Among the swirl of startups chasing opportunity in the global remittance market, Amsterdam-based Terra sees a way to cut costs by launching a lightweight, mobile-centric app that uses heavy data to offset financial crime risks.
Terra this month is launching a cross-border mobile remittance service, at a time when data to verify prospective customers’ identities is scarce, and requirements to protect against fraud are rising sharply, said Ambar Sur, founder and CEO of Terra, a recent spin-off from New Delhi-based mobile technology firm Mahindra Comviva.
"Governments and banks around the world have significantly increased anti-money laundering and Know Your Customer compliance requirements, and this is one of the factors in global remittance costs," Sur said.
Through a collaboration with LexisNexis Risk Solutions, Terra has found a quick way to satisfy anti-money laundering requirements and measure business risks when onboarding new customers in emerging markets, who are often unbanked, Sur said.
Using consumers’ mobile phone numbers as their primary identifier, Terra has created a service that builds on its parent company’s deep capabilities in mobile technologies for a nimble customer sign-up process, Sur said. Mahindra Comviva, established in New Delhi, India, provides mobile wallet services to mobile telco companies and banks in 90 countries.
"Our business model is focused on targeting working populations in emerging nations, where mobile phones are ubiquitous and a consumer’s mobile phone number can act as proxy for their identity across all economic touchpoints," Sur said.
Through its connection to LexisNexis’ data, Terra’s service can spot a broad range of risks associated with customers for all types of transactions, and the whole process happens in milliseconds, Sur said.
LexisNexis receives customer data from Terra and compares it against its global database of financial crime "risk entities" from 240 jurisdictions around the world, instantly producing a risk score for each prospective Terra customer, said Chrisol Correia, director for international anti-money laundering compliance for LexisNexis.
Once a new customer is deemed secure, Terra continues to monitor transactions on an ongoing basis using LexisNexis data, Sur said.
Terra’s customers typically send smaller-denomination remittances of around $200. Fees will vary for the service, based on volume and location, but Sur said fees typically will be "far less" than many existing options. The average cost to send a cross-border payment is about 5% to 8% of the payment, according to the World Bank.
Terra is initially testing its mobile remittance service with payments sent between Dubai and the Philippines. It’s gained regulatory approval there to work with retail partners at each end, who typically provide mobile phone services in local villages with cash-out capabilities.
Terra hopes to expand to other regions as early as this year, concentrating on emerging markets in Asia, Africa and Latin America as it works to gain regulatory approval in those markets, Sur said.
Terra aims to market its service through partnerships, to connect a diverse array of financial services providers including mobile wallet operators, money transfer firms, banks and payment platforms, focusing initially on unbanked populations where governments are steadily escalating requirements to screen out suspicious transactions, Sur said.
"We have deep reach into markets around the world where mobile wallets exist, and we can partner with anyone, whether they’re operating with Nigeria’s bank-led mobile wallet model, or Kenya’s telco-led mobile wallet model, to add a remittance service with a data-driven approach to block suspicious transactions," Sur added.