Think Flat

For years, services like PayPal have provided a web-based alternative to traditional money transfers. These work well, especially in locales where computer access is easy to come by and the majority of the population has bank accounts. But many developing countries have limited computer access at a village or small town level, coupled with the fact that the process of managing a PayPal account is complex and time-consuming.

In the U.S., services like OboPay (some of which I have previously written about, here) have emerged. OboPay offers users the ability to transfer money through SMS texting, creating an easy way to settle small debts like cab fares and restaurant bills. Though it has recently expanded into India, OboPay has yet to establish a global footprint which is necessary to provide the type of remittance services that migrant workers require.

Services like PayPal and OboPay also are limited by their dependency on bank accounts. Many migrant workers come from less affluent regions of developing countries where a large portion of the population remains unbanked (Read my post of last year on Banking for the Unbanked, here). The need for a comprehensive solution which provides services to the unbanked has created a void, which entrepreneurs world-wide are beginning to take notice of, and effectively fulfill.

In November of last year Western Union announced a partnership with the GSM Association, which represents over 700 GSM mobile phone operators. The goal of the partnership is to facilitate cross-border remittances, with the unbanked segment as a major target.

Recently, the first of these international, real-time mobile remittance services was launched by the Philippine-based company, Globe (Read the news report here). Though not truly mobile-to-mobile, the service allows Filipino workers abroad to instantly send money from a Western Union Branch to a family member or friend’s mobile payments account. The mobile account, known as GCASH, acts as a mobile wallet and allows subscribers to pay bills and manage expenses without actually having a bank account. By the end of this year, similar services are expected to be available in India, with other locales following soon after.

Similar alternatives to Western Union mobile remittance services for the unbanked are also popping up. Com2U Sdn Bhd, a Malaysian mobile-services provider has launched a remittance service which allows mobile subscribers of select regional mobile service providers the opportunity to SMS-text money-transfer requests within Malaysia and Indonesia. Once transferred, the money can be withdrawn from over 10,000 ePay facilities, no bank account required.

The ubiquity of the mobile phone is providing a powerful new medium for transactions to occur. As businesses and consumers worldwide grow more comfortable with using their handheld as a means to conduct payments, expect more convenient, global remittance solutions to be developed.

The World Bank’s Migration and Remittances website provides a groundswell of factual information on the subject.

This post on the Banking Systems and Technology site provides a look at other Western Union-GSM partnerships.