[Dave Birch] Western Union has $4.5 billion in revenue last year.  They have a big share of the remittance market and there are plenty of other people looking at that number with some envy.  One particular group of people looking at that market are mobile operators, who (via the GSM Association, which represents more than 700 mobile phone operators in more than 200 territories and countries) recently got together with MasterCard to pilot a global money transfer service that will use mobile phone technology to reach consumers who have no access to traditional banking services (ie, almost everyone in the entire world).  Their vision is that users will be able to transfer money almost instantaneously between participating banks and various card payment products, such as MasterCard’s pre-pay cards, via a mobile phone.

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There are a great many mobile payment and remittances services already up and running around the world.  We’ve discussed the Kenyan M-PESA scheme before, for example, and that is now being extended to offer an international money transfer service in conjuction with Citigroup.  The service will let Vodafone customers in the UK send money, typically to family or friends in other countries, using either a mobile phone or website. The mobile remittance service is initially rolling out in Kenya, with other countries lined up.

What’s different about the MasterCard and GSMA scheme (known as the Mobile Money Transfer, MMT, scheme), I assume, is that it will allow customers of one operator with a MasterCard to send money to customers of another operator (provided they have a MasterCard, presumably), so it keeps the payments industry in the telco loop.  It’s been welcomed in developing countries such as India.  Dayanidhi Maran, Indian Union minister of communications and information technology says, “The project is particularly relevant and important for India which is the largest recipient of international remittances from about 20 to 25 million Indians working across 130 countries. The World Bank has estimated that in 2005 Indian expatriates remitted over $22 billion back home."  The UN reckon that there are over 200 million people worldwide who live and work away from their homes and these people, in 2005, remitted over $230 billion.  Hardly a niche, and plenty of transaction revenues to be earned.  But as Hannes sagely points out the most interesting result of this and other similar initiatives will be the number of people that potentially could be drawn into the banking space.  If the banks are alert to the opportunities and can deliver appropriate low-cost products, they could see millions and millions of new customers.

In another less well-developed (so far as mobile is concerned) market, the USA, yet another mobile SMS-based P2P service has been launched.  I wonder what sort of the traction these services will get?  They have no future at retail point-of-sale (because of contactless and then NFC) so they must focus on remote point-of-sale or person-to-person.  It’s hard to go head-to-head with PayPal in the P2P space unless you come up with something radically better, so that leaves remote POS.  Here, I think, is the opportunity for partnerships and shared networks.  TextPayMe allow payments on Craigslist, which seems like a good place to start.  But is it enough?

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

3 comments

  1. Global money transfer

    Article intéressant à lire sur les P2P internationaux par David Birch sur Digital Money Blog. Mes billets en relation sur le sujet : Paiement par SMS vers le Kenya, les opérateurs visent le transfert de fonds par GSM, Vodafone se

  2. India has a population of approximately 1.136 billion people of which 72.2% live in rural areas. A majority of these people including low income people who live in urban areas do not have access to the banking system as opening an account is a major hurdle.
    Eko India Financial Services Private Limited (www.eko.co.in) – startup company based in Delhi, India is looking to extend banking facilities in these untapped/un-banked areas through the use of mobile phone as a channel (currently there are over 200 million mobile phone subscribers (GSM & CDMA). Eko is looking to ensure greater financial inclusion and increase the outreach of the banking sector as envisaged by RBI – the Indian Federal Bank through the use of Business Correspondent Model.
    Initially starting with No-Frills Savings Accounts, Eko later intends to have three lines of business; platform, membership and payment. Eko has signed Letters of Intent with three banks including a large MNC bank and two Indian private banks to do a pilot at Uttam Nagar, a low income area in west Delhi. The pilot project is scheduled to go live in the 1st week of December.
    Eko aims to become a $1 billion market cap company by 2011. This will require Eko to be a $100million plus revenue company with clear visibility to $1 billion in revenue by 2015 with good profitability.
    Our team can execute and has the ability to attract world class talent. We believe that we are capable of achieving the targets as we have a disruptive solution that leverages the widespread usage of mobile phones and processes that are based on a self regulating “Circle of Trust” powered by Eko Relationship Officers (agents). Eko is adapting the success of prepaid methodology in the telecom industry for financial inclusion using several innovations, one of which we have patented. Eko aims to have 100 million plus members and the ARPM (Average Revenue per Member) will grow from $1 per member annually to $10 per member. In other words Eko is aiming at building critical mass and monetizing it.
    With the pilot project we aim to refine our model and once we have a robust system we will grow rapidly. Eko is also fortunate to be in a space where they will help improve the lives of their members with dramatic improvement for the lower income group.
    Eko has a number of competitors and expects the number to rise. We ensure zero cost for the customers. Additionally, our competitive advantage lies in our ability not only to innovate and execute on a total end-to-end solution but also bring in ease of use for the customers rather than just be a technology provider. Further, our business model aligns the incentives for all the members of the eco-system to make a win-win deal for all. We will have to run smarter and harder to become one of the leaders (market is very big for just one dominant player). It gives us some comfort that in disruptive models incumbents find it difficult to compete.

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