Tech Firm Eyes Remittances With Mobile Cash App

A local technology firm is eyeing a share of the international remittances with an application that can be integrated with any mobile money network for direct cash transfers using phones.

AVLC Group chief executive and co-founder Andrew Kanyutu during the interview at his office in Nairobi on Monday. Photo/SALATON NJAU

AVLC Group chief executive and co-founder Andrew Kanyutu during the interview at his office in Nairobi on Monday. Photo/SALATON NJAU

Information technology firm AVLC Group has developed Instant Matrix, an android-based application, joining a number of companies such as a UK-based Skrills that has partnered with M-Pesa to offer mobile money transfer services.

Other than the international money remittances, AVLC Group intends to capture the intra-Africa money transfer and is seeking partnership with mobile firms such as MTN, Vodacom, Safaricom and Airtel, among others.

Users have to register with AVLC agents or do it online through their mobile phones, once registered the system is able to automatically recognise the user conducting money transfer transactions from any part of the world.

The platform offers Kenyans in the diaspora flexible options for transferring money back home, especially those who do not have bank accounts.

The system terminates the transaction directly in an e-wallet account, which basically is an individual’s mobile money account. The same transfer can be terminated in a bank account within hours or a day, depending on a bank’s efficiency.

Instant Matrix also performs currency conversion as well as offering advanced reports necessary for reconciliations and support for agency models as well as regulatory purposes.

Latest data from the Central Bank of Kenya (CBK) indicates that Kenyans in the diaspora sent home Sh2.3 billion in the first three months of the year using channels other than banks, highlighting the growing influence of alternative means such as M-Pesa and sacco money transfer systems.

“In our first phase that we estimate will take the next nine months, we intend to on open at least 20 corridors in Africa both intra Africa and out of Africa transfers with America, Europe and UAE being the main focus,” AVCL Group co-founder and chief executive Andrew Kanyutu told the Business Daily in Upper Hill, Nairobi.

“We are already in final stages of opening six intra-Africa corridors with various licensed firms and telcos within the next few weeks. The reception by the approached institutions has been very positive and encouraging.”

The platform’s architecture is based on a source and destination, which creates corridor — a route with a source and destination of two currencies involved.

The cost of sending the money through the platform will be borne by the senders while AVCL and the telcos will make money through commissions earned from cash transfer services.

The agents that AVLC seeks to partner with must be legal entities with a valid licence and regulated by the relevant authorities.

A 2013 FinAccess National Survey reported 11.5 million adults use mobile money services in Kenya, compared to 5.4 million using traditional banking services.

CBK data shows that Western Union (with Post Bank), M-Pesa and IRNET, a system of the saccos, remitted Sh824 million in March compared to Sh722 million in February and Sh767 million in January.

Diaspora remittances have become a new front for competition in the financial sector because it provides transactional commissions, foreign exchange earnings and cheap deposits for banks. New entrants are looking at spoiling the party for seasoned outlets.

CBK captured the amount of money sent by the channels in Europe through M-Pesa as Sh606 million in the three months to March.

There was no amount captured under the platform for other parts of the world, including North America which is the largest source of remittances though.

M-Pesa has partnered with global firms MoneyGram and Western Union which allow users of the two to send money directly to Safaricom subscribers.

Recently a UK-based money transfer firm, Skrill, also reported a partnership with Safaricom to have its users send money directly to its subscribers who can withdraw it through M-Pesa.

Saccos, through the IRNET system were used to remit more than Sh60 million in the three months.

Remittances from Kenyans working abroad are the fourth-largest source of foreign exchange after revenue from tea, horticulture and tourism.
However, commissions charged by banks for the services have come under much scrutiny.

A report by Overseas Development Institute released last month indicated that Africans were being charged an equivalent of 12 per cent of the money being remitted, almost double the global average.

The government is seeking to pass a diaspora policy paper, through the Ministry of Foreign Affairs, to push for lower fees.

The policy paper will pave the way for the creation of key institutions such as the National Diaspora Council of Kenya to harness the resources of about three million citizens living abroad, a majority of who currently entrust their investments to relatives and friends.

The search for a policy guiding remittances of Kenyans living and working abroad has been on the cards in the past five years since the National Economic and Social Council broached the subject sometime in 2008.

– Business Daily