When 21-year old Joseph Sokol moved to Israel in 2014 to study in Jerusalem’s Yeshiva Machon Meir, he found paying his rent in Israel from a bank in hometown of Los Angeles very inconvenient.
“I had to transfer money from one bank account to my Israeli account and then change the money into shekels — it was all very costly, considering all of the transaction fees, and took up a huge amount of time.”
That was when the self-taught techie decided it was time to make the process cheaper and simpler, together with his yeshiva friend and now partner, 22-year-old Meir Leff. He used the money he received as bar mitzva gifts to back his idea, and a year later introduced OlehPay, a website that enables users to inexpensively send money from the US to Israel.
On the site, users register for an account; put in their US and Israeli bank account numbers; submit their identification details, such as home address and social security number, along with some documentation; and then ask for the money to be transferred. The signup process is very quick, Sokol explained in a phone interview, and the transfer of the money takes a couple of days.
OlehPay runs the transaction domestically in both jurisdictions: the firm has reached agreements with a bank in the US and in Israel so that the US dollars can be transferred to the US bank and once it is there, the Israeli bank transfers the same amount of money, in shekels, to the customer. OlehPay then makes sure the money is transferred between the banks. This saves the users from foreign wire and processing fees, which make up the bulk of the costs of transfers. On average one saves about $65 on wire fees by using OlehPay, the company’s website says.
“Our system debits the account in the US as a local transaction — which is cheaper than an international transaction, and credits the account in Israel as a local transaction as well,” he said. “We do away with SWIFT, checks processing fees ATM fees and wire transfer fees.” The SWIFT payment network is one of the largest international financial messaging systems in the world.
The firm may have nabbed the attention of a Chinese billionaire who recently heard its investor pitch and said he’d like to invest in the firm, Sokol said. Negotiations are underway for a $200,000 investment, but for now Sokol is not releasing the identity of the Chinese potential investor.
OlehPay can also deposit shekels into accounts at banks that do not generally accept international wire transfers, such as the Post Office bank, the website said. The firm limits transfers to NIS 50,000 ($14,000), because under NIS 50,000 Israeli law does not require a face-to-face meeting — the so-called Know Your Customer regulation that requires businesses and banks to identify and verify the identity of their clients.
OlehPay allows payment transfers from several US bank accounts but only to one Israeli account.
The exchange rate used is the Bank of Israel’s representative rate, and an algorithm makes sure that OlehPay is not exposed to currency fluctuations. “How we do this balancing is our secret sauce,” said Sokol, declining to reveal further details.
He also said that all the transactions and details are tightly secured, but was fairly tight-lipped about the details. “All of the information is secured by segmenting the information on three separate servers, to fragment information about the transactions, personal information and account details,” he said.
The two-man firm has already garnered some 400 users and is looking to raise money to expand its scope — for now, mainly to users in the US and Israel. “There are thousands of US immigrants in Israel that have US and Israeli bank accounts,” he said. But eventually the aim is to build a global product, helping make international money transfers cheaper and less burdensome.
OlehPay partners with an Israeli-licensed clearing agent for the transactions, the website says. The company is licensed through its partners as an accredited money service business in the US and Israel and holds customer funds in individually secured FDIC (Federal Department of Insurance Corporation) insured accounts — ensuring the safety of customer funds, Sokol said.