bigger bargaining power to reduce the costs of remittances. Grouping thousands of transaction for a given corridor to negotiate the prices would be an interesting option.

7. Appendix

Illustration 1- Display of transparent results

Illustration 2- Monetization

Illustration 3 - Remittances market

Illustration 4- TawiPay’s competition