“Africa has a hugely inefficient market place in terms of price points and that’s because the services offered today are controlled by providers which ride on networks that are bilateral and closed loop,”Avijit Nandas, Chief Executive Officer of the global digital payments and remittance company, TimesofMoney, told CNBC Africa on Wednesday.
Nandas explained that online companies, such as TimesofMoney, provide a digital platform for consumers to make fund transfers and payments to their home countries at a significantly lower cost than what they would usually pay.
According to reports, the cost of remitting in Sub-Saharan Africa is around 12 per cent, which is three percentage points higher than the global average. If African rates were in line with South Asia, Africans would save 4 billion dollars a year.
The online remittance service companies however, Nandas pointed out, may soon change the game and will save a significant amount of money for consumers as well as prove to be very convenient with its 24 hour service.
“We are a digital platform so are able to offer the unique option of a 24 hour service,” he added
The revolutionary concept, Nandas added, could also be incorporated into existing bank systems.
“Our proposition to banks today is to offer a platform which reaches their consumers directly and the bank has control over the entire value chain end to end instead of going through closed loop agent networks,” said Nandas.
He added that with the absence of closed loop networks, online remittance companies can lower product costs significantly.
“Just to give you an example, if a consumer wanted to send money back home, he now has the option of going into a bank branch, or use a cash based money transfer agent or he could come to us,” explained Nandas.
Currently, internet penetration has reached over 20 million people and Nandas believes that with this number on the rise, online payment and remittance platforms allows the developing world to catch up to the rest of the digital world.
This service is already offered in India, Sri Lanka and Bangladesh and will soon be offered in various African countries, starting with Kenya.
“We are just starting off in Africa, firstly with Kenya and have several more in the pipeline but you'll hear announcements more aggressively in the near future,” Nandas concluded.