Starting and growing a money transfer business has its own benefits and attractive returns. Money transfers are conducted daily across the world. So from this, we can say that there will be always a market for your business. Also, you can create a better image of your business in people’s minds by fulfilling their financial needs.
Today, you do not need a traditional brick and mortar office to conduct the money transfer business. You just need digital money transfer software for offering money transfer facilities to your customers. By doing this, you can avoid the overhead costs of an office, furniture, rent, staff, and other related expenses.
Africa has become the top spot for remittance startups due to vast business opportunities. People have started welcoming online means of payments in this country. In this blog, we will show you how you can start your money transfer business in Africa. But before you start your money transfer business into the African markets, you first need to understand the current scenario of remittance markets in Africa.
The money transfer market in Africa
International remittances have become an essential source of income for the African economy. As per Statista, the transaction value in the digital remittance segment is expected to grow at $358 million (approx.) by 2024. The users in the digital remittance segment are estimated to grow by 0.3 million (approx.) by 2024. So from these, we can say that the need for a digital money transfer provider will surely increase in the African remittance markets.
Talking more about the mobile money transactions scenario in the African markets, Sub Saharan Africa has a large number of money transactions. As per Statista, Sub-Saharan Africa amounts to closely 64 to 66 percent (approx.). So you can consider starting your money transfer business from here. It would give a better push to your money transfer business.
Steps for starting a money transfer business in Africa
Starting a money transfer business in Africa looks attractive but there can be some hurdles that you need to jump first. Let us look at how you can start an online money transfer business in Africa:
Research more about the region
Before setting up a business for a money transfer in Africa, you should have an idea of the demand for money transfer in its respective areas. Africa is quite a big continent. It covers more than 50 countries. The number is very big, so you need to think carefully about which country you want to target.
After you choose a country, you need to do in-depth research about its demographics and markets. This will help you to get a clear idea of the people’s needs in that region. In African countries, online money transfer transactions mostly take place in urban areas as compared to rural areas. So first you must start your remittance transfer business in the urban areas. Then you can gradually start shifting your business towards rural areas.
Manage business risks
When you are planning to enter into new territory, you need to understand its business conditions. Also, you need to figure out more about the demand for your product in your chosen region. If there is less demand or no demand for your product, then you must create the demand for your product by using multiple promotion strategies.
Generally, Africa is considered an underdeveloped region, so it may happen that your business journey may not go smoothly. Also, there is a risk of theft in Africa, so you have to implement strict measures for securing your finances.
Obtain a license
After preparing your business plan, it is compulsory to get a license for your money transfer business. In the olden days, the money business was mostly done by the banks. Private enterprises cannot participate in it. So there was no need to get a license for your business. But now times have changed, you cannot do a remittance business without a license.
For getting a business license, you need to apply to the central bank of the country. You can start your transfer business only after getting approval from the bank. You can also consider becoming an authorized delegate of an existing license holder or you can get white-labeled from him.
Register as a payment business
After getting the license, you have to register your business. After getting the license, you have to decide whether you provide your services in a physical store or you will go online.
Before you start with your money transfer business, you need to establish a business relationship with banks and financial institutions. Also, you have to take permission of opening a merchant bank account from the government authorities. You also have to pay some fees to the government for starting operations.
Choose a software partner
If you have decided to take your business online, then you must hire a software development company or you can outsource your software development to remote developers. A software developer can guide you through the journey of your software development. It will show you what features you will need to integrate into your money transfer solution. Also, it can show you how you can lower your development costs.
But choosing your software partner is not an easy task, you should do a detailed analysis of the development companies in the market. You have to take more information about the software company such as expertise, experience, delivery time, location, etc., Choose your company carefully as this can play a crucial role in your app’s success.
As we have discussed above, starting a money transfer business can be a lengthy process. However, a financial regulator can help you with it. Also, it can help you with fraud prevention by making a separate account for your clients. Be alert and adaptable in case of following the government regulations as they constantly keep changing. As technology and the global markets evolve, your money transfer business will also get developed.
So what are you waiting for? Kickstart your money transfer business by following these steps. Feel free to contact us if you want to know more about our money transfer solution.