A new app will just make the cost of sending money through mobile channels from Europe to Uganda four times cheaper.
The app, ‘PostalPay’ will enable people located in the EU to send remittances in a cheaper, but also faster and safer way from their mobile phones.
It was created through a joint effort by Inpay, the UN’s International Fund for Agricultural Development (IFAD), a cross-border payments company, and its subsidiary company Eurogiro, a global postal cross-border payments networkand Eurogiro in collaboration with PostBank Uganda and Posta Uganda.
“By using our cross-border payment technology, we are cutting the total costs of remittances to 2.5 per cent, helping migrant workers get a fairer service and helping us in our mission of democratizing payments in every corner of the world,"said Thomas Jul, CEO of Inpay and Eurogiro.
"We are incredibly grateful for the cooperation with IFAD, the EU and our partners in Uganda in this joint project. We look forward to working with local members of the Ugandan community in the Netherlands and Sweden to further support app uptake,” said Jul.
In 2021, the remittance flows to Uganda (US$1.08 billion) represented almost 3 per cent of national GDP. Uganda ranks in the top 10 of remittance recipient countries of sub-Saharan Africa.
Currently, money can take days to be delivered and costs exceed 10 per cent of the amount sent, including the foreign exchange margin, adding unnecessary strain and cost on migrant workers and family members back home.
Money can either be instantly transferred to a PostBank bank account or received as a cash pick-up in multiple Posta Uganda and PostBank Uganda locations.
“PostBank and Posta Uganda wide outreach through their branches makes picking up cash far more convenient for recipients in Uganda; we also believe that the trusted name of the Post and Bank will help foster market adoption,” added Jul.
IFAD’s EUR 369,000 grant will support the launch of ‘PostalPay’ in Sweden and the Netherlands, two European countries with an established Ugandan diaspora.
The IFAD contribution is part of the PRIME Africa Programme, co-financed by the European Union with the additional support from the Government of Luxembourg. Inpay and Eurogiro are jointly contributing EUR 172,000 to co-finance this venture over the next 18 months.
“We are delighted to work with Inpay and Eurogiro to promote financial inclusion in marginal rural areas. Facilitating people's access to savings and credit will help them to participate in the rural economy and improve their livelihoods. Inpay technology provides low-cost and secure cross border payments and Eurogiro’s access to the global postal network makes it a valuable partner,” said Pedro de Vasconcelos, Manager of the Financing Facility for Remittances at IFAD.
“These remittances are a lifeline for rural people. However, the cost of sending money to Uganda is still far above the SDG target 10.c of reducing the cost of migrants’ remittances to less than 3 per cent by 2030. Mobile channels offer a great opportunity to achieve this goal,” added De Vasconcelos.
The partnership builds upon a previous IFAD grant to Postbank Uganda (PBU) and Posta Uganda between 2017 and 2020.
IFAD support helped extend financial services, including remittances, to rural and refugee communities, and supported the refurbishment of 30 post offices, opened new mobile branches, and procured mobile cash management vans in rural areas.