Uncategorized

Study263: Money transfer start-up shifts remittances business

24 Aug, 2018 - 00:08 0 Views

eBusiness Weekly

Jeffrey Gogo
In the years following Zimbabwe’s economic challenges in 2008, thousands of Zimbabweans had already crossed the “border” to countries such as South Africa, the United Kingdom, Australia and Botswana, in search of greener pastures.

Zimbabwean student populations abroad had also begun to swell rapidly, as a cash crunch marked by severe limits on cash withdrawals back home became entrenched. Both groups the economic refugees and students either needed to send money back home or to pay for university fees abroad.

But remittances were becoming increasingly expensive, and for students, nearly impossible in light of the critical shortage of foreign currency at home. One person who was sharply alive to the problem was Tinashe Jani, the 28-year-old Zimbabwean reading for a masters degree in blockchain technology at Rhodes University.

Together with a friend Hillary Zuze, a 27 year-old environmental science graduate, the duo recognised that if they created a company that was digitally-based to facilitate remittances via cryptocurrencies, they could not only keep transfer fees down, but also speed up remittances as well as help Zimbabwean students studying overseas obtain hard currency easily, cheaply.

So, the idea of Study263, a money transfer system, was born last September.

In the interview below, Jeffrey Gogo (JG) speaks to Tinashe Jani on the progress his South African-based agency has made so far. Tinashe is represented TJ 

JG: Study263 will be a year old on September 1. What can you say are the milestones that the company has achieved since formation? And challenges?
TJ: Our road map is centred on moving to other countries. Creating a student loan for international students. Most universities require 100 percent school fees for international students in January.

We have also managed to expand our team to 20 full time personnel who work around the clock to make sure all clients are well attended to as money is a sensitive topic and no one wants to be blue ticked or have their calls not answered.

Our biggest challenge has been attracting corporate clients as most finance managers will not understand the cryptocurrencies world and so will be skeptical. Another challenge has been the lack of a central meeting office for our clients as our first office was a little bit out of town. Most clients associate money “moving” companies to have corner offices in the hub of the town like most banks but the world is moving to a high internet speed connection and a smart phone that can handle applications as enablers. 

JG: Is using bitcoin for remittances really a good idea for money transfers?
TJ: We don’t only use bitcoin but any other available cryptocurrency. It is a good idea because of three important attributes it has cheaper transaction costs one can move $1 000 and be charged $10. No other money transfer system allows that. It is also faster the traditional money transfer systems take 5+ working days, with cryptocurrencies one can send money to the UK in less than 30 minutes and the recipient just has to have a phone that has an app. No queues or extra documentation or getting told you did not spell your name properly so the money will not come out. The third advantage applies to Zimbabwe’s situation it works, now as you know that out of the country card payments do not work anymore.

JG: How exactly is the transfer done? We know that someone sending money via a bank will visits the bank, makes a cash deposit and so forth. What exactly happens with those transacting on the Study263 platform?
TJ: The first step is that one sends money, US dollars or bond notes, to our agents in Zimbabwe via Ecocash, cash or electronic transfer. Our agents buy bitcoin with the funds transferred before the bitcoin is converted to Rand in South Africa. Finally, our agents in South Africa transfer the money to the beneficiary via electronic transfer. The entire process takes up to three working days. This is to allow for things like holidays or large amounts. It also allows for interbank transfers to be done. Not every bank has Zipit. We do, however, complete some transactions within 24 hours. A similar process applies for cash transfers originating from South Africa to Zimbabwe.

JG: How do you deal with the volatility in the price of bitcoin during transfers? And how are the transfers facilitated in view of the crypto ban in Zimbabwe?
TJ: Volatility burden is passed on to the company. The client on transacting with us is informed of the final amount they would receive, for example $100=R800. The company and its agents are well equipped to hedge their position in order to maintain that rate. We also hold a float in the event that the rate goes down or all our analysis could not predict the position, the company bears that cost. It’s the cost of being in business.

In light of the ban of the crypto “exchange”in Zimbabwe, we resort to peer to peer. We have created a network that allows us to always have a supply of bitcoins. We also maintain a float from our SA investors which allows us to service the clients should our peer networks not have the necessary volumes to fulfil the client order. The same applies for people who want to send money to Zimbabwe, our networks now allow us to always match demand with supply

JG: On the average, how much worth of transfers have you facilitated in both fiat and crypto in the past year?
TJ: We count in number of transactions as values of our crypto assets and Zimbabwean fiat have gone up and down drastically in the past year. We have facilitated over 900 transactions to date with amounts ranging from $10-$10 000+.

JG: Can we put an actual figure, in monetary terms, on the 900 transactions processed to date?
TJ: Unfortunately not due to competition and the nature of money being sensitive, we prefer not to disclose.

JG: Fees are known to be quite a huge put off for people looking to send money home from abroad via traditional money transfer mechanisms. How does Study263 compare in this regard?
TJ: Study263 offers $95-R1 000. This is higher than any other transfer system available in South Africa at the current rate of US$-Rand rate of 1:14, which means R1 000 is equal to $71.

JG: One of the major reasons cited by the Reserve Bank of Zimbabwe for forcing crypto exchanges to shutdown was to do with issues around violations of the Exchange Control Act. It looks like the Study263 business model falls foul in this respect as well, at least as far as the RBZ is concerned. What is your comment?
TJ: We do not use any (digital) exchange anymore and so do not fall in that spectrum. If RBZ would perhaps adopt some of the lessons that SA Reserve Bank and SA Revenue Service are implementing on how to deal with cryptocurrencies, our economy and tax authority specifically could benefit from the income. One of the trading platforms in South Africa, Luno, has 24 hour volumes of over 250 bitcoins at approximately R90 000 each. That’s R22,5 million. Luno is registered and compliant with South African laws. Imagine the employment and empowerment effect! An agile and proactive task team should have been set up to try and understand how our government can benefit before shutting the exchanges down.

JG; You speak of adding China as are recipient country and vice-versa. What has motivated this move? One can understand your presence in South Africa, which is home to millions of Zimbabweans.
TJ: China has a large number of Zimbabwe students who are our target market as we are also falling in that category. We have friends in China who were facing the same out of the country card payments challenges and so we did try outs and ensured that we understood the process fully to introduce it to potential customers.

JG: Study263 isn’t exactly a name that reflects the kind of business you do, that of money transfers. Why such a name, looks more scholarly than it is financial?
TJ: Study263 speaks to our main target market students from the 263 (Zimbabwe’s international code) who are studying abroad. The name encompasses the fact that all students from Zimbabwe who are studying in any country were facing the same problem.

JG: Five years from now, where will Study263 be?
TJ: Study263 aims to be the fastest and cheapest money transfer system in Africa for university students. We don’t only work because of financial crisis in Zimbabwe but our speed, transparency and cheaper commissions make sure hopefully stay sustainable.

Share This:

Sponsored Links

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds