Consider a small, a very small, gramin (designated village) bank in India, with a customer base of barely five thousand. Then think of a large bank—like, say, ICICI—with some 15 million customers and locations all over India, besides a few dozen abroad. It would seem patently ridiculous to suggest that the two could compete on even terms in any space, let alone the lucrative money transfer market.

Not so any more. With Payquik’s help, the smallest of banks can stand head to head with the biggest of the pack, and claim his share of the kill.

Payquik, first of all, is not a money transfer company. It merely enables the process, an engine that powers the vehicle of money transfer. “Think of it as a car,” explains Bhairav Trivedi, who founded the Delaware-registered company four years ago. “You can have any exterior, but the core engine is ours.” (As Jeff Slowik, VP, dryly quips: “You can have it in any color too...”)

What it does is provide a regulatory-compliant platform for those who want to run a business in transferring money, whether from the U.S., U.K. or Canada, to virtually anywhere in the world. Payquik hosts the infrastructure and the transaction capabilities, besides, crucially, the compliance requirements that accompany any banking, or quasi-banking, activities.

Reading the Patriot act
The compliance requirements alone are enough to befuddle even the biggest names among them. (U.S. compliance norms are easily one of the most stringent in the world.) Even the State Bank of India, it must be recollected, was caught by surprise when slapped with a fine of $7 million in the November of 2001. (It was, till then, the largest fine ever in banking history.)

The havoc caused by Osama bin Laden, and the consequent flurry of regulations has meant that funds being transferred now are under greater scrutiny than ever before. So the barrage of compliance issues would be something bound to leave larger banks quite confused, forget the gramin bank.

There is first of all, the rather controversial USAPATRIOT act, with its particularly stringent compliance norms. Once this hurdle is crossed, there are those of the Office of Foreign Assets Control, or OFAC. Every transaction that Payquik enables, says Slowik, is checked against the OFAC list.

Then there is the Bank Secrecy Act, and the ‘Enhanced Customer Information Program, informally dubbed ‘KYC’, for ‘Know Your Customer’. Besides, it might be added, knowing that the person who is sending or recieving the money is your customer. The identities of both registered sender and beneficiary must be checked and crosschecked. His name, address, Social Security number, phone numbers and just about every detail about him must be available for the asking.

To be compliant with this, Payquik has to undergo the Bank Secrecy Act audit every year. This, it must be noted, is the same sort of audit that is expected of any bank in the U.S. Every four months, it has to submit to another audit: that of the Federal Deposit Insurance Corporation. “We never take the short-cut.” says Slowik. “We don’t say that compliance issues are not important.”

So banks using Payquik services need not have any cause for worry about being slapped with fines under laws that are steadily getting tougher. “Banks are very risk-averse. Fines are always an embarrassment. Maybe a lot of them were not aware of what they needed to do.” Besides, it costs much less to transact through Payquik. Only the much-berated hawala (greymarkets run by people on personal underwriting) could compete with the rates that Payquik offers.

Before this company’s entry into the market, there were few options that a customer looking to send money home had. One, of course, was hawala. Then there was the Western Union (“slash money grab”) system. A person could take the cash and walk into whichever Western Union agent’s office happened to be nearby, pay their transaction fees to send the money across, converted at usually higher-than-market rates.
Or the other option was by wire transfer through the U.S. bank where the person has an account. This would cost anywhere between fifty to seventy five dollars, besides probable charges on the side of the Indian bank too.

A check would be as painful. First of all, it would take as many as fifteen days to get to the destination. After which, it would have to be deposited in a bank that, it was hoped, had the capability to clear it with the bank of origin, a process that, by itself, would take a further week or two.

Brand New Idea
Now the game is in the Internet. Someone who has come to the U.S. to work and stay need not sever the ties he had with his bank back home. The bank can, in fact, reach out overseas, and that under its own brand.

Transaction charges are minimal when compared to the other players. The highest might be $10, and the lowest, nothing at all. The exchange rates are attractive, close to the interbank rates. “Some companies make money on forex,” adds Slowik. “ We believe that for the banking market the forex revenue belong to bank. Because that’s their core business.”

And of course, the whole system—log on, identfy, verify, send—is a lot simpler than physically going through the process. Finally, if Payquik was named so, it was due to a valid reason: the crediting happens almost instantaneously or, at worst, the next day. Little wonder then, that banks and portals are swarming to avail themselves of Payquik’s services. And the latter has already cornered a biggish chunk of the market.

Worldwide, the transaction market’s worth stands at about $150-200 billion. Money sent to India from the United States ranges from $6 billion to 8 billion. It has shown a 20 percent year-on-year increase. The U.S.- India market showed an astounding 200 percent increase over the last 10 years.

This should be of little surprise. Indians figured as the largest growing immigrant population between the census of 1990 and that of 2000. In the late 90s, the influx of technical jobs caused a boom in immigration numbers: this is reflected in the almost hundred percent increase over the past decade. Right now they are the second largest Asian immigrant group, behind the Chinese. (There are some 2.9 million Chinese in the United States, while the number of those of Indian origin stands at somewhere between 1.6 and 1.9 million.) The other south Asians, notably the Pakistanis and Bangladeshis have also grown by a 100%.

Payquik
Payquik was founded in 2000, with funds being provided by angel investors. Its first customer was Namaste, a portal servicing the Indian market in the U.S. The portal was looking at getting a toehold in the money transfer market, and looked to the startup for help.

Subsequently, Payquik went on an expanded corporate run, where it got funded by an institutional investor. These funds were used to expand what was fast turning out to be a lucrative business idea.

Now Payquik’s customers come from all over the world. Besides various other portals, they have banks from over the world (the Indian ones include ICICI, HDFC and Corporation Bank). It services customers from Pakistan and Bangladesh, and Vietnam and also caters to the whole of South America, and a significant portion of the rest of Latin America. Payquik has concerns in Mexico, Panama, Columbia and Guatemala. There are a few Carribean countries, besides those from Africa, like Kenya and Nigeria. Trivedi recalls having even sent money to Togo.

China isn’t yet there, but Trivedi has plans in that direction. But the Net, as is well known, has its downsides too. Security, for one. And it was all the more true in such a case as Payquik’s, where hundreds of users relied on one common infracture. The system had to be “safe, secure and efficient”.

So it was decided that they would go only for the best hardware and software money could buy. The servers they chose were Sun, “expensive but more robust”. This was complemented by UNIX, and topped off with Linux. As for database, the obvious choice was Oracle. They have regular firewall and penetration audits. "There was absolutely no compromise. It takes a long time to build customer confidence, but only a single instant to shatter that," says Trivedi.

So far, at least, they have been doing the former function rather well. “The interesting thing about Payquik,” explains Trivedi, “is that we were generating revenues from 2001. We have already broken even.”

This means that there is no need for any more investments, unless major expansions are on the anvil. It’s all about the efficiency of the system, he says. In India, for example, the best bet for the efficient disbursal of funds would be the banking system. And at the other end, of course, is Payquik.