Screengrab: YOUTUBE
Screengrab: YOUTUBE

Digital money transfer company  WorldRemit, which has opened an office in Johannesburg, aims  to take as much as 30% of remittance outflow transactions in the country.

It is the second office that the UK-headquartered company has launched in Africa after it opened a smaller Somalian office a few months ago.

The World Bank’s 2018 report on the market for remittance services showed that remittance outflows from SA amounted to $2.4bn in 2015, making it the largest remittance-sending country in the Southern African Development Community region.

“We know it’s a pretty crowded space and a competitive landscape. Our average cost in SA will be 5%,” said WorldRemit’s MD for the Middle East and Africa, Andrew Stewart.

World Bank data shows that the only market where the cost of sending remittance is lower than this is Russia where average fees are just more than 2%. The average cost of sending remittances from SA  is 15% compared to the world average of 7.6%.

 Stewart said the company is able to keep the cost low because it does not have brick and mortar operations or cash agents and most of its operations are automated. 

WorldRemit will allow people in SA to send money to a bank account in any of the 150 countries it services or to send mobile money to cellphones. 

Cross-border money transfers in SA are dominated by traditional players such as Western Union and MoneyGram who have a physical presence throughout the country and complement it with a network of banks and agents with physical operations.

Being cash-based works for  it since many Africans still predominantly transact with cash.

“We realise that we have to invest. The model will look at how to engage with feet on the street. It’s going to be a journey, but we’ve done it in other countries,” said Stewart .

A completely digital-based operation, WorldRemit is targeting immigrant workers and South Africans who already have bank accounts and are already Fica compliant to send their money abroad.

buthelezil@businesslive.co.za