Tag: app

Sending money home – the difficulties faced by the UAE’s migrant workers

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A large part of life for many migrant workers in the UAE is sending money home. Most are here because they can earn substantially more than they can in their native countries, coupled with this is the fact that a lot of expatriates are supporting families at home.

Sending funds from one country to another might seem simple in these days of online transfers however, many workers in the UAE are paid on prepaid payroll cards, which they can only use to withdraw cash from an ATM, and their wages are lower than the AED 5000 required by banks to access even a basic account.

If you don’t have access to online banking, or any banking at all, the only option left is cash transfers. This is something NOW Money is solving by allowing low-income workers to access the same advantageous transfer rates as those in the banking system via a payments app. For now however, cash remains king for this section of the population.

An expatriate sending money home needs to consider these main three factors:

  • Which is the fastest way to send money?
  • Which exchange house has the best exchange rates?
  • What, if any, are the “hidden fees”?

Obviously, working out all of the above and choosing where to make your transfer takes time and resources. A worker who only has one day off a week will almost certainly not have the time to research the best options every month which potentially leaves them worse off.

Cash transfers fall into three main areas; Cash to cash, cash to bank and cash to card. All of these require an exchange house to carry out the transaction. Users can either use a standard exchange house Al Ansari Exchange or UAE Exchange or an express exchange house such as Western Union.

Standard exchange houses are generally cheaper in terms of transaction fees than express ones but the downside is they are slower in sending funds across borders. Express houses can have the money sent over in a matter of minutes but inevitably, the fees are higher for this service.

Exchange rates marginally differ from one exchange house to another however, although there may not be huge differences, over time migrant workers can save a chunk of their income if they find and transfer their money from the right exchange houses at the right time.

It may be a little difficult to compare rates across these houses, as rates change constantly, on average more than 5 times a day, so pinpointing the optimum time to make the transfer is complex.  Technology is changing this and there are websites that compare rates at different exchange houses. Get4x.com for example give up to the minute rates across the different exchange houses and the best location to use.

Surprisingly, exchange rates differ depending on the location of the exchange house’s branch. On average, rates are more competitive in Sharjah for example than in the malls of Dubai however they may not be as accessible.

Another consideration for those making the transfers are the charges or the “hidden fees”. Many exchange houses across the UAE are known for implementing indirect costs which the consumer is not always aware off, essentially withholding some of the money at the time of pickup at their foreign branches.

Sending money home to loved ones comes with many headaches at present for low-income workers. NOW Money plans to change this by giving those previously excluded from the banking sector access to online accounts and payments facilities. The service will provide the best exchange rates available with the in-app marketplace, and it will also give an update on when the money is due to arrive back home. The best part of all is that the transfers can all be done with a few clicks on a screen in an internet connection. NOW Money aims to help people receive the same access to services that those in higher income roles take for granted. It’s time to stop financial apartheid and allow everyone the choice to bank online.

by Vivek Harjani

The poverty premium: It costs more, to be poor.

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Put simply, the poverty premium is the principle that people on low or zero incomes pay more on the essential costs of living than wealthier people.

Despite working in a business entirely centred around financial inclusion (providing access to the digital economy for those usually unable to afford it) I have only recently begun to investigate the true reach of the poverty premium’s grasp: across almost all areas of our economy.

At a basic level, the poverty premium is predominantly dictated by economies of scale. Purchasing in bulk or from hypermarkets usually affords the buyer some kind of discount.

Why would you buy the rice from the convenience store? Perhaps it saves a trip in the car. If you fall into the middle or upper financial segments, this is likely. But for people on a lower income, around 70% of the UAE population, buying a small amount is all they can afford at one time. But they get less rice, dirham for dirham, than those who can afford to buy in bigger quantities or hypermarkets they can reach in their cars.

According to University of Bristol, the lowest income UK families pay nearly AED 4,000 more per year than their middle income counterparts for basic amenities. Costs are driven up by having to pay to access money (same in the Gulf), increased insurance costs due to living in dangerous areas, and paying for utilities in inefficient ways such as pre-paid meters, kiosks and gas bottles (again, same in the Gulf).

Working in the remittance industry, I am acutely aware of the costs people without access to the digital economy face compared with those who are banked. People from smaller countries such as those in Africa pay up to 30% of their transfers when paying cash at the counter. Those who can send them online would pay less than 5%.

