We sat down with the Co-founder of Machnet Inc., Mr. Bal K. Joshi. He is one of the early pioneers in the global remittance industry and has made a significant contribution in this sector. Originally from Kathmandu, Joshi came back to Nepal after completion of his studies from the United States. He is best known for his first e-commerce business Thamel.com that caters Nepalese living abroad.
Here’s an excerpt of the interview with Mr. Joshi on Machnet, the evolution of remittance industry, his struggles, how he overcame it and the reason behind his success.
About Machnet Inc.
Machnet is an online remittance platform, designed exclusively for Money Service Businesses in the USA. The platform developed through partnership between Thamel.com and Leapfrog Technology, Inc. .With core competencies in managing MSB licensing (money service business licenses), supporting correspondent banking relationships, building enterprise technology and running local remittance businesses, the two leading companies of the industry created this platform. It currently supports remittance in five countries.
Bal K. Joshi and cross-border money transfer
Joshi shared that he got into money transfer business because of the customers’ request to send money from Thamel.com. Then, he came up with ThamelRemit, a digital remittance service by signing up with companies in India. He loves the whole money transfer business and feels that it is too sweet to let go.
Thamel.com was the first e-commerce business in Nepal catering to Nepalese living abroad. Initially, everything was going smoothly but he realized that they were not making any money despite the drastic rise in customer base due to high logistics cost.
On startup of Machnet Inc.
Machnet Inc. is an evolution of ThamelRemit which started to overcome its shortcomings. In 2010, Himal Karmacharya (President, Leapfrog Technology Inc.) and Bal K. Joshi decided to join hands and co-found Machnet Inc.
Mr. Joshi was aware that he needed a team who can build a world-class technology product to cater the global customers. Leapfrog brought its skilled team to design and develop the state of the art technology and online infrastructure. While, the business development team of Machnet focused on the business aspects.
Like every business, digital money transaction has special needs. Such as need of secure payment tools, control mechanism for fraud, management of KYC, and operating AML. So, the Co-founders decided to focus on the service side and use the revenue that will be generated from service to design the platform.
“Our motive was to come up with a product that is globally scalable and not Nepal-centric.”
Hurdles faced along the journey
Bal K. Joshi tells us that “Money business is the most difficult business to be in. It is highly regulated and monitored. It gets affected by the slightest change in politics and geopolitical arena.”
He came across an article that mentioned remittance business owners to have a different licensing set up by the year 2013. To get a licensed in 50 states of America required at least 25 million. So, they signed a deal with US-based company in 2012 with a mutual understanding that they would use licenses and infrastructure provided by US company to run the business. The partnered company’s license got revoked by the government due to some legal issues. And he was back to where he started. After continuous hard work and business tie-ups, they were able to create a global platform that will serve Nepalese living abroad.
When asked about the changes he has witnessed in cross-border remittance..
He expresses cash to be dead in no matter of time and people will start to use mobile applications and Facebook to send money. The internet is definitely changing things and demonetization whether people like it or not will happen. Until the digital revolution,very few hands controlled this industry. Earlier the cost of the transaction was huge and fees charged to customers were not transparent. However, the global geopolitical environment has changed and country like ours (Nepal) is not capable of providing employment and development opportunities to its citizens. As a result, people moving to developed countries has increased dramatically resulting in the rise of remittance volume.
Bal K. Joshi shares his vision for Machnet
“Machnet is going to focus in the fintech side of things, moving money digitally, internationally. Our core market focus is not only Nepal, we are expanding our services in countries viz. Korea, Turkey, Pakistan, and India. We will be continuing to grow our service in other countries. Machnet is going to be one of the successful company in the US, doing the things we do in the fintech side of things. We are already getting a lot of name and momentum on how we are changing the facet. Money transfer business was a very monopolist business before. But, now we have created business relationships, tools, platforms enabling any global players to provide their own white label services to their customers. The whole disruption of collapsing the remittance ecosystem has already begun.”
“DREAM BIG” – Bal K. Joshi
His Success mantra
Bal K. Joshi accredits his success to his team: from software development team at Leapfrog Technology to Business development team at Machnet. The whole team effort has been the biggest crux of the success.
To learn further on Machnet and how we provided them with right solution to their problem, read our case study on Machnet Inc.