Citi Launches QuikRemit to Gain Share of Global Remittances Growth

Implications: In 2007, over 150 million migrants worldwide sent more than $300 billion to their families in developing countries, which is up from $268 billion in 2006. Citi acquired PayQuik in January 2008 to expand its remittance offerings and to gain a greater share of the growing remittance market. It's a success story that PayQuik was birthed by a immigrant from India, who after graduating from Wharton teamed up with a former classmate and they pooled their funds from family and friends to launch PayQuik in 2000. U.S. immigrant workers sent home approximately $42.8 billion in 2007 and 73% of Latin Americans who live in the U.S. send an average of 10% of their paychecks back home each month. In the past, their choices for sending funds back home was by a paper check, wire transfer or through one of the money transfer organizations such as Western Union. QuikRemit could level the playing field by removing the hassles, delays and high fees often associated with traditional remittance providers.

Analysis: QuikRemit is a turn key solution that complies with federal anti-terrorist and anti-money laundering regulations that have been enforced since the passage of the U.S. Patriot Act after 9-11 and QuikRemit offers its clients a technology platform that alleviates the regulatory constraints that has hampered money transfer organizations in the past and forced some to them to close their doors. Citi joins a list of other banks who have launched remittance solutions, including Bank of America, HSBC and Wells Fargo, who provide existing customers with "free" or low cost transaction fees to send remittances back home safely and securely. 50% of total remittance volumes is distributed by financial institutions. 

1.  Recipients of remittances in receiving countries that are sent through one of the banks mentioned above, have the options to pick-up their funds at participating banks in their home country, at a local ATM, or the funds can be deposited into their bank account or funds can be picked-up at retail and rural locations, where applicable

2.  India, Mexico, China and the Philippines were the top recipient countries of remittances in 2007, however, the weakening U.S. dollar has eroded the value of the billions sent overseas every year by immigrants working in the U.S.

Takeaway:  PayQuik founders probably felt like the geese who laid the golden age when Citi came knocking at that door last month. PayQuik offered Citi a technology platform that could allow its customers to reach over 90 countries by using PayQuik, which Citi is now calling QuikRemit. QuikRemit could potentially become an industry standard for sending remittances internationally.