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ELECTRONIC HOME REMITTANCES

ELECTRONIC HOME REMITTANCES. An ABS proposal. INTRODUCTION. An ABS introduction Company formed in 1995 Principals played instrumental roles in introducing automation to the Pakistani Banking Sector SWIFT, NIFT, Secure Internet Messaging Solutions

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ELECTRONIC HOME REMITTANCES

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  1. ELECTRONIC HOME REMITTANCES An ABS proposal

  2. INTRODUCTION An ABS introduction • Company formed in 1995 • Principals played instrumental roles in introducing automation to the Pakistani Banking Sector • SWIFT, NIFT, Secure Internet Messaging Solutions • Principals have over 100 man years of banking automation experience PayPakistan.com

  3. BACKGROUND OF PROPOSAL • Pakistani expatriates Remit between $3-5 billion annually to Pakistan • Revenue generated by banks is $60 million annually from this service alone • Business is dominated by the 5 large Pakistani banks, which have overseas presence • Banks/institutions without overseas presence have not been able to tap into this business/space • Cutting edge technology allows ABS to identify an ITES opportunity which will enable institutions without overseas presence to tap into this market • Solution is available, which will enable Bank AL Habib to enter this space, with the time to market within 3 months PayPakistan.com

  4. MARKET SIZE • Pakistanis remit over US$ 3.00 billion to Pakistan per annum (Source: SBP) • Remittances through un-official means are estimated at $2 billion • Remittances is one of the highest foreign exchange earner for Pakistan • Total potential revenue base of market size is US$ 60 million/annum (includes Hundi & ME sectors) PayPakistan.com

  5. Distribution of Market Size Sector Official Un-Official Total % (figures are in millions per annum) USA $1,152 $720 $1,872 36% UK $324 $200 $524 10% Europe/Aus $336 $220 $556 11% UAE $576 $360 $936 18% ME $768 $500 $1,268 25% PayPakistan.com

  6. Having seen the market size’s and potential revenues, we will now present the ABS solution which is: • Financially Attractive • Technically Sound • Operationally Efficient PayPakistan.com

  7. Current Options Current Options available to overseas Pakistanis for Home Remittances are … PayPakistan.com

  8. OPTION 1 Pakistani Bank Branches abroad accept funds for home remittances Advantages: • Free service to the sender Disadvantages: • Branches are not located in many cities • Branches not 24/7 operations (banking hrs only) • Getting to a Pakistani Bank branch is time consuming • The cost of time and travel, cost of time off from work and the inconveniences faced are extremely high • No tracking facility PayPakistan.com

  9. OPTION 2 Direct transfer through a Foreign Bank Advantages: • Sender bank branch located in close proximity of sender Disadvantages: • Prohibitive charges • Not 24/7 for international remittances • Funds credit date at receivers bank account in Pakistan is not known (anywhere from 3 days to 2 months) • Extra charges for tracking and not done Real Time • Need Routing & Swift number details from receiver’s bank, which is often difficult to obtain and can cause serious delays if incorrect PayPakistan.com

  10. OPTION 3 Fund transfer service companies like Western Union and Money Gram Advantages: • Branches are located everywhere • Online and offline money deposit options offered to senders in North America and Europe • Fund transfer instant (within 5 minutes) • Funds available for pick up in multiple locations across Pakistan (GPO/National Bank for Western Union, UBL/Al-Falah for Money Gram) Disadvantages: • Fund transfer rates are expensive ($15-85 from US) • Poor Exchange rates offered (Rs. 56.2 v/s 57.8) • Additional services are charged and expensive PayPakistan.com

  11. OPTION 4 Other fund transfer companies like Yahoo, Moneybookers, Ikobo, Xoom, Onlinefx, etc Advantages: • Online transaction processing allows sender 24/7 convenience of sending funds from home or office • Instant fund transfer (within 5 minutes) if receiver has fund transfer service ATM card Disadvantages: • Fund transfer rates are expensive • Most services issue an ATM card for fund withdrawal from Cirrus ATMs. Fund withdrawal rates high for receiver • May take up to 4 weeks to receive first ATM card • Assumption is receiver is ATM savvy • ATM’s are not widely located everywhere (limited coverage in Pakistan) • Additional services are charged and expensive PayPakistan.com

  12. Option 5 UBL click2Remit UBL has realized the need to enter the electronic remittance Space…however, with a solution that they have not written, are not managing and can not customize Advantages • Online 24/7 • Credit, debit cards and eCheques accepted Disadvantages • Only for US customers • Direct credit only within UBL accounts • Non-UBL accounts have a mailing system solution • Delivery process not electronic PayPakistan.com

  13. Option 6 & 7 Hundi/Hawala Systems • Based on trust • Unsecured • Illegal • Open to Money laundering • All governments strongly discouraging this means Exchange Companies • These are primarily an extension of a Pakistani Bank PayPakistan.com

  14. Summary of Disadvantages • Most are not 24/7 • Transfer charges high • Global presence issues • Poor exchange rates • Coverage issues (ATM) • Not integrated with Pakistani banking system • Summary of remittances to sender not readily available • Delay in funds transfers • No tracking facilities PayPakistan.com

  15. OPPORTUNITY An opportunity exists for a service that can: • Overcome all the disadvantages listed and • Is Remitter friendly (easy to avail and operate) PayPakistan.com

