Making Money Transfers Work for Microfinance Institutions: A Technical Guide to Developing and Delivering Money Transfers (Draft)

Publication Date: Dec 2006
Published by: Consultative Group to Assist the Poor (CGAP)
Document Type: Paper

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What strategy, products, and institutional structure are needed to support a successful money transfer operation?

The purpose of this “Technical Guide to Developing and Delivering Money Transfers” is to help financial service providers determine the strategy, products, and institutional structure that would support successful money transfer operations.

The guide is aimed at:

• Financial service providers such as microfinance institutions (MFIs) and other institutions that serve low-income clients;
• Senior managers and directors who want to launch new money transfer services or improve the existing ones.

The guide:

• Describes the basic business models for MFIs involved in money transfers and examines their advantages and disadvantages;
• Explains the complex process that formal money transfers involve a receiver;
• Provides MFI’s managers with a set of questions for evaluating whether the MFI is prepared to enter the money transfer market;
• Offers guidelines for setting strategic goals, for product development and for institutional support development;
• Presents explicit instructions on crafting favorable alliances that allow MFIs to offer money transfer services;
• Examines factors that can make MFIs attractive partners for international money transfer operators;
• Explores factors that can reduce both the cost and risk of an MFI’s market entry.

The guide concludes that the field of money transfers is broad and evolving rapidly and recommends that each MFI should compare the information that the guide presents with the realities of its own markets.