Fostering a FinTech Revolution from Remittances

In 2017, Malaysia’s central bank revealed that nearly MYR33 billion of remittance funds had been sent abroad – placing the country at the fourth in the world in terms of sending countries. Despite this growth, however, the communities which rely on such services the most have conventionally been bereft of affordable and accessible solutions to send money to their loved ones.

As the Malaysian market leader in digital remittances, Merchantrade Asia is collaborating with Malaysian Digital Economy Corporation (MDEC) to raise the financial inclusion of Malaysia’s underbanked migrant workers and underserved SMEs into the digital economy.



The unbanked population in Southeast Asia is staggering, as it amounts to nearly 30 percent of the region’s nearly 600 million population. Although Malaysia enjoys one of the region’s highest levels of financial inclusion (the World Bank in 2014 noted that 81 percent of Malaysian adults had an account at a licensed institution) the underbanked problem in the country remains real.

Financial inclusion in a country involves not only its citizens, but also the foreigners working and living there. Yet, despite there being around 3 million migrants in Malaysia, 90 percent of them currently do not have access to banks or licensed financial institutions – effectively circumventing their power to participate in the domestic economy. But with Malaysia seeking to cement its position as one of Asia’s economic hubs, the need to address this problem is dire.

Having leveraged on the power of FinTech for over a decade, Merchantrade Asia has been empowering Malaysia-based migrant workers via its e-money and digital remittance services. Already obtaining a foothold in the migrant remittance market, the company has set its sights on fostering widespread digital adoption within the domestic financial ecosystem.

With support from the Malaysia Digital Economy Corporation (MDEC), Merchantrade now aims to bring its disruptive FinTech services to Malaysian small and medium enterprises (SMEs) who have been underserved by conventional business remittance providers.


Digitalising the migrant economy

From starting out in the late 90s as a telco equipment supplier, Merchantrade has since grown to lead Malaysia’s remittance industry with 84 outlets, two wholesale banknote trading hubs and more than 400 agents located throughout the country.

For the company, much of its success is attributed to founder Ramasamy K. Veeran, who saw the massive potential of the digital economy during Merchantrade’s early days. In 2003 – when Merchantrade was still mainly selling VOIP (Voice over Internet Protocol) calling cards to migrant workers – Ramasamy began to realise how internet-based technology can deliver better product efficiency; particularly in empowering traditionally-underserved financial consumers such as migrant workers.

From seeing how his business helped provide easier and more affordable means for foreign workers to contact their loved ones back home, Ramasamy then wanted to solve an even bigger problem faced by migrants: affordable and accessible remittances.

Ramasamy then spent the following years learning about how tech-driven disruption can impact traditional remittance and money exchange businesses. This culminated in the launch of Merchantrade’s eRemit service for individuals, the online P2P version of its offline remittance business.

Apart from using technology to align its services with an economy that was becoming more tech-dependent, the move marked the first time which a local business successfully digitalised its core remittance service for the mass market.

Merchantrade’s Chief Strategy Officer, Paran Puvanesan, described the integration of technology into Merchantrade’s remittances services as understanding that the market needs to change; particularly to keep up with the evolving lifestyles of the migrant workers themselves.

“They are becoming more tech-savvy and their requirements have changed. This has also caused us to similarly evolve our remittance offerings,” said Paran.


Attaining financial inclusion – the cashless way

Today, Merchantrade offers a suite of offline and online services that includes international money transfers, foreign currency exchange, wholesale banknotes, digital payment processing and (as to not forget its roots) mobile telecommunications. Its eRemit service has bagged numerous awards over the years and in 2017, successfully recorded around MYR700 million in transaction value. It also has the capacity to transfer funds to over 220 countries and is linked to some 234,000 pay-out points worldwide.

Having cornered one end of the digital economy, Merchantrade is now determined to align its business expansion with the Malaysian economy’s digitalisation – namely by empowering underbanked financial consumers via cashless solutions.

