Money transfers to India are becoming a commodity as competitors all have similar cost structures and are effectively selling the same product: moving money from one bank account to another bank account in India. There may be small variations in FX rates, fees, transfer speeds, and payment options, but money transfer operators (MTOs) will need to differentiate themselves in new ways to evolve and profit going forward. In recent months, the industry has had characteristics of a price war, with some MTOs offering exchange rates above interbank rates in order to drive customer acquisition and retention. This has drastically eroded profit margins for MTOs that are now struggling to generate a profit.
MTOs will have to provide value-added services that leverage their existing customers and products in order to grow revenues and profitability. Oxigen has led the way in providing value-added services such as instant bill payments, instant gift cards, and holiday gifts as well as a unique customer experience that incorporates a shopping cart, reward points, and gamification. Bill payments command higher margins than money transfers because they provide significantly more value: the sender knows what the money is being spent on; the recipient doesn’t have to worry about picking up money or paying their bills; and they’re instant. Gifts are also higher in value and margin because they leverage the high demand products and services of trusted brands to deliver the experience of showing loved ones just how much you care about them.
We can’t share all of our plans with you, but Oxigen will be launching more exciting value-added services in the future. Here are a few sneak peaks:
- Automated Bill Pay: Oxigen plans to enable customers to automate bill payments according to the actual amount due to each operator. Just like you can automate your bill payments for your phone, TV, Internet, utilities here in the USA, NRIs will be able to automatically take care of their loved ones’ regular monthly bills through Oxigen.
- Transfers to the “Cloud”: pending regulatory approvals, Oxigen will be enable NRIs to transfer money into the Oxigen Wallet and, subsequently, other mobile wallets in India. Transfers to the Oxigen Wallet will be like transferring money to the “Cloud” in that the recipient will be able to use the value in their wallet as they please to: take some out in cash; pay some bills; transfer some money domestically; go shopping online; and/or take the family out for dinner.
- Retail Cash Out: also subject to regulatory approvals, Oxigen Wallet users in India will be able to withdraw cash from their Oxigen Wallet at any of Oxigen’s 200,000+ retail locations across India – that’s more cash out locations in India than Western Union. This will make it much more convenient for recipients in India to access the cash from their received money transfer.
One other thing to look out for in general as the money transfer space evolves is Blockchain, which has already been adopted to some extent by banks such as IndusInd Bank and MTOs such as Western Union. Blockchain-based platforms such as Ripple are enabling international transfers to happen without relying on the banking system. By operating freely from the banking system, Blockchain is likely to disrupt foreign exchange rate pricing because it is not bound by the pricing set by interbank rates. Blockchain-based transfers are promising for India’s unbanked population because recipients would not need to have a bank account. Blockchain-based transfers would also be instant and, arguably, even more secure because transaction information is decentralized and generally harder to hack than the centralized banking network. One thing holding Blockchain back from taking off in India is the lack of accessibility and adoption of Blockchain-based currencies, which still must be converted to Rupees with significant costs and often hassle, mainly because the network of vendors accepting Blockchain-based currencies is still very small and not incentivized by regulators. Oxigen is keen to explore the benefits of adopting Blockchain as the market matures.
Amir is an accomplished entrepreneur with expertise in international business, IT, and telecom. He received his Master’s from MIT Sloan and has started 4 companies impacting the lives of millions globally. Red Herring featured Amir as one of the “Top 25 [Entrepreneurs] Under 35”. Amir enjoys yoga, kitesurfing, and travel.