To stabilize its revenues, Lasco Financial obtains a fourth transfer partner | Business
Lasco Financial Services has formed an alliance with a fourth money transfer service provider, Boss Revolution, in an effort to increase transaction volume and stabilize revenue that the company says it could lose as fees online transactions are declining.
COVID-19 has changed the way funds are disbursed in Jamaica, and this is a trend that is unlikely to change even with the passage of the pandemic.
At the height of the pandemic last year, money service providers began to heavily promote their online money transfer services, a transaction method that would allow the financial services company to keep segment profits intact. remittances from its activity, as well as reduce the overall impact. on the group of hard-hit segments like Lasco Financial’s microcredit arm, Lasco Microfinance.
The option not only proved more convenient for senders, many of whom now transact from the comfort of their own homes, but was seen as the best payment method for customers as a result of social distancing protocols in cities. physical points of sale. It also had a big benefit for customers: Transaction fees were less than half of the costs associated with physical outlets.
Typically, transaction fees at retail outlets are $ 8 per transaction, while online transactions incur a cost of $ 4 per transaction, a portion of which is paid to Lasco Financial for its services. agent.
It’s a good deal for those who remit funds, but the electronic service cuts some of Lasco Financial’s revenue.
“We are always concerned about reducing transfer partner fees,” CEO Jacinth Hall-Tracey told shareholders at the company’s annual general meeting last week.
Boss Revolution is just one of the “few new money transfer partners” that Lasco Financial wants to ensure to increase its market share, but also to create a buffer against the revenue fallout that the company could. suffer due to the shift of consumers to online services.
A brand operating under the global IDT Corporation, Boss Revolution has outlets in all 50 states of the United States. The company, which also operates in the telecommunications business, provides remittance services from the United States to Nigeria, Ghana, Kenya, India and Haiti.
Its deal with Lasco Financial would give Boss Revolution a presence in Jamaica through Lasco Money Services, which operates 140 locations nationwide. On the other hand, Lasco Financial plans to add 1,000 clients in the first year of its partnership.
“Boss Revolution is really unique. It is a communication company that facilitates the mobile recharge service, call packages, and is therefore very close to the diaspora market; and it is this unique capability that we seek to harness, ”Payment Services Director Ramon Davis told the Financial Gleaner.
The company expects business to primarily flow through the Boss Revolution online channel, Davis said. Once sent, money transfer recipients have the option of picking up the money in store, having it transferred directly to their bank account or depositing it on their Lasco Pay prepaid Mastercard.
Lasco Financial also serves as an agent for MoneyGram, Ria Money Transfer and Remitly through its nationwide network. Lasco’s remittances segment has grown aggressively over the past year, mainly thanks to the one-off COVID-19 stimulus programs the United States has granted to its citizens. Most remittances to Jamaica originate from the United States. The performance of the Remittances segment helped Lasco Financial go from a loss of $ 57 million to an annual profit of $ 157 million at the end of fiscal 2021.
The company expects growth in its money transfer business to continue in fiscal 2022, but Hall-Tracey is concerned the company may see a decline in segment performance compared to the double-digit revenue growth it has seen. ‘she knew last year.
“So what do we do for the new year?” We have several new transfer partners to roll out as we need to scale faster to compensate for the lower fees per transaction. And of course, we have to monetize all of these investments that we have made over the past two years, ”said the CEO.
The launch of the Lasco Prepaid Visa card issued by Lasco Pay is still pending. Visa card deployment complements the company’s first product launched under the sandbox regime – a technology-driven cashless business model that was designed specifically, but not exclusively, for business owners without an account banking.
Lasco Financial’s unaudited first quarter report showed the company generated profit of $ 75 million, 171 percent higher than the corresponding period in 2020. Revenue reached $ 591 million, up $ 52 million, or 9.7 percent, from the corresponding three-month period in 2020, largely due to continued growth in money-services business.