American money transfer company, Trans-Fast has entered the Kenyan market through a partnership with ABC Bank.
Trans-Fast allows customers to send money through the online platform, mobile application or depositing directly into recipients’ bank accounts.
“The introduction of Trans-Fast is part of ABC Bank’s strategy for diaspora customer acquisition and also appropriately caters for local businesses dealing with international clients,” said the bank’s business general manager, Peter Kinyanjui.
Banks have been fighting for commissions earned in remittance of cash from the diaspora which have been on the rise.
Last year, Kenyans working abroad sent home Sh130 billion up from Sh118 billion in 2013, underscoring the growth of the business. Nearly half the remittances are sent from America, home to Trans-Fast, which also operates in another 107 countries.
“Kenya is an important market for inward remittances as well as growing potential for outward remittances. Kenya’s working force is spread across the world and Trans-Fast is well placed to cater to them around the globe,” said Samir Vidhate, Trans-Fast director, Asia & Africa.
Diaspora remittances not only earn a bank transaction commissions but also currency exchange income and cheap deposits.
ABC Bank has also entered a partnership with MoneyGram, which operates in a similar way to Western Union.
Banks have been scrambling to sign partnership deals with international money remittance companies in efforts to grow their reach in the international markets.
The business has also attracted players outside the banking sector. In 2013, Nation Media Group launched Nationhela card, which is able to receive cash transferred directly from abroad.
Since Central Bank of Kenya started licensing money remittance providers last year 10 firms have been approved by the regulator.
Telecommunication giant Safaricom is one of the registered money remittance providers. Saccos are also seeking to enter the space through partnerships with banks.
Kenyans working abroad have been keen to invest back home following a faster growth of the Kenyan economy compared to the economies they are working in.
The government has also been strict on use of formal channels in the remittance of cash in order to lock out money laundering and terrorism financing.
“Due to the huge sums involved, remittances are now being recognised as an important contributor to the country’s growth and development,” said Central Bank of Kenya during the release of the recent diaspora remittance numbers.
Increased competition is expected to result in a fall in transactional charges, which have previously been cited as a major hindrance to sending money to the country.