[Herald Interview] Moin out to cut cost of remittance

The Korea Herald is publishing a series of interviews on promising startups in the fintech industry. This is the eighth installment. — Ed.

Despite the constant wave of technological advances, the remittance method has evolved little in South Korea over the past few decades, with only banks legally allowed to provide remittance services.

Now with the growth of the fintech industry, a startup can address problems in interbank remittance and bring more benefits to customers, according to Ian Suh, founder and chief executive officer of remittance service provider Moin.

“Users of conventional interbank wire transfers had to pay high commission fees and wait for a long period of time, while the process was not trackable,” Suh, 34, told The Korea Herald in an interview, referring to the SWIFT codes established in 1973 for international banking services. “Basically, we have been wiring money abroad in the way we did decades ago.”

This month, Moin became one of the firms to obtain licenses as remittance service providers from the Financial Supervisory Service, following a state-sponsored revision of the Foreign Exchange Transactions Act in December 2016.

Before the revision, Moin and other similar firms had provided their remittance service using different schemes or blockchain without gaining specific licenses.

With the revision, the companies must receive a license to provide the services using either pooling or pairing schemes, while using blockchain is banned.

As part of the licensing process, the firms also had to temporarily halt their operations to be checked on legalities. Moin said its remittance service will resume in February after a six-month hiatus.

Licensed firms can now either take advantage of the pooling scheme -- using a pool of money made up of both Korean and partner nation’s respective local currencies -- or pairing scheme, a way to settle the outgoing and incoming amount of money by pairing them.

The process allows Moin users to avoid multiple layers of bank commissions, and instead pay a commission of no larger than 2 percent for a quicker transfer that does not require obscure SWIFT codes, Suh said.

A Moin user can remit up to $20,000 per year and $3,000 per transfer, and the wiring process is trackable, he explained.

“Users will eventually turn to better benefits,” said the owner of the startup, which has eight employees.

Moin was founded in March 2016 on a zero legal basis, and thereby had operated with the risk of being outlawed.

But Suh said he held on, seeing the new irreversible trend in the financial services industry.

“I believed in the infinite potential of the remittance service market in Korea.” Suh said, recalling the days when Moin was in a “gray area.”

More than a year and a half after Moin was founded, the firm embarked on the remittance service with Japan in October, and with China in November.

The volume of money remitted through Moin’s platform has increased by about 140 percent each quarter, according to Suh. 

Moin, however, was not an exception from the South Korea government’s crackdown on cryptocurrency-related business.

Before the law revision, Moin had used blockchain platforms in its wiring process, to convert the Korean won into encrypted coins, and again convert the coins to currencies in partnering nations.

Pinning hopes that the government would lift the ban on the use of blockchain technology, Suh said Moin would not give up on its blockchain-powered technology. Also, cryptocurrencies devoted to remittance, such as ripple or stellar, could be an option for its improving remittance technology.

“The government has signaled that it would prop up blockchain technology, so we expect to resume the blockchain-based remittance service soon,” he said.

During the interview, Suh expressed eagerness to partner with countries in Southeast Asia, such as Vietnam, Indonesia and Singapore.

Meanwhile, a remittance service to the United States is not readily applicable, partly due to different legal settings state by state, as well as time differences, Suh said.

The cross-border wiring business initially targeted those studying or working abroad and their families or relatives in Korea. But as time went by, an unexpected group of customers who buy products overseas directly, locally dubbed “Jikgujok,” began to use Moin’s service, according to Suh.

“Imagine a person trying to buy a product worth about $50, and paying $40 in commission fees for remittance, (using traditional wires)” Suh said.

Suh was a software engineer for Samsung Electronics before working in venture capital for SoftBank Ventures Korea and FuturePlay.

In December, Moin drew a combined 2 billion won ($1.88 million) of series A investment, despite the suspension of service.

Moin has a net worth of 2.5 billion won and employs six data-processing technicians, well above the FSS’ minimum threshold of 1 billion won and three, respectively,

By( Son Ji-hyoung 
(consnow@heraldcorp.com)