Seeing an opportunity to marry the need of catering to migrant worker needs with bringing more footfall to local businesses, the company in early January 2018 introduced the Merchantrade Money Visa Prepaid Card.

Those with the card can make payments to millions of merchants worldwide without the need to bring around large sums of cash. As it does not require the holder to possess a local bank account, it helps provide migrant workers the convenience of cash management and security.

According to Paran, the launch of the card is part of Merchantrade’s strategy to position itself as a ‘24/7 digital currency changer’.

“The card is as a multi-currency digital wallet which can be loaded up to MYR10,000; meaning its holders can use it to have their salaries credited there, store money, remit funds or simply go shopping”, said Paran. “As such, we see its utility as going beyond the migrant worker market and are positioning it towards the greater Malaysian market.”

Disrupting Malaysia’s SME remittance infrastructure

Currently, Merchantrade is looking to move away from a brick-and-mortar role to a more progressive FinTech player. The company aims to do this by disrupting conventional methods of remitting and exchanging funds.

But the migrant economy is only one avenue in which Merchantrade is seeking to foster a cashless revolution. It is now using its experience in digital remittances to bring the service to another segment of Malaysia’s underbanked community – SMEs.

Despite there being an upward trend in money remittances from Malaysian businesses over the past decade, smaller enterprises have traditionally been forced to use banks and costly forex brokers.

This was the reason underpinning the launch of Merchantrade’s eRemit Business service. It is Malaysia’s first online B2B non-bank portal for local SMEs that is aimed at improving ease of doing business, effective financial transactions and secure money transfers regardless of the recipients’ location.

With the service, Merchantrade aims to help local SMEs penetrate thriving foreign markets. This is as it offers the option to transfer funds to over 200 countries worldwide via Merchantrade Asia’s large service network.


Raising domestic market exposure with MDEC

Merchantrade’s eRemit Business now serves over a hundred companies across Malaysia; spanning various industries such as trading, manufacturing and services. Yet, with there being nearly 7 million registered business in Malaysia, Merchantrade has only penetrated the tip of its target market’s iceberg.

To grow its profile, the company has been cooperating with MDEC to reposition itself as a FinTech innovator for the domestic economy. Through the collaboration, Merchantrade has benefited much in terms of growing its brand profile beyond the migrant market – helping it to better position itself as a FinTech company seeking to provide cheaper and accessible remittance solutions for all Malaysians.

“Although we’ve grown to become a trusted remittance service provider, our greater ambition is to stamp a mark with the FinTech space,” said Paran. “As such, we jumped on the opportunity to work with MDEC as we knew they could help us grow our brand exposure between not only migrants, but the Malaysian public at large.”

MDEC was also noted to have backed Ramasamy’s vision of promoting a cashless ecosystem, and as such helped the company increase its exposure and raise its investor profile. This was namely done via MDEC’s Global Acceleration and Innovation (GAIN) programme, which helped Merchantrade expand its stakeholder networks (particularly between SME circles) and inviting the company to learn more about branding at events.

From its early days in supplying telco cards and spearheading the digitalisation of Malaysia’s remittance industry, Merchantrade is now a trusted name within the country’s migrant worker community. Backed by MDEC, Merchantrade now seeks to generate the same kind of rapport between other stakeholders.

“Partnering with MDEC – as Malaysia’s lead digital economy agency – has given us greater credibility”, said Venkatesh Raj, the Head of Marketing, Brand & Communication at Merchantrade. “Their stamp of endorsement gives customers and stakeholders greater assurance when it comes to working with us.”

Although Merchantrade has been making overtures towards regional expansion (it recently struck a joint venture with Singaporean telco giant M1 Ltd’s remittance subsidiary) the company’s immediate plans, for now, is to delve deeper into the local remittance and forex markets for SMEs.

With MDEC’s support, Merchantrade aims to show it is leveraging on its expertise within digital remittances and FinTech to plug the financial gaps faced by Malaysia’s underserved financial consumers.

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