Finance, access to credit, insurance – this is just the obvious stuff. The poverty premium extends way past finance or even groceries.

The UAE’s recent ban on Skype has, as a nation of expats, affected most of us. Free calling home made living away from loved ones that little bit easier. Many have already found VPNs are a way to circumvent this ban. VPNs are not only illegal in the UAE, they are prohibitively expensive (around $100) for those who have a monthly disposable income of around $200 (AED750), and often too complicated for people with an elementary grasp of technology to implement anyway. Middle and higher income people may choose to pay this one-off VPN cost, but those on the lowest incomes must instead pre-pay for what phone credit they can afford and then spend that credit on premium international calls. Much like inheritance tax, the poverty premium is not afraid to tax the same funds repeatedly.

Have you noticed that in the last decade, the cost of “luxury” lifestyle goods – think televisions, Playstations – has depreciated, whilst the cost of life’s basics – food, healthcare, transport – has exploded to ruinous levels? The poverty premium doesn’t apply only to people living in absolute poverty like Somalia. This new type of poverty continues to hit those living in precarity in America, the UK and even here in the UAE.

So how are we addressing the poverty premium? Despite the attempts of universities and charities, it receives little attention from policy makers. Better to look at something you can influence far quicker. Technology. Technology is the ultimate equalizer.

Skype ban excluded, technology is bringing the power of choice to anyone in possession of a smartphone. The UAE has a 98% smartphone penetration level. If you are still in any doubt of lower-income people’s capacity to operate a smartphone (we still hear this a lot), please look at this recent image of the NOW Money team delivering dates during Ramadan.

Looks staged, doesn’t it? It isn’t. These people are ready and waiting with half our economy’s purchasing power. The “new” ideas aren’t really new – after all, they are just selling things, renting things, delivering things. But the way they can be paid for and consumed – online, rather than expensively at the closest shop, brings a whole new dimension to accessibility and pricing.

The reason for financial inclusion isn’t just providing people with a safe place to keep money (albeit, that’s a good one). We have bigger plans for NOW Money and its ability to bridge the gap to other platforms: ecommerce, apps, even drones. These are just at the start of the journey to financial freedom for society’s most challenged. And for the creators of these platforms, your market just got a lot bigger.

 

 

Meet Ben – Technology Specialist

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Although a developer by trade, Ben has proven to be quite the estate agent since joining NOW Money in September 2017. Not only has he been driving NOW Money’s technology to the next level, he’s also taken on the office move. He can code and build flat-pack furniture – what more could a start-up want?

Tell us about your role here

I’m currently working on the technology which on-boards customers to the NOW Money platform. The on-boarding process is how we identify customers, collect all regulatory information from them and prevent fraudulent accounts being created.

The job involves testing lots of different technologies and using them across lots of different platforms. The process so far has allowed me to dive into all of the latest RegTech and biometric innovations. There’s some really advanced technologies out there – it’s really great to be working alongside those at the forefront of the industry.

What is your first short-term goal within the company?

Other than really improving the application, my secret goal has been to relocate the NOW Money office as close to my apartment as possible.

What do you like most about working for a start-up?

Pretty much everything. I love working in small teams trying to do big things, and the feeling that we’re all really motivated, heading towards the same goal. Oh, and also no pointless meetings!

What are you most excited about over the next few months?

Seeing the stuff I’m working on going into production. Everything we do at NOW Money has the chance to change people’s lives, and the company has great potential to do some amazing things over the next few months. We get closer to these everyday.

What were you doing before you joined NOW Money?

I’ve been in the UAE for ten years now. Originally I came here to work for Dubizzle, which, at the time, was a start-up of similar size to NOW Money today.

After seven years at Dubizzle I was keen to do the start-up thing again, this time right from the start. So, I co-founded a fitness technology start-up, as well as working with other start-ups remotely.

If you weren’t with NOW Money, what would you be doing?

I’ve been really interested in FinTech for a while now. If I wasn’t with NOW Money, I’d probably be developing my own cryptocurrency.

Start-ups attract people who can’t sit still. What do you do when you’re not developing things?

Usually riding one of my bikes at Al Qudra, running somewhere, or eating copious amounts of burritos at Taqado.

