In Washington Heights, a small startup has found a new opportunity by building a business to business platform to serve the numerous storefront remittance providers in the largely Latin American neighborhood in Upper Manhattan.
In a fiercely competitive market, Regalii's new model is producing 20% monthly growth by letting long-standing, trusted storefronts interface with consumers.
Regalii was founded in 2012 as a consumer-facing service for sending money from the U.S. directly to billers in the Dominican Republic.
Regalii's three founders, Juan Jose Maldonado, chief operating officer; Edrizio De La Cruz, chief executive; and Inigo Rumayor, head of Latin America sales, have backgrounds in both remittance and financial technology, though they faced a steep learning curve given the remittance industry's unique challenges, such as high rates of fraud, heavy compliance burdens, high costs for acquiring customers and gaining their trust, and the difficulty of building out an offline presence.
These risks made finding intermediaries with existing relationships with consumers a better strategy for Regalii.
We were a B2B company, said Rumayor, in an interview at Regalii's office on West 180th Street. It just took us some time to realize that.
Regalii went through Y-Combinator in the summer of 2013 and shortly after graduating from the accelerator, presented at TechCrunch Disrupt in San Francisco. The company has secured $2.7 million in funding since it launched.
Legacy remittance companies, such as Ria Money Transfer, the third largest money transfer service in the world and La Nacional came to Regalii several times, trying to persuade them to offer the service, white-labeled in their locations.
Regalii was stubborn at first, said Rumayor. But more than 90% of our revenue was coming from B2B so the B2C service was eventually scrapped, he said.
The company now supports more than 18 remittance providers with more than 37,000 point of sale locations. It has relationships with more than 300 utility companies and other billers in six countries in Latin America, India and the Philippines. Remittance senders like the control of being able to pay international bills directly since cash they sent wasn't always being used to pay utility or phone bills.
Regalii currently has the largest and most comprehensive cross border bill payment portfolio in the world, Maldonado said. Via Regaliis direct relationships with billers, were able to process payments immediately and provide real time balance and due dates, two incredibly valuable pieces of information for customers paying their families utility bills abroad.
The company is in talks with some of the world's largest money transfer companies about integrating the bill pay service into its platform. While large remittance players could partner with billers in receiving markets themselves, to get to market quicker these companies prefer to partner with third parties and share a piece of the revenue.
And theres revenue to share since Regalii increases the volume of remittances. Bill payment and cash transfers dont cannibalize each other; instead around one-third of customers that are new to a remittance provider through the bill pay service end up becoming money transfer customers as well, said Rumayor.
Once a customer is in Regaliis system, the company can automate the process of sending money. That seamless experience is one of the reasons Regalii retains about 80% of its customers, said Rumayor. Customers pay on average two or three bills per month, he said.
According the telco trade group, GSMA, international remittances are the fastest growing transaction type and are valued at more than $580 billion per year.
A rash of startups has moved into the remittance space focusing on digital and mobile services in an effort to push fees lower. Some of these newbies are concentrating on one corridor, but will soon find scaling up is hugely important in the industry. For instance, Remitlys initial push was to initiate cross border transfers between the U.S. and the Philippines, but the company is aggressively pursuing other parts of Asia, the South Pacific and Latin America. Regaliis movement has been opposite, starting with Latin America and moving into India and the Philippines, two of the largest receiver countries for remittances.