electronic home remittances an abs proposal. paypakistan.com introduction an abs introduction ...

ELECTRONIC HOME ELECTRONIC HOME REMITTANCESREMITTANCES

An ABS proposalAn ABS proposal

PayPakistan.comPayPakistan.com

INTRODUCTIONINTRODUCTION

An ABS introductionAn ABS introduction

Company formed in 1995Company formed in 1995

Principals played instrumental roles in introducing Principals played instrumental roles in introducing automation to the Pakistani Banking Sectorautomation to the Pakistani Banking Sector

SWIFT, NIFT, Secure Internet Messaging SolutionsSWIFT, NIFT, Secure Internet Messaging Solutions

Principals have over 100 man years of banking Principals have over 100 man years of banking automation experienceautomation experience


BACKGROUND OF PROPOSALBACKGROUND OF PROPOSAL

Pakistani expatriates Remit between $3-5 billion annually Pakistani expatriates Remit between $3-5 billion annually to Pakistanto Pakistan

Revenue generated by banks is $60 million annually from Revenue generated by banks is $60 million annually from this service alonethis service alone

Business is dominated by the 5 large Pakistani banks, Business is dominated by the 5 large Pakistani banks, which have overseas presencewhich have overseas presence

Banks/institutions without overseas presence have not Banks/institutions without overseas presence have not been able to tap into this business/spacebeen able to tap into this business/space

Cutting edge technology allows ABS to identify an ITES Cutting edge technology allows ABS to identify an ITES opportunity which will enable institutions without overseas opportunity which will enable institutions without overseas presence to tap into this marketpresence to tap into this market

Solution is available, which will enable Bank AL Habib to Solution is available, which will enable Bank AL Habib to enter this space, with the time to market within 3 monthsenter this space, with the time to market within 3 months


MARKET SIZEMARKET SIZE

Pakistanis remit over US$ 3.00 billion Pakistanis remit over US$ 3.00 billion to Pakistan per annum to Pakistan per annum (Source: SBP)(Source: SBP)

Remittances through un-official Remittances through un-official means are estimated at $2 billion means are estimated at $2 billion

Remittances is one of the highest Remittances is one of the highest foreign exchange earner for Pakistan foreign exchange earner for Pakistan

Total potential revenue base of Total potential revenue base of market size is US$ 60 million/annum market size is US$ 60 million/annum (includes Hundi & ME sectors)(includes Hundi & ME sectors)


Distribution of Market SizeDistribution of Market SizeSectorSector Official Official Un-OfficialUn-Official TotalTotal %%

(figures are in millions per annum)(figures are in millions per annum)

USAUSA $1,152$1,152 $720$720 $1,872$1,872 36%36%

UKUK $324$324 $200$200 $524$524 10%10%

Europe/AusEurope/Aus $336$336 $220$220 $556$556 11%11%

UAEUAE $576$576 $360$360 $936$936 18%18%

MEME $768$768 $500$500 $1,268$1,268 25%25%


Having seen the market size’s and Having seen the market size’s and potential revenues, we will now potential revenues, we will now present the ABS solution which is:present the ABS solution which is:

Financially AttractiveFinancially Attractive Technically SoundTechnically Sound Operationally EfficientOperationally Efficient


Current OptionsCurrent Options

Current Options available Current Options available

to overseas Pakistanis for to overseas Pakistanis for

Home Remittances are …Home Remittances are …


OPTION 1OPTION 1Pakistani Bank Branches abroad accept funds for homePakistani Bank Branches abroad accept funds for homeremittancesremittances

Advantages:Advantages: Free service to the senderFree service to the sender

Disadvantages:Disadvantages: Branches are not located in many citiesBranches are not located in many cities Branches not 24/7 operations (banking hrs only)Branches not 24/7 operations (banking hrs only) Getting to a Pakistani Bank branch is time Getting to a Pakistani Bank branch is time

consumingconsuming The cost of time and travel, cost of time off from The cost of time and travel, cost of time off from

work and the inconveniences faced are extremely work and the inconveniences faced are extremely highhigh

No tracking facilityNo tracking facility


OPTION 2OPTION 2Direct transfer through a Foreign BankDirect transfer through a Foreign Bank

Advantages:Advantages: Sender bank branch located in close proximity of Sender bank branch located in close proximity of

sendersender

Disadvantages:Disadvantages: Prohibitive chargesProhibitive charges Not 24/7 for international remittancesNot 24/7 for international remittances Funds credit date at receivers bank account in Funds credit date at receivers bank account in

Pakistan is not known (anywhere from 3 days to 2 Pakistan is not known (anywhere from 3 days to 2 months)months)

Extra charges for tracking and not done Real TimeExtra charges for tracking and not done Real Time Need Routing & Swift number details from Need Routing & Swift number details from

receiver’s bank, which is often difficult to obtain receiver’s bank, which is often difficult to obtain and can cause serious delays if incorrectand can cause serious delays if incorrect


OPTION 3OPTION 3Fund transfer service companies likeFund transfer service companies likeWestern Union and Money GramWestern Union and Money Gram

Advantages:Advantages: Branches are located everywhereBranches are located everywhere Online and offline money deposit options offered to Online and offline money deposit options offered to

senders in North America and Europesenders in North America and Europe Fund transfer instant (within 5 minutes)Fund transfer instant (within 5 minutes) Funds available for pick up in multiple locations Funds available for pick up in multiple locations

across Pakistan (GPO/National Bank for Western across Pakistan (GPO/National Bank for Western Union, UBL/Al-Falah for Money Gram)Union, UBL/Al-Falah for Money Gram)

Disadvantages:Disadvantages: Fund transfer rates are expensive ($15-85 from US)Fund transfer rates are expensive ($15-85 from US) Poor Exchange rates offered (Rs. 56.2 v/s 57.8)Poor Exchange rates offered (Rs. 56.2 v/s 57.8) Additional services are charged and expensiveAdditional services are charged and expensive


OPTION 4OPTION 4Other fund transfer companies like Yahoo,Other fund transfer companies like Yahoo,Moneybookers, Ikobo, Xoom, Onlinefx, etcMoneybookers, Ikobo, Xoom, Onlinefx, etc

Advantages:Advantages: Online transaction processing allows sender 24/7 Online transaction processing allows sender 24/7

convenience of sending funds from home or officeconvenience of sending funds from home or office Instant fund transfer (within 5 minutes) if receiver has fund Instant fund transfer (within 5 minutes) if receiver has fund

transfer service ATM cardtransfer service ATM card

Disadvantages:Disadvantages: Fund transfer rates are expensiveFund transfer rates are expensive Most services issue an ATM card for fund withdrawal from Cirrus Most services issue an ATM card for fund withdrawal from Cirrus

ATMs. Fund withdrawal rates high for receiverATMs. Fund withdrawal rates high for receiver May take up to 4 weeks to receive first ATM cardMay take up to 4 weeks to receive first ATM card Assumption is receiver is ATM savvyAssumption is receiver is ATM savvy ATM’s are not widely located everywhere (limited coverage in ATM’s are not widely located everywhere (limited coverage in

Pakistan)Pakistan) Additional services are charged and expensiveAdditional services are charged and expensive


Option 5Option 5

UBL click2RemitUBL click2RemitUBL has realized the need to enter the electronic remittanceUBL has realized the need to enter the electronic remittanceSpace…however, with a solution that they have not written,Space…however, with a solution that they have not written,are not managing and can not customize are not managing and can not customize

AdvantagesAdvantages Online 24/7Online 24/7 Credit, debit cards and eCheques acceptedCredit, debit cards and eCheques accepted

DisadvantagesDisadvantages Only for US customersOnly for US customers Direct credit only within UBL accountsDirect credit only within UBL accounts Non-UBL accounts have a mailing system solutionNon-UBL accounts have a mailing system solution Delivery process not electronicDelivery process not electronic


Option 6 & 7Option 6 & 7

Hundi/Hawala SystemsHundi/Hawala Systems Based on trustBased on trust UnsecuredUnsecured IllegalIllegal Open to Money launderingOpen to Money laundering All governments strongly discouraging this meansAll governments strongly discouraging this means

Exchange CompaniesExchange Companies These are primarily an extension of a PakistaniThese are primarily an extension of a Pakistani

BankBank


Summary of DisadvantagesSummary of Disadvantages Most are not 24/7Most are not 24/7 Transfer charges highTransfer charges high Global presence issuesGlobal presence issues Poor exchange ratesPoor exchange rates Coverage issues (ATM)Coverage issues (ATM) Not integrated with Pakistani banking systemNot integrated with Pakistani banking system Summary of remittances to sender not readily Summary of remittances to sender not readily

availableavailable Delay in funds transfersDelay in funds transfers No tracking facilitiesNo tracking facilities


OPPORTUNITYOPPORTUNITY

An opportunity exists for a serviceAn opportunity exists for a service

that can:that can: Overcome all the disadvantages Overcome all the disadvantages

listedlisted

andand Is Remitter friendly (easy to avail Is Remitter friendly (easy to avail

and operate)and operate)


WHAT DO WE PROPOSEWHAT DO WE PROPOSEFunctionally ABS proposesFunctionally ABS proposes Service will be an online 24/7 Remittance Solution Service will be an online 24/7 Remittance Solution

available to anyone anywhereavailable to anyone anywhere Economical Rates (free under the HRS)Economical Rates (free under the HRS) Rupee based transactionsRupee based transactions Customized to integrate with the Pakistani Banking Customized to integrate with the Pakistani Banking