How do you let your hair down?

Some sort of hop-based-bevaerage, maybe of the German weiß variety. Aside from that I love travelling and visiting new places, preferably ones with great vegan food options!

The story so far…

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As Forrest Gump said; life is like a box of chocolates, you never know what you’re going to get.

The same can be said for business.

Growing up, I always knew that I wanted to one day run my own business, I just didn’t know what in. I grew up in sleepy Suffolk, where high-flying professionals were farmers and doctors. My ambitions stemmed far beyond that.

I idolised my grandfather for starting and running his own business, not without its trials and tribulations, and I knew that I wanted to follow in his footsteps.

I was never into academia at school – I went to university because I felt I should, plus it looked good fun. After taking a gap year where I saw a glimpse of the wider world for the first time, I did quite well and ended up going to Cambridge to study economics – a subject I didn’t really know existed until after school. I’m glad I went to university, as I met some incredible people, one of which is now my business partner, and co-founder of NOW Money (NOW), Katharine Budd.

If someone asked me what a bank was when I was 18, I would have said it’s a branch in town, and if someone had asked who is a banker, I would have said it was the branch cashier.

After university I was excited by the business world, but nevertheless I was still young and naïve. It was the depths of the recession in 2009 and I needed some money and experience, so I applied for one of the only banks which was still accepting applications from graduates, HSBC.

I planned to work for three years, get some money and experience behind me and then leave to start my own business. However, six years later I had made good progress, had worked with some great people and was enjoying my job, so it proved harder than I expected to make the decision to leave.

During this time, Kat and I had only maintained sporadic contact since university. It wasn’t until very early on a cold February morning when I was cycling into work in London that we rekindled our friendship.

I got hit by a car. I have that slightly sleepy driver to thank for being able to start NOW.

Following the crash, I spent time in hospital and then was recuperating at home, when one day, out of the blue, I received a box of chocolates from Kat – dark chocolates, as she remembered that I way preferred them to milk chocolates. Little did I know it, but this was the beginning of an incredible partnership, and it’s where NOW began.

I thanked her for her kindness – not before scoffing all the chocolates – and we picked up conversation again. She had moved out to Dubai, so as a post recovery treat I booked myself on a flight out there to go and see her and see what Dubai was all about. When I got over, I realised that there was so much going on and so many unrealised opportunities.

I was working for a large bank, so was intrigued by the challenger banks in the UK who were building a solution around what a 21st century customer actually wants, but knew that the UK was very over-banked and I was behind the curve. Coming to Dubai and seeing a new market, I realised there was an opportunity to do something similar in markets where everyone had smartphones but couldn’t access banks.

Kat and I initially turned our attention to a retail data analytics solution for retail banks, to help them understand their customers better. However, it never really got much traction. We realised that the biggest population in the Middle East are the low-income migrant workers, who in the UAE, unlike in Europe, aren’t able to open a bank account unless they earn a certain amount of money. This gave us a massive population of people that we felt we could service properly for the first time, because if we ran everything online, we’d have a low cost-base and could profitably provide these guys with a high-quality solution. It seemed perfect – it offered a social benefit, solved a clear problem and was a credible business. And this is where the idea for NOW was born.

The difficulty of leaving a stable career, where I was earning a lot of money and had career progression, plagued me. All of a sudden I had no idea what I was doing and I was working day in day out with someone I was good friends with, but had never engaged in a professional relationship with. It was a new dynamic – Kat had my whole life in her hands, and vice versa. You spend every day looking back and living in anxiety.

I got lucky – in hindsight, I couldn’t have started NOW with anyone but Kat. However, starting a business from scratch, in a foreign country has been far more mentally challenging than I could have ever imagined. Everything that previously gave me security got pulled from beneath me.

Now we are on an upward trajectory and things are gaining momentum. We are a team of nine people and seeing how excited they are to come into work every day, and how much they truly get behind our vision and our goals, is a way better feeling than I ever thought it would be.

Of course, we had doubts. Our initial thought was “we can’t do this, we have no idea what we’re doing!”

It has taken a lot of willpower, patience and hard work (and a little luck) but will hopefully go to show that anything is possible!

Welcome to NOW – the financial inclusion company that is full of endless possibilities.