Those who emigrate to countries like the U.S. come for a shot at new lives and new opportunities, but many of them still keep close ties back to their families at home, including sending money to help them financially. However, current methods leave much to be desired. As the sender, you cannot guarantee that the money will always go towards what you intended. And when you are the receiver and live in precarious circumstances (the same ones that may have pushed your family members to move abroad), receiving cash can be a risk. And that’s before even considering the costs involved.
Enter Regalii, a Battlefield finalist presenting today at TC Disrupt. The company has devised a way for people, via their mobile devices, to send remittances to their families back home, which are received in the form of credits to pay bills, or to buy groceries.
The company has already been operating in limited beta between the U.S. and the Dominican Republic. Today, it’s extending that service to Mexico, and CEO and co-founder Edrizio de la Cruz tells me the company is now busy raising a seed round to extend that further, including remittances between countries that do not originate in the U.S. One investor that’s already committed: Maverick Capital. It’s been helped on that front by virtue of also having been part of the recent class of startups to have come through the Y Combinator incubator.
“We see this as a global play, with a lot of interest for this already in Europe and SE Asia. It’s not just an American but a global problem,” De la Cruz says.
Regalii competes against the likes of Western Union and MoneyGram, which let people wire cash and are mostly web-based and in-person operations. Similarly, another service called RegaloCard offers people the ability to send non-cash remittances for bills, but it is mostly an offline service and not focused specifically on retail or supermarkets. Xoom.com has also focused on the same markets as Regalii, but does so only for cash-to-cash payments. But there is another basis for why Regalii is focusing on specific services beyond cash: “What we’d noticed in our research is that 64% of the money people send back home is spent on food, medicine or bills,” De la Cruz says. “There is no need to go through all these hurdles to get that money to where it’s being used, so that’s another reason why we partner with points of sale.”
Regalii provides its service for a $3 flat fee, as compared to many other services that work on a combination of fees and/or commissions. The company claims to offer 60% cost savings for typical remittances.
Companies in the world of mobile financial services have long eyed up emerging markets, where users may often lack convenient access to bank accounts and credit profiles, as a category ripe for the taking. In Latin America alone, this is a $69 billion opportunity annually, De la Cruz tells me. One of the biggest areas within that has been money transfers, where people who live in one country or city use basic cellular services like SMS to initiate, send and receive payments to family members.
De la Cruz tells me that the crux of Regalii’s service hinges on another interesting development in the mobile world: that of the mobile gift card. “We found a way to hack the mobile gift card,” he says: effectively this means that Regalii taps into the infrastructure that is already in place as a way of delivering the sum of money to recipients, with cash never coming into the equation.
I asked De la Cruz whether this posed another problem: people in emerging markets still seeing lower penetration for smartphones, or retailers and utilities being too behind technologically in order to fully engage in Regalii’s offering. So far, this hasn’t been an issue, however.
“There is enough infrastructure there,” he said. “There is a huge misconception around Latin America being behind, but they are pretty tech savvy and all the players we work with have centralized, gift card systems. We tap into those systems. It is a streamlined model that gets virtualized and put on people’s cell phones.”
Questions from judges:
Do you have to specify where your money will go exactly? Yes, for now. Later sending will be universal and recipients can suggest.
How was the the process of getting retailers on board? Not a problem; we have over 7,000 on board already.