SystemSystem Bank Accounts credited within 24 hours or sooner Bank Accounts credited within 24 hours or sooner

(depending on recipient bank)(depending on recipient bank) All transactions documented from end to end, All transactions documented from end to end,

meeting all money laundering regulations in Pakistan meeting all money laundering regulations in Pakistan & abroad& abroad

System prompted tracking of fundsSystem prompted tracking of funds Tracking of Funds Feature available to senderTracking of Funds Feature available to sender Summary of remittances available to senderSummary of remittances available to sender


WHAT DO WE PROPOSEWHAT DO WE PROPOSEOperationally ABS proposesOperationally ABS proposes

ABS is selling a solution, not a softwareABS is selling a solution, not a software Solution will be delivered based on a Solution will be delivered based on a

Strategic relationship between ABS and Bank Strategic relationship between ABS and Bank AL HabibAL Habib

ABS’s role will be handling all aspects of ABS’s role will be handling all aspects of service up to the transfer of funds into the service up to the transfer of funds into the Internet Merchant AccountInternet Merchant Account

Bank AL Habib’s role will be handling of all Bank AL Habib’s role will be handling of all aspects of the processes after the delivery of aspects of the processes after the delivery of funds in the merchant accountfunds in the merchant account

ABS will handle the technical aspects while ABS will handle the technical aspects while the Strategic Partner will handle the financial the Strategic Partner will handle the financial and administrative aspects of the serviceand administrative aspects of the service


ABS SolutionABS Solution Service will be delivered thru the internet – accessible from Service will be delivered thru the internet – accessible from

anywhere/anytime 24/7anywhere/anytime 24/7 Remitters access the service websiteRemitters access the service website New customers/remitters register (email verification/activation process); New customers/remitters register (email verification/activation process);

existing customers simply log-onexisting customers simply log-on Customer enters details of remittance and recipientCustomer enters details of remittance and recipient Credit Cards is the current payment platform (others to follow)Credit Cards is the current payment platform (others to follow) Website secure ‘payment processing’ comes into operation with Secure Website secure ‘payment processing’ comes into operation with Secure

Socket Layer (SSL) technology and customer enters credit card detailsSocket Layer (SSL) technology and customer enters credit card details Payment processing procedures check card validity and enters into Payment processing procedures check card validity and enters into

authorization process. It immediately informs on website within 3 seconds of authorization process. It immediately informs on website within 3 seconds of acceptance/decline of transaction to customeracceptance/decline of transaction to customer

Auto email sent to customer of transaction confirmation with TR# and Auto email sent to customer of transaction confirmation with TR# and Payment receiptPayment receipt

Money credited to internet enabled Merchant Account in Pakistan within 5 Money credited to internet enabled Merchant Account in Pakistan within 5 seconds of transaction acceptanceseconds of transaction acceptance

What have we achieved?What have we achieved? Satisfied money laundering issues (end to end doc, amt, sender)Satisfied money laundering issues (end to end doc, amt, sender) Secured Payment platformSecured Payment platform Delivered funds to Bank AL Habib Ltd merchant account from customer Delivered funds to Bank AL Habib Ltd merchant account from customer

account within 5account within 5secondsseconds

Solution ahead in timelineSolution ahead in timeline


ABS Solution…(2)ABS Solution…(2)Funds will then be transferred from Merchant Account toFunds will then be transferred from Merchant Account toHome Remittance department of each bankHome Remittance department of each bank

Citibank will (at a pre-determined time) transfer funds to Home Citibank will (at a pre-determined time) transfer funds to Home Remittance department of each bank via SWIFT, based on Consolidated Remittance department of each bank via SWIFT, based on Consolidated bank wise report submitted by ABS (under the instructions of Bank AL bank wise report submitted by ABS (under the instructions of Bank AL Habib)Habib)

Corresponding detailed list (with recipient details) will be provided to Corresponding detailed list (with recipient details) will be provided to each bank for onward credit of account holders (under the instructions of each bank for onward credit of account holders (under the instructions of Bank AL Habib)Bank AL Habib)

MT103 generation for real time or offline delivery to banksMT103 generation for real time or offline delivery to banks SBP regulation of 24 hour credit for Home Remittances applySBP regulation of 24 hour credit for Home Remittances apply Auto Reconciliation will take place at predetermined times between ABS Auto Reconciliation will take place at predetermined times between ABS

website transaction information and Citibank payment Gateway website transaction information and Citibank payment Gateway collectioncollection

System overcomes all the disadvantages and is totally electronic from System overcomes all the disadvantages and is totally electronic from source to recipient banksource to recipient bank

What have we achieved?What have we achieved?Successful transfer of funds to recipient bank account electronicallySuccessful transfer of funds to recipient bank account electronicallyand speedilyand speedily


