After hawala and bank channels, remittances through online channels are expanding rapidly

The migrant population from India is pouring money into the country and while they do so, they are increasingly using online payment channels. Globally, the remittance or money transfer market clocks around $240 billion-$250 billion in revenues. India accounts for a major chunk of this portion and is the largest recipient of remittances globally, witnessing inflows to the tune of nearly $58 billion annually. Increasingly, more and more people are adopting the more advanced and efficient official money transfer channels, which has resulted in the industry growing at a compounded rate of 20% annually for the past few years.

While the overall remittance market is growing fast, the online remittance space can grow only when people who are habituated to do wire transfers through banks, start to adopt the new channel. Avijit Nanda, president, TimesofMoney, told Moneylife, "The challenge is to break the mindset and get the customers to adopt such superior services. If you are able to establish a proof of concept with these users and get them on board, they will never go back once they use the system."

Mr Nanda added, "Traditionally, customers were using bank cheques and bank wires, but with the emergence of online channels like ours, they chose to leverage on the technology benefits available in terms of transparency, efficiency of costs, pricing, convenience etc. Since there are no intermediaries or channels either on the sell side or receipt side, the cost of providing such services is significantly lesser than what a traditional money transfer operator works on. Hence, we have the ability to provide better pricing."

TimesofMoney is a digital payment services company and serves varied clients both in India and around the world. It offers services such as India Money Transfers, Global Money Transfers, E-Payments and Co-branded Cards. Globally, companies such as Western Union and Moneygram have a sizeable presence in this space.

Hawala networks as a channel for money transfer have been thriving for decades. The existence of such informal transfer systems are still a challenge for the official channels. Mr Nanda pointed out that hawala channels are the only alternative for the scores of illegal immigrants, who cannot approach banks since they would be immediately asked for their immigration status. Although hawala networks will never go away completely, he feels that the dependence on such channels is gradually coming down in favour of the more accessible official channels. "Banks and money transfer companies like ours have realised that there is a huge potential for making services available to more and more people by improving distribution reach, network and accessibility. Usage will come from these efforts. Gradually, people are adopting official channels which are more accessible. Hawala also comes at a significant cost. We have seen the dependence on hawala channels diminishing as we move ahead."