Start-up aims to make it easier and cheaper to move money.

Auckland-based start-up company KlickEx has an excellent corporate ambition - to save me money.

As a correspondent for Global Radio News, a London-based network with journalists in more than 200 countries, I get paid in pounds and the bank charges $15 each time I get paid. KlickEx chief executive Ross Peat reckons he could easily halve the cost with his company's electronic currency-exchange service.

Peat is hoping to launch British, American and European offices next year, but for now the company is focused on its South Pacific operations (Australia, New Zealand and the islands), which went live on October 6. "We initiated in the South Pacific because it's our backyard and because it's a fantastic test environment," says Peat, citing the mix of world-class banking facilities in New Zealand and Australia and the extensive currency exchange with Pacific nations.

It is no surprise that Pacific Islanders send significant amounts of money home to their families, nor that New Zealand is the largest contributor, ahead of Australia.


But it is astonishing to learn that, according to World Bank figures, remittance flows to the islands in 2009 were worth US$470 million. The fees and commissions charged for that transfer, Peat says, are estimated at about 18 per cent of the total - a whopping US$90 million.

That's more than $2 million a week in fees and commissions, a hefty burden when you consider that remittances home to Tonga comprise about 38 per cent of the island kingdom's gross domestic product (GDP). For Samoa, the figure is about 25 per cent of GDP. "It's a significant market," says Peat, "and we think there's a better way of managing these sorts of services."

He believes the company could halve the amount banks charge, effectively injecting $1 million a week into South Pacific island economies. To achieve that aim, KlickEx has launched an internet-based service, which lowers its infrastructure costs, and partnered with Irish communications company Digicel, the largest provider of mobile-phone services in the South Pacific.

As Peat notes, 80 per cent of the Pacific Island population is "unbanked or under-banked" and the mobile phone is becoming "the payment device and financial services device of emerging nations. You can send funds out of New Zealand via what we call the web-to-wallet service ... and you land [the money] on a Digicel mobile phone and you can literally buy services, groceries, pay your power bill using your mobile phone."

KlickEx was established in August 2009 by Peat, chief operations officer Robert Bell and chief technology officer Brett Waterson, whose background is in banking loyalty systems, auctions and trading systems.

Bell says they have built and fully tested a regional payment system that lets all the banks receive funds in real time, a settlement system, a foreign exchange market and the links to the various banks, including primary banking partner Kiwibank.

KlickEx is significantly cheaper, Bell says, citing a recent transaction involving a New Zealand Tongan sending 80 pa'anga (about $59) to a Tongan account. The chap realised he had made a mistake, reversed the order, and sent it to Samoa: "The whole round trip cost him 5c. Anyone else, it would have been about $50."

There will be other benefits to the islands besides savings on fees and commissions, he says. By building a global payment system, the company is effectively connecting local entrepreneurs to the rest of the world. "We feel we're part of something really great going on," Bell says. "We're playing an economic role, which is why we've had such enthusiastic support from the central banks across the South Pacific."

There have been major regulatory hurdles to clear, a process assisted by KlickEx's ambition to be a "compliance exemplar".

"We feel we have something special ... in the market with Digicel and [that] should provide us with a valuable platform to extend the service into Asia and, possibly, Africa," says Peat.

The potential is huge, but Peat and Bell decline to provide an estimate of what the company might earn. Nor will they say how much they've spent to date, although they acknowledge it has been significant. But it is worth noting that the global foreign exchange market is worth about US$700 billion ($867 billion).

"It's not often you get involved in a high-tech project, market-leading finance and, as well, delivering huge benefits, while potentially having a handsome return back here in New Zealand."