  16. WHAT DO WE PROPOSE Functionally ABS proposes • Service will be an online 24/7 Remittance Solution available to anyone anywhere • Economical Rates (free under the HRS) • Rupee based transactions • Customized to integrate with the Pakistani Banking System • Bank Accounts credited within 24 hours or sooner (depending on recipient bank) • All transactions documented from end to end, meeting all money laundering regulations in Pakistan & abroad • System prompted tracking of funds • Tracking of Funds Feature available to sender • Summary of remittances available to sender PayPakistan.com

  17. WHAT DO WE PROPOSE Operationally ABS proposes • ABS is selling a solution, not a software • Solution will be delivered based on a Strategic relationship between ABS and Bank AL Habib • ABS’s role will be handling all aspects of service up to the transfer of funds into the Internet Merchant Account • Bank AL Habib’s role will be handling of all aspects of the processes after the delivery of funds in the merchant account • ABS will handle the technical aspects while the Strategic Partner will handle the financial and administrative aspects of the service PayPakistan.com

  18. ABS Solution • Service will be delivered thru the internet – accessible from anywhere/anytime 24/7 • Remitters access the service website • New customers/remitters register (email verification/activation process); existing customers simply log-on • Customer enters details of remittance and recipient • Credit Cards is the current payment platform (others to follow) • Website secure ‘payment processing’ comes into operation with Secure Socket Layer (SSL) technology and customer enters credit card details • Payment processing procedures check card validity and enters into authorization process. It immediately informs on website within 3 seconds of acceptance/decline of transaction to customer • Auto email sent to customer of transaction confirmation with TR# and Payment receipt • Money credited to internet enabled Merchant Account in Pakistan within 5 seconds of transaction acceptance What have we achieved? • Satisfied money laundering issues (end to end doc, amt, sender) • Secured Payment platform • Delivered funds to Bank AL Habib Ltd merchant account from customer account within 5 seconds Solution ahead in timeline PayPakistan.com

  19. ABS Solution…(2) Funds will then be transferred from Merchant Account to Home Remittance department of each bank • Citibank will (at a pre-determined time) transfer funds to Home Remittance department of each bank via SWIFT, based on Consolidated bank wise report submitted by ABS (under the instructions of Bank AL Habib) • Corresponding detailed list (with recipient details) will be provided to each bank for onward credit of account holders (under the instructions of Bank AL Habib) • MT103 generation for real time or offline delivery to banks • SBP regulation of 24 hour credit for Home Remittances apply • Auto Reconciliation will take place at predetermined times between ABS website transaction information and Citibank payment Gateway collection • System overcomes all the disadvantages and is totally electronic from source to recipient bank What have we achieved? Successful transfer of funds to recipient bank account electronically and speedily PayPakistan.com

  20. ABS Solution…(3) • POD from recipient bank will be sent to Bank AL Habib Ltd administration cell for status update (paper or electronic) • Database of all transactions (with their status) is maintained for ready references by customers at any time • System prompted follow up of transactions for all exception reports will improve delivery time and Turn Around • Online tracking of status by customer available thru its life cycle • Track back interface will be available for Home Remittances departments for immediate updates What have we achieved? • Follow up online on status and system prompted • History available for viewing and printing (also can be used for consulate submissions) PayPakistan.com

  21. Security Issues • 128 bit encryption • SSL • Firewalls (hardware & software at both ends) • Secure Payment Gateway • Best of breed technologies • Encrypted database PayPakistan.com

  22. Financials PayPakistan.com

  23. INCOME PROJECTION Based on market stats and surveys • Total market size US$ > 3.0 Billion annually • Hundi is another 2 billion (not included in calculations) • Less Middle East residents due to non-credit card culture (US $1.2 Billion annually) • Present Market Size= US$ 1.8 Billion/annum • Average Annual Transactions = 3.6 Million PayPakistan.com

  24. INCOME PROJECTION…(2) Assumed target market share 10% - valued at US$ 180 Million per annum • Average transaction volume is: 360,000/annum • Remittance commission from SBP is as follows: SR 25 x 360,000 = SR 9 million = Rs. 135 million • Impact of 1% growth = Rs. 13.5 million/annum Total Market Share (Hundi + Legal) 10% = Rs. 378 Million/annum 1% impact = Rs. 37.8 Million/annum PayPakistan.com

  25. EXPENSES AT A GLANCE The expense for this project can be divided into two distinct areas A) Technical & System expense B) The fund handling and distribution expense, both initial and running Details of Technical & System Expenses • System Development • Hosting • Cost of Servers • Cost of Bandwidth Requirements • Cost of Communication • Cost of System Operations • Cost of Continued Development • Cost of Project Management PayPakistan.com

  26. EXPENSES AT A GLANCE Details of Bank AL Habib Expenses • Cost of setting up Merchant Account • Cost of Publicity campaign, initial & running • Cost of Distribution thru Banks Telex Charges, etc • Cost of fund deposit and withholding costs by Merchant Bank • Cost of Dispute settlements/Charge backs • Legal costs • Costs of arrangements with Banks • Cost of Transaction Authorization charges • Cost of Insurance against charge backs PayPakistan.com

  27. We have demonstrated a solution which is:- Financially Attractive- Technically Sound- Operationally EfficientWhats the next move? PayPakistan.com

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