(photo credit: Courtesy)
Well over 100,000 foreign nationals work in Israel each year, hoping to make a good living and support their families back home.
But when it comes time to send the check, they face a problem: sending remittances home can cost a hefty amount. Between the exchange rate to convert currency and the fees from banks or money wiring services, a significant chunk of their hard-earned cash gets eaten up by financial institutions instead of making it back to, say, Thailand or the Philippines.
Enter Neema, an Israeli financial technology start-up that has introduced a novel workaround: debit card services for foreign workers and their families back home.
Until now, the company has offered an app that allows people to load money and send it around the world for a 1 percent fee (compared to common fees that are as high as 7%).
Here’s how it works. The worker downloads the app and goes to the Neema office or one of its 20 small deposit locations to drop off their money. Then, through the app, they can send that money to a network of 100,000 pickup locations with which Neema is affiliated.
As of this week, however, they also can also load that money onto a debit card for their own use, or another that their family can use back home.
“This isn’t just about remittances, it’s about financial inclusions. You need a debit card to do anything in the modern economy,” said Barack Ben-Ezer, the company’s CEO. For the worker, they can use the card to pay bills, order things online and so forth. “If you operate only in cash, you’re very limited.”
Back at home, the family can use the card to extract cash from any ATM, or use it at stores that accept credit cards.
The provision of extra financial services, Ben- Ezer said, sets Neema apart from similar Israeli remittance start-ups, such as Rewire.
The whole thing operates much like a bank, but Neema is actually regulated by the Finance Ministry as a foreign currency exchange.
“A bank accepts deposits, and then they lend it to other people. We don’t do that. All the money that our customers put in their Neema account either goes on the card or can be sent to a pickup location,” Ben-Ezer said.
Instead, they cooperate with existing banks that are regulated by banking supervisors, including Bank Leumi in Israel and a US bank Ben-Ezer did not want to name. That bank, he said, provides the link to MasterCard.
Pending a new fundraising round, Ben-Ezer said the company plans to expand its operations outside Israel to either Europe or the US.