International mobile payment services provider, TerraPay says it has successfully obtained regulatory approval from the South African Reserve Bank to launch cross-border money transfer services in the country.

According to a statement issued by the company, TerraPay is the fifth company to be licensed as a category three, authorised dealer in foreign exchange with limited authority, also known as ADLA 3, to conduct low-value international money transfers in the country.

The company says it is building global payments infrastructure for low-value cross-border transactions.

The service interconnects mobile wallet service providers, financial institutions and money transfer operators in key send and receive markets. The license enables the company to enter into cross-border low-value person-to-person payments in South Africa.

“The South Africa market is highly complementary to TerraPay's international money transfer network in Africa, Europe, and Middle-East countries. In the Initial roll-out, TerraPay will enable cross border money transfers from South Africa to mobile wallets in Zimbabwe, Nigeria, Mozambique, and Uganda,” notes the statement.

Ambar Sur, founder & CEO of TerraPay says, “As per a report from FinMark Trust, the bulk of remittance flows from South Africa are destined for Zimbabwe, Mozambique, and Lesotho, with 85% of all migrants originating from these countries.

“Moreover, almost 70% of transfers to these countries are conducted informally, since the high cost of formal money transfers is a major barrier to accessing formal remittance channels. TerraPay is taking an aim to solve this problem of the migrants, by facilitating instant and cost-effective low-value money transfers to mobile wallets.”

The company says it is now open for business in South Africa and that it is actively looking to build strategic partnerships to further expand our footprint in the Southern Africa region.

“South Africa is a major send as well as a receiving market. Apart from sending remittances to all neighbouring Southern African countries, the country also receives remittances from UK, Australia, and the US,” says TerraPay.

According to the World Bank, the global average cost of sending remittances was 7.43% of the amount sent by remitting customers. For remittances sent from South Africa, the average cost was 16.71%; more than double of the global average.