The US-based company MoneyGram is one of the most visible money transfer services in Nepal. With more Nepalis going to different countries for work and other purposes, the world’s second largest money transfer service has established a strong base in the country. MoneyGram, which has seven principal agents across 2,400 locations in Nepal, is expanding its network. The expansion drive has led the company to partner with Ipay Remit and to focus on expanding its network in the Terai region. Sheshagiri (Sukesh) Malliah, MoneyGram’s Regional Relationship Director, South Asia was in Nepal to announce the partnership and to check the recent activities of MoneyGram Foundation, the CSR arm of the company. In an interview New Business Age, Malliah talked about the company’s market prospects in Nepal, introduction of a new payment system, CSR initiatives and expansion  plans. Excerpts:

What is the purpose of your visit?
I am here to meet our partners. I joined MoneyGram last year and I guess this is a good opportunity to meet with our associates. I am also here to announce IPay remit as our New Nepali partner. Besides that, I am in Nepal to see the progress made by the Chaudhary Foundation regarding the rebuilding of 10 schools devastated by last year’s earthquake. MoneyGram Foundation has provided USD 80,000 to the Chaudhary Foundation to rebuild the schools.  

Our CSR arm is something that most ‘Moneygrammers’ would be proud of. We run this initiative by MoneyGram several times a year where employees are encouraged to contribute and the company contributes an equal amount of money for social causes.

Your company is one of the largest money transfer services in Nepal. How has MoneyGram grown in Nepal over the years?
We have achieved spectacular growth in Nepal over the years. Nepal is in fact the fastest growing market for us in the region. We are growing at a healthy double digit year-on-year. In the South Asia region Nepal is the top country in terms of contribution of remittance in GDP. The country receives about USD 5.8 billion in remittances annually and the contribution is about 29 percent. 

No other country in the region comes close to Nepal. Bangladesh is second after Nepal with probably nine percent followed by Sri Lanka. India, being the world’s largest remittance receiver (about USD 72 billion annually), has a contribution rate of just about 3.5 percent. 

How has MoneyGram’s business been in Nepal after last year’s earthquake as the remittance inflow has risen sharply?
Immediately after the earthquake, the situation was a little worrying due to the uncertainty. Nevertheless, it was clear after few months that Nepal has been receiving a record amount of remittances. It was a very unfortunate event as human lives and properties were lost. But from a business perspective, we don’t see that as having negated our growth in Nepal. 

Which countries are the major remittance senders as per MoneyGram’s data?
North America and Europe continue to be the driving force for the money coming into Nepal. But Qatar and Saudi Arabia are the largest senders. 

We have been aggressively pursuing that particular trend. We are doing some very unique things in the market which is very different to the conventional money transfer business. In Qatar we have partnered with Ooredoo, the largest mobile money transfer money service in the Gulf nation. Ooredo has tied up with many companies and the wages of the employees and workers are paid via their mobile wallets. We are now targeting South Asians living in Qatar and getting them to send money from their mobile wallets. So, from a mobile you can send money to Nepal or India or Bangladesh and it can be dispensed out here in cash. We have a version of UI interface in Nepali which will be convenient for Nepalis. 

How secure are the transactions through mobile phones?
A mobile wallet is technically as safe and secure as a bank account.  Of course regulations are required to cover it, which I think is coming in Nepal. We have not left any room to spare in terms of security of transactions as it is the core of our business. 

What is MoneyGram’s share in the Nepali money transfer market?
Nepal is a very highly fragmented market as there are multiple money transfer channels. So it is very difficult to get actual data. There are many companies several of whom have their own services and also have MoneyGram. It is very difficult to even know the performance of the players. Due to the complexity of the market, any number the service providers would put will actually not be correct.

How is the competition in Nepal?
We are witnessing a fair level of competition here. For Nepalis, more the competition, lesser the cost of services as all fight for the same business. It makes sure that we innovate and introduce new services to the market. 

Nevertheless, there are threats from illegal channels like ‘Hundis’ as they  are so called. The illegal channels are posing a very big challenge for us across South Asia. 

Why are the illegal money transfer channels so widely used? 
Probably, these channels are closer to the customers. Secondly, it is likely that people think using ‘hundis’ to send or receive money is cheaper without realising the associated risks involved. People may never receive money sent from other countries. It also poses high risks for a country as well. Unlike the official money transfers operating through banking channels, there are no identification checks of senders or receivers, no-anti money laundering checks and no terrorism related checks. 

What policies would you recommend the government adopt to control these activities?
 One of the good things that the central bank of Nepal did recently is to regulate the US dollar to NPR conversion rate.  The initiative really helps because now everyone has to offer the same Forex conversion rate. You can’t play around it. So, what happens now is that for the legal channels, everyone is forced to follow a particular structure. It makes legal channels extremely competitive compared to Hundis. 

What we really look forward to is the government’s engagement in order to control the illicit channels. The government also needs to actively engage in educating the population. I think it is very important for the government to clamp down on Hundi operators. 

What is MoneyGram doing to raise awareness in this regard? 
We are continuously raising awareness regarding the risks of using illegal channels. We are expanding our network to get closer to our customers. If a person is not being able to collect money from official channels, he/she is likely to resort to ‘hundi’ channels. We are signing up with companies like Ipay here and we are strengthening our relationship with the other agents in Nepal. 

Similarly, we are introducing competitive solutions for our customers like in Saudi Arabia and Qatar. We are using new technologies to reduce the costs. 

How is MoneyGram providing its services across the country?
We have reached out to 2,400 locations throughout the country with seven principal agents. We are now focusing on increasing coverage in the Terai area because there are lots of migrant workers from that region who are moving out to different countries for work. 

How do you expect MoneyGram’s partnership with IPay to progress in the upcoming years?
IPay brings us that unique advantage as they have a fairly large network. We are expanding our network at 500 more locations in Nepal. So, our focus is to partner with companies who can get us closer to our customers. You will see us doing some more of these initiatives in the coming months.