7 Things You Need to Start a Money Transfer Business

7 Things You Need to Start a Money Transfer Business
Currency exchange, money transfer, FinTech financial technology, Global business, online banking, interbank payment concept. Man using mobile phone and laptop computer with international currencies and world map on virtual screen

The first thing we would say to you on deciding to start your money transfer business is “Congratulations!”  You are stepping into a $682 billion industry that promises to keep growing. 

The demand for international and domestic remittance is set to maintain a skyward curve in the next decade as more people move to better-developed countries and cities worldwide in search of a better life. According to the World Bank, this would translate to a 5.6% near-yearly increase in global remittance from 2021. The best part of all is that you can take advantage of this opportunity without necessarily incurring heavy setup costs.

That’s right. With the availability of online remittance software today, you don’t have to build a traditional brick-and-mortar money transfer business. There is no need to set up a physical location and incur overhead costs associated with operating an office if you don’t want one. With only a mobile phone or computer and a reliable online remittance application, anyone can start a money business with relative ease! We will come back to this in a bit.

But before you get all excited and blindly jump right in as many people do, it is important to note that money transfer is a serious business. Running it means compliance with set regulations put in place by government authorities in charge of money movement no matter where you are. These regulations differ from country to country. Sure, this business can be lucrative, but if you don’t set your foundations right or try playing tricks with people’s money, you will run into huge problems with the law.

Another mistake new money transfer operators make is picking the wrong software provider or trying to integrate a lot of software they don’t understand into their business. This can cost you money and time if you don’t know your way around the remittance software market. 

That said; here are 7 essential things you need to do to start your business today.

1. Consult legal experts in the field

As with many other businesses, there are rules and regulations, the dos and don’ts guiding the operation of a money transfer business. The law takes the handling of people’s money – especially when it involves cross-borders – very seriously. The first thing you need to do is to consult with the local regulators and attorneys who are experts in this field depending on your country. Usually, these security compliance rules differ from country to country. New money transfer operators would need to ensure their business meets these security compliances in the countries they operate.

Unless you’ve got certain associates in high places, the services of these experts usually attract a fee. But if it means providing you with thorough guidance on how to run your business within the legal framework without risking penalties (fine + prison), then it’s probably worth it.

2. Understand the personas in the money transfer ecosystem

One of the mistakes money transmitter companies make when starting is not understanding the money transfer ecosystem. As with any industry, the money transfer industry is an ecosystem composed of different players and specific functions. Your role as a new money transfer operator is to understand these players and their roles in the scheme of things. Below are the essential players in the money transfer ecosystem:

Sender/Remitter: The expatriate or person sending the remittance

Beneficiary: The person to whom the funds are been sent to

Sender’s bank: The bank used by the sender to remit the money. The sender’s bank also serves as the bank (or e-wallet) out of which the funds are debited. This can be a physical bank, an online bank, a mobile or electronic wallet, etc.

Beneficiary’s bank: The account into which the remittance is credited and the beneficiary can access the fund. This can be a physical bank account, a mobile or electronic wallet, etc.

Money Transfer Operator (MTOs): The authorized entity(s) facilitating the remittance. In traditional remittance, the sender and beneficiary can use different MTOs or use an MTO with a large operating network that can facilitate both the sending and receiving of money across borders. With online remittance software today such as the Money Transfer Application, a single MTO can facilitate both ends of the transaction with relative ease. In summary, this is where your business fits in.

Payment Processor: A payment processor or partner is utilized by the MTO to process payment if channels such as debit/credit cards, ACH, online transfers, etc. are used.

Payment Network: These are routes used by MTOs to settle transactions in countries where they cannot operate. 

Transmitter platform: This is the correspondent bank or online money transfer software leveraged by the MTO to host all their money transfer activities. One such remittance software is the Money Transfer Application which not only encompasses everything needed by an MTO to operate but also comes with easy accounting and tracking features.

