Why Not Build Your Own Remittance Infrastructure

For entrepreneurs, developing a remittance platform is often more complicated than expected. Many opt to collaborate with external partners rather than build their own infrastructure. Avinash Chidambaram, founder of Cybrid, and James Wester of Javelin Strategy & Research, discussed how these partners can assist in compliance and the creation of payment applications in a PaymentsJournal podcast.

Challenges in Building Remittance Platforms

Remittance platforms require more than just collecting payments. Their development involves significant resources from developers, integration challenges with Know Your Customer (KYC) processes, and regulatory compliance. These requirements vary by business, making it difficult to replicate a standard model. Sending stablecoins, for example, presents distinct challenges compared to a local store.

Complexity increases when executing cross-border payments due to differing regulatory compliance across jurisdictions. As Chidambaram highlighted: "The complexities in one market multiply when you try to enter another. You must think about all the rules and regulations for each corridor."

Working with technology partners specializing in compliance can lighten this burden and manage these issues more efficiently and cost-effectively. Wester added that companies should focus on their core business and let third parties handle changing regulations.

Common Solutions for Similar Problems

Remittance and B2B companies face common challenges, such as collecting user data for compliance. Implementing pre-configured APIs facilitates secure data collection, reducing the need for additional resources. Speed is key in B2B payments, with 24/7 transactions, especially regarding international fund flows.

Chidambaram explained that by already assisting clients with payments to China, they can leverage that experience to address common challenges, thus creating a beneficial network effect for all.

Disadvantages of Infrastructure Providers

Not all external partners offer the same support. Many providers focus on the underlying technology, leaving implementation to the client. Chidambaram noted that the basic setup may be straightforward but does not always meet the specific requirements of a jurisdiction.

Using open-source repositories or AI tools can allow building basic blocks but fails to scale. Another common issue is the risk of fraud that may require reserve funds, directly affecting businesses.

Final Conclusions

To develop a remittance or B2B payments platform, finding a partner that addresses the challenge comprehensively is crucial. This allows companies to focus on growth, while partners handle aspects like liquidity management and money movement 24/7/365. The best payment platforms automate necessary tasks like KYC collection, enabling developers to focus on enhancing user experience.

Wester claimed that "the complicated part can be that 10% you didn't consider that could cost you a fine or the loss of a partner." Chidambaram added: "We facilitate going beyond the core infrastructure. We empower entrepreneurs so they don't have to worry about payments."

It is necessary to focus on what each company does well and leave payment management to those equipped to handle it.