Western Union to launch global mobile money-transfer service
By PHILIP NGUNJIRI
WESTERN UNION, a global leader in money transfers and the GSM Association, a global trade association representing over 700 GSM mobile phone operators, are to develop cross-border mobile money transfer services worldwide.
The project, to be handled by Western Union's new mobile division, will develop a commercial and technical framework that mobile operators can use to enable consumers to send and receive low-denomination, high frequency money transfers using their mobile phones. The first commercial services that make use of the framework will be rolled out in the second quarter of this year.
The two bodies are following in the footsteps of Kenya's leading mobile phone operator, Safaricom, which last March launched M-Pesa, a money transfer using the mobile phone. Within eight months of M-Pesa's launch, over a million customers have registered with 1,300 service and the agent outlets. M-Pesa is already available between the United Kingdom and Kenya, meaning a Kenyan working in Britain can text as little as $20 to relatives back home.
Tim Jones, principal consultant of London-based Innovaro, said it was unlikely that such a service would have taken off in Europe or the United States where banking alternatives are already in place.
But the combination of a lack of banking services and the growth of cell phones, much to the surprise of those focused only on developed markets, seen Africa leap-frog ahead of Europe in the area of micro payments.
According to industry insiders, mobile money transfers will soon be big business, even if they capture just a sliver of the global remittances business, which the World Bank expects to reach $318 billion this year.
Research firm Informa, meanwhile, estimates that globally there are now more than 3.3 billion mobile subscriptions. And both figures are set to rise.
The commercial and technical framework to be developed forms a key element of both Western Union's mobile strategy and the GSMA's Mobile Money Transfer programme, which aims to use the reach and ease of mobile money transfer services to expand the mobile financial services market and stimulate social and economic development.
Mobile money transfer services will make it simple, quick and affordable for more people to send small amounts of money through a conventional and regulated system. Both partners believe there is an opportunity to create and grow