3. Work out your business model

Now that you know the essential players in the ecosystem, it’s time to select your business model. You can decide to run a traditional brick-and-mortar remittance business where you set up a physical location. You may prefer an entirely online remittance business. You can equally decide to do both!

The main thing is to understand the pros and cons of the business model you select and your operating capacity. For example, while it is far cheaper and advantageous to start an online remittance business than a physical one, you would deal with digital currencies only as you don’t have a physical teller where people can hand in cash for transfer. Trust issues also may hinder the business from booming especially if you are setting up in an area where only a few people understand online activities. 

On the other hand, running a physical location alone limits your business from taking advantage of the opportunities available online such as; larger and easier remittance networks, different digital payment methods, and bill payment services you can offer.

4. Choose a software partner

Whether you’re operating a physical location or an entirely online remittance business, you would need remittance software. Remittance software is an application that allows you to manage your money transfer business all in one place. It manages the transfer of funds from senders to receivers, facilitates the exchange of money in different currencies, applies exchange rates, handles payout between different subsidiaries, and provides transaction reports and reconciliations.

It is important to note that securing excellent remittance software makes a huge difference in your business. Remittance software like the Money Transfer Application (MTA) performs all functions required to run a remittance business and much more while offering cutting-edge technology services such as anti-money laundering and fraud detection, at the same time.

MTA also allows you to offer bill payments and mobile money services to customers across the globe. This software expands your business horizon, offering you more ways to earn from your business. Why limit yourself to providing money transfer services alone when you can help customers pay bills too? MTA is customizable, which means it can be moulded to suit your business model or size; whether you operate a small shop, a low-tech medium-sized MTO, or a large organization. The software can be accessed on any computer device via the cloud or downloaded as a mobile app (Android and iOS).

When selecting a remittance software, consider how efficient your business would look when MTA is running in the background.

5. Obtain a license

The actual ‘putting of feet into the water’ starts with obtaining the license to operate as an authorized money transfer entity. Depending on your country of operation, the process of obtaining a license is often not all roses. In the UK, it takes about 3 months to obtain a license after jumping several hurdles. 

Starting as new MTOs with little experience of how the game works, it may be wise to begin as an affiliate to a larger, already existing MTO so that you learn the ropes. The Money Transfer Application offers this kind of opportunity and gives you access to serving as a sub-agent under already established MTOs while processing your license. However, if you understand the business correctly, then, by all means, start fully.

This is one of the reasons why you simply need expert advice from legal consultants before taking any step further in this business. Bear in mind that among the requirements for obtaining a license is the availability of your software partner, so be sure you’ve picked and installed a remittance software in place before pursuing a license.

6. Be clear of Anti-money laundering checks

The best way to do this is to go for anti-laundering training. Every new MTO needs to do this as it would help you understand the dos and don’ts of channelling funds and how to avoid being used for smurfing. Most of this training can be done online or the information sourced from books. 

However, if you’ve integrated the Money Transfer Application into your business, the smurfing detention technology and other advanced security features take care of compliance for you and save you a lot of anti-money laundering troubles. 

7. Gather your working capital

As with every business, your money transfer business requires starting capital. This is money you would spend on acquiring clients, retaining them, marketing your services, obtaining a license, securing a software partner, running your business day-to-day, etc. For physical locations, capital would include funds for setting up an office, office furniture and fittings, and petty cash for maintenance.


The truth is you don’t have to put everything in place before starting your business – only the necessary things. It is always wise to start small and grow, learning along the way. Start by learning every nuance in the game and abiding by the laws as you operate. The money transfer industry is always changing, influenced by new systems and technologies. As an MTO, your organization must stay alert to changes within the industry.

The Money Transfer Application exists to make this journey a lot easier. Contact us for further inquiries on how our software can assist you in getting started or automating your money transfer business seamlessly.

7 Comments on “7 Things You Need to Start a Money Transfer Business

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