Last week we announced that Adaverse invested $500,000 into UmrahCash. We took the opportunity to sit down with the founder, William Phelps, to learn more about his startup.
Originally from London, United Kingdom, William has lived and worked across various emerging markets in Africa and the Middle East. As a former Investment Manager with Adaverse, he oversaw 50 Web3 investments across 11 countries in multiple sectors and stages. Transitioning into venture building, he founded UmrahCash.
UmrahCash addresses a significant issue: Saudi Arabia receives 14 million migrant workers and 7 million religious visitors annually, 85% of whom come from emerging markets, yet there are no international fintech solutions to facilitate their financial needs. Pilgrims require Saudi Riyals (SAR) for their trips, but currently, they struggle to obtain this currency or have to buy it at inflated prices through informal Hawala networks.
UmrahCash facilitates the movement of money between West Africa, emerging Islamic countries, and Saudi Arabia. The company aggregates funds from travel agents and groups, disbursing cash in Mecca, Medina, and Jeddah.
In William’s words: “Boiling it down to its core, UmrahCash is aimed at promoting Islamic financial inclusion,” enabling pilgrims to safely, transparently, and efficiently access capital. Here’s more about their journey and mission:
Adaverse: What’s the story behind UmrahCash?
William: Having spent several years in Africa, I've observed that the primary focus in tech revolves around money transfers, cross-border payments, and remittances, typically leveraging stablecoins. However, the emphasis has been predominantly on North-to-South flows, such as between Europe and Africa or North America and Africa.
What’s less discussed, but equally significant, are the West-to-East and East-to-West financial flows, particularly within the Islamic market. Many Islamic regions in Africa have strong financial and travel ties to Saudi Arabia, especially due to religious pilgrimages. This presented a clear opportunity: the same technological solutions used for North-South remittances could be applied to the pilgrimage market.
The unique advantage of the pilgrimage market is its stability - regardless of economic conditions, there will always be pilgrims traveling annually. The challenge lies in adapting technology, typically designed for tech-savvy users, to a market that is often less familiar with such innovations. This requires both critical and creative thinking to scale the technology effectively.
Looking ahead, our goal is to leverage this infrastructure beyond Africa. In countries with similar financial and economic challenges, like Pakistan and parts of India, we aim to replicate our success by utilising the established network and technology principles we've developed.
UmrahCash utilizes very well-established technology and technological flows, but to a market that's otherwise untouched.
Adaverse: Can you explain the business model of UmrahCash?
William: Certainly. The business model of UmrahCash addresses a significant issue in our initial market, Nigeria, and broadly in West Africa: the lack of foreign exchange availability. Many people in these regions are unbanked and tend to carry cash, especially when traveling for pilgrimages.
There are three main ways people currently handle foreign exchange for pilgrimages:
Black market: many resort to the black market, where currency is sold at parallel rates, often doubling the cost of the pilgrimage.
Hawala networks: others use informal Hawala networks, which are risky due to the lack of accountability and transparency.
Carrying cash: many pilgrims, regardless of whether they are banked or unbanked, bring large quantities of physical cash to Saudi Arabia. This method is particularly problematic for African travellers as it often leads to issues upon arrival.
Currently, there is no unified or transparent method for exchanging money upon arriving in Saudi Arabia, making the process fragmented and opaque. UmrahCash aims to solve this by providing a secure, transparent, and unified platform for currency exchange, thus easing the financial burden and risk for pilgrims.
Adaverse: What is the Web3 element of this business?
William: We leverage stablecoins on the back end of our operations. Stablecoins allow for seamless and borderless transfer of value, enabling us to easily on-ramp from local currencies in West Africa and subsequently exchange these stablecoins for rials in Saudi Arabia. This simplifies the transfer process and enhances accountability, providing a transparent alternative to the opaque Hawala networks that are currently widely used.
Adaverse: Are you going to accept a wide range of stablecoins, or are you building on a specific one like Cardano's stablecoin?
William: At the moment, we are stablecoin agnostic. Our goal is to cater to the lowest common denominator regarding tech knowledge and inclusion. We've designed our product to resemble a West African banking app, with familiar features and a user-friendly UI/UX. We also leverage agents in Northern Nigeria and Saudi Arabia who speak local languages and are trusted by pilgrims. The use of stablecoins is entirely on the back end. While we aim to make the use of stablecoins more apparent in the future, for now, we are open to using any stablecoin that provides us with the necessary market liquidity.
Adaverse: Is your strategy for user acquisition focused on utilizing networks of agents?
William: Exactly. Our customer acquisition strategy is very pragmatic and follows a B2B2C model. We will onboard travel agents who will then sell our product to their customers. By providing these travel agents with access to Saudi riyals, they can offer this currency to their clients. This approach requires significantly less customer acquisition cost (CAC) and builds trust, as the travel agents already have established relationships with their customers. This means we have less direct interfacing to manage, leveraging the trust the agents have with their clients.
Adaverse: How are you going to build an app that is user-friendly for people who might not be tech-savvy, like older users?
William: That's a very good question, as many of our pilgrims may have never traveled before and tend to be quite conservative. Fortunately, in Nigeria, mobile banking is already very popular, whether through USSD or basic banking apps on simple devices. By replicating these familiar features, we can ensure a reasonable level of customer success.
Additionally, we utilise agents who have strong connections to the communities we serve. This makes it easy to onboard customers, even through manual methods, due to the existing trust and relationships. So, whether a user chooses to interact directly with the app or through a trusted agent, we offer a variety of options to accommodate everyone's needs.
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