Dispatch: Migrants vs Big Banks
Dispatch, a mobile application that allows migrants to send money home without paying exorbitant transaction fees, won the McCoy Family Center for Ethics in Society Most Ethically Engaged Hack at TreeHacks 2023.
In 2022, migrants sent an estimated $626 billion US dollars back to families and friends in their low- to middle-income countries of origin. In fact, these private “remittances” are larger than official development aid.
But, a big chunk of this money is consumed by banks before recipients ever see these funds. Globally, remittance fees average 6.3 percent of the amount sent, though they can be as high as 20 percent. That means that the migrants from developing nations and the two billion people living in conflict-affected areas, who depend on money sent from abroad to live, lose out on a substantial amount of cash with each transaction.
Dispatch is designed to challenge Big Banks’ hold on the international remittance industry and prioritize migrants’ needs. “The Dispatch team members identified a potentially exploitative relationship between Big Banks and immigrants from low-income and war-torn countries, which their technology seeks to redress,” remarked TreeHacks judge Collin Anthony Chen. As the Associate Director for Undergraduate Outreach for the Center for Ethics, he “was impressed by their empirical research on the problem, and their capacity to identify the salient moral risks to these vulnerable populations.”
Like everyone else, the Dispatch team—Aryan Siddiqui, Agam Bhatia, Tanmay Garg, and Saanvi Chawla—had just 36 hours to turn one idea into an actual project. But unlike some of the other teams, Team Dispatch is all frosh, all international, all Stanford, and all first-time hackathon-ers.
From Friday night at 10 until about 1 pm Saturday, the team brainstormed numerous project ideas before landing on the problem of high remittance fees. Siddiqu explains that because he lives in Oman, which borders Yemen, he’s worked with refugees there and “knows the difficulties they experienced losing money from relatives to high transaction fees.” But the problem resonated deeply with the rest of the team as well because they’ve all seen people impacted by exploitative bank practices.
This shared experience helped the group identify key problems with remittance processes as well as decide what functionality to include in Dispatch’s prototype. First, the process involves high costs, is plagued by mistrust, and suffers from inefficiencies. Second, few traditional remittance services are offered in countries affected by war, which means those that do exist can charge high fees and offer low exchange rates. Plus, in developing nations unaffected by conflict, high remittance fees may mean families will still need to augment these funds by turning to exploitative loan sharks.
To begin to address these issues, Dispatch offers a monthly subscription rather than charging high fees based on the amount of money sent; provides clear, transparent information; offers multilingual support; and secures user data. But in addition to confronting high remittance fees, group members know that a currency’s exchange rate at the time the money is transferred determines how much money the senders will have to pay to meet their obligations. Bhatia notes that users typically convert between two or three different currencies, so the app is designed to “automatically notify users when the exchange rate for the currencies they use most often is lower than usual so they can save X amount of money” when sending a remittance.
In terms of research, the team explored how various financial systems and international transfers work, discovering that transfer and payment systems on most apps are very US-centric. So to best serve migrant populations in the US, Chatwa explains that they “looked at the top 50 countries that people in the US were sending money to every year and examined the financial systems of those countries. Based on that, we tried to develop a platform that would be informed by the systems of each of the countries that received money from the US, and by who would presumably be using our app.” Finally, they also expect to solicit ads from verified migrant service communities to provide vital information and to help keep subscription fees low.
The team acknowledges that their biggest challenge going forward will be researching the legality of their app. More specifically, they will need to follow international money transfer regulations, and account for government restrictions on currencies and potential embargos.
“Because we came up with the app in only 36 hours,” Chawla concludes, “we haven't really looked at its legal repercussions yet. But it’s a cause that we all believe in so we’re excited to see where this leads.”