Pangea is on the cusp of becoming the first digital remittance company to offer a branded checking account closely tied to its core product.
The Chicago-based fintech is adding the bank account option in response to customers that told the company they don't feel a strong connection with their current financial institution, according to Shafiq Shariff, the vice president of product.
“It was this idea that the bank wasn’t really ‘for them,’ but it was something they had to have” to make remittances, Shariff said. “That was the inspiration.”
For many immigrants, remittance companies are the lifeline to helping families financially back home. Shariff said Pangea's users routinely set aside a percentage of their paycheck to remit funds to family in their home countries. Pangea users can remit funds to family in 15 countries across Asia and Latin America. The fintech did not disclose its number of users or revenues.
The company is hoping those customers will sign up for additional services aimed at helping them.
“We really began ideating and designing this idea of a banking product that’s tailor made for customers from the ground up that would let them manage their finances domestically, and send money to their families back home,” Shariff said.
While the final details of Pangea’s checking account are still under development, Shariff last week wrote in a company blog post that users will have access to a cash load network at over 100,000 Green Dot Network retail locations and the ability to withdraw cash for free through the Moneypass ATM network. (Pangea is using Green Dot's banking-as-a-service platform for its banking product.)
The account will feature a Visa-branded debit card, no monthly maintenance fees, overdraft fees or minimum balances.
Pangea also will give users the ability to have their paycheck deposited up to two days early through Green Dot’s ASAP Deposit feature.
Shariff said Pangea currently does not have a launch date for the account. The company will initially market the product to its core customer base that already has a checking account, but will position the app as a one-stop shop for banking and remittance.
Shariff also said Pangea has heard from “those customers that really haven’t had a bank account and are still taking cash to the incumbents. We’re sensing their desire to use this to manage their finances.”
“There is a certain segment of customers, usually from Latin America, that are very comfortable walking into Western Union with their cash and sending money that way,” Shariff said. “In the same vein, those customers could load cash into this account at a CVS or 7-Eleven and have ability to do more than just remit.”
Other digital remittance competitors don’t offer anything similar yet.
A spokeswoman for PayPal, which owns Xoom, pointed to Xoom users’ ability “to hold a balance in their PayPal account, use their bank account, debit cards, credit cards or even a PayPal Cash Card or a PayPal Cash Mastercard to fund their international transfers.”
Western Union declined to comment specifically on Pangea’s plans, but it offers “digital services in over 70 countries, delivering funds in cash across the globe or to bank accounts and mobile wallets in many countries. We serve customers from all walks of life, banked or unbanked,” Khalid Fellahi, senior vice president and GM of Western Union Digital, said in a statement.
For Green Dot, Pangea serves as another example of the flexibility of the BaaS platform.
Green Dot CEO Steve Streit has previously highlighted Green Dot’s efforts to improve its enterprise BaaS platform with new features and functionality, while also announcing plans to offer a simpler version of the product called Bank OS to the likes of social media influencers.
“The sales pipeline has picked up quite a bit for Green Dot BaaS, with a wide variety of new types of programs and companies looking to create a bespoke and compelling financial experience for that special stakeholder in their lives,” Streit said last week during an earnings call.
Multiple industry surveys suggest that persuading customers to leave their current bank will be a challenge for Pangea.
But Talie Baker, a senior analyst with Aite Group’s retail banking and payments practice, said Pangea’s new offering could help get more migrant workers into the traditional banking system.
“Pangea can provide value-added services to their customers, get them using financial services products, which will have a long-term effect on their financial stability, and provide lower-cost, and potentially safer remittance services than a cash-based or prepaid model provides,” she said.
