Rational FX will utilize its expertise in the remittance industry, existing capacities, efficiencies and infrastructure to revise Xendpay's current payment mechanisms and re-launch it as the first genuinely no fees bank-to-bank international money transfer service that offers exchange rates that are typically only available to multinationals to individual users.
In doing so RationalFX will offer a service that is considerably cheaper than the market rate, allow more money to reach its intended destination, and provide a mechanism for customers to send more of their money to the developing world.
RationalFX removes the traditional profit mechanisms used by the rest of the industry, and covers the costs of Xendpay by inviting users to make a voluntary service payment, akin to a restaurant tip. RationalFX will ask customers to pay what they want, according to how much they value the service and the cause.
Xendpay will invite its users to collaborate with them after using the service and recommend the service to others.
Launch date: 11/04/14
Estimated duration: 5 years
Savings being offered on global average of 8%: 7.5%
Total amount remitted during the course of the commitment: ,591,118,172
Total savings over the course of the commitment: ,333.863
Savings Year 1: ,619 / Average monthly transactions: 3194
Savings Year 2: / Average monthly transactions: 8,501
Savings Year 3: ,442,554/ Average monthly transactions: 22,628
Savings Year 4: ,839,626/ Average monthly transactions: 60,229
The following measures have been taken in support
- Re-hauled the marketing and payment platforms to fit with the mission - this also involved significant amends to our backend processes and payment mechanics
- Set up a standalone campaign page to educate people about the need to reduce the cost of international money transfer
- Translated everything into the 6 key European languages
- Organized a four month long marketing and public relations outreach campaign
The goal of RationalFX, by way of the development of Xendpay, is to reduce the costs of international money transfer.
Remittance is the most tangible link between migration and development. According to the World Bank an estimated 215 million people, three percent of the world's population, have emigrated in order to support their families financially. International money transfer is the largest overall source of external financing to developing countries; billion in 2014. That's three times the total global aid budget. For some countries remittances can account for as much as one-third of GDP.
However, currently eight percent of money transferred globally is swallowed up by fees and high exchange rates and, at times, never reaches its intended destination. This year a staggering billion less will be received by intended recipients the developing world.
Africa has some of the most expensive fees and rates for money transfer. Of the billion sent to African nations in 2012, more than billion was drained in fees.
The situation globally has been recognized by the G8/G20 who have called for a five percent cut in remittance prices, which could release up to billion a year.
A further challenge in remittance is a lack of transparency about and understanding of the profit mechanisms in the industry. In a recent survey conducted for the World Bank just 36 percent of respondents were aware that the total cost of remittance includes other components such exchange rate mark up and fees. A survey of remittance service providers revealed that 69 percent claimed that there are no such fees.