ABS Solution…(3)ABS Solution…(3) POD from recipient bank will be sent to Bank AL Habib Ltd POD from recipient bank will be sent to Bank AL Habib Ltd

administration cell for status update (paper or electronic)administration cell for status update (paper or electronic) Database of all transactions (with their status) is Database of all transactions (with their status) is

maintained for ready references by customers at any timemaintained for ready references by customers at any time System prompted follow up of transactions for all System prompted follow up of transactions for all

exception reports will improve delivery time and Turn exception reports will improve delivery time and Turn AroundAround

Online tracking of status by customer available thru its life Online tracking of status by customer available thru its life cyclecycle

Track back interface will be available for Home Track back interface will be available for Home Remittances departments for immediate updatesRemittances departments for immediate updates

What have we achieved?What have we achieved? Follow up online on status and system promptedFollow up online on status and system prompted History available for viewing and printing (also can be usedHistory available for viewing and printing (also can be used

for consulate submissions)for consulate submissions)


Security IssuesSecurity Issues

128 bit encryption128 bit encryption SSLSSL Firewalls (hardware & software at Firewalls (hardware & software at

both ends)both ends) Secure Payment GatewaySecure Payment Gateway Best of breed technologiesBest of breed technologies Encrypted databaseEncrypted database


FinancialsFinancials


INCOME PROJECTIONINCOME PROJECTION

Based on market stats and Based on market stats and surveyssurveys

Total market size US$ > 3.0 Billion annuallyTotal market size US$ > 3.0 Billion annually Hundi is another 2 billion Hundi is another 2 billion (not included in calculations)(not included in calculations)

Less Middle East residents due to non-credit Less Middle East residents due to non-credit card culture (US $1.2 Billion annually)card culture (US $1.2 Billion annually)

Present Market Size= US$ 1.8 Billion/annumPresent Market Size= US$ 1.8 Billion/annum

Average Annual Transactions = 3.6 MillionAverage Annual Transactions = 3.6 Million


INCOME PROJECTION…(2)INCOME PROJECTION…(2)Assumed target market share Assumed target market share

10% - valued at US$ 180 Million per annum10% - valued at US$ 180 Million per annum

Average transaction volume is: 360,000/annumAverage transaction volume is: 360,000/annum

Remittance commission from SBP is as follows:Remittance commission from SBP is as follows:SR 25 x 360,000 = SR 9 million = SR 25 x 360,000 = SR 9 million = Rs. 135 millionRs. 135 million

Impact of 1% growth = Rs. 13.5 million/annumImpact of 1% growth = Rs. 13.5 million/annum

Total Market ShareTotal Market Share (Hundi + Legal) (Hundi + Legal)

10% = Rs. 378 Million/annum10% = Rs. 378 Million/annum1% impact = Rs. 37.8 Million/annum1% impact = Rs. 37.8 Million/annum


EXPENSES AT A GLANCEEXPENSES AT A GLANCEThe expense for this project can be divided intoThe expense for this project can be divided intotwo distinct areas two distinct areas

A)A) Technical & System expense Technical & System expense B) B) The fund handling and distribution expense, The fund handling and distribution expense,

both both initial and runninginitial and running

Details of Technical & System ExpensesDetails of Technical & System Expenses System DevelopmentSystem Development HostingHosting Cost of Servers Cost of Servers Cost of Bandwidth RequirementsCost of Bandwidth Requirements Cost of CommunicationCost of Communication Cost of System OperationsCost of System Operations Cost of Continued DevelopmentCost of Continued Development Cost of Project ManagementCost of Project Management


EXPENSES AT A GLANCEEXPENSES AT A GLANCE

Details of Bank AL Habib Details of Bank AL Habib ExpensesExpenses

Cost of setting up Merchant AccountCost of setting up Merchant Account Cost of Publicity campaign, initial & runningCost of Publicity campaign, initial & running Cost of Distribution thru Banks Telex Charges, etcCost of Distribution thru Banks Telex Charges, etc Cost of fund deposit and withholding costs by Cost of fund deposit and withholding costs by

Merchant BankMerchant Bank Cost of Dispute settlements/Charge backsCost of Dispute settlements/Charge backs Legal costs Legal costs Costs of arrangements with BanksCosts of arrangements with Banks Cost of Transaction Authorization chargesCost of Transaction Authorization charges Cost of Insurance against charge backsCost of Insurance against charge backs


We have demonstrated a We have demonstrated a solution which is:solution which is:

- Financially Attractive- Financially Attractive- Technically Sound- Technically Sound- Operationally Efficient- Operationally Efficient

Whats the next move?Whats the next move?

electronic home remittances an abs proposal. paypakistan.com introduction an abs introduction ...

Documents

pakistani bank branches

pakistan gponational

pakistan revenue

market solution

sender bank branch

receivers bank account

fund transfer rates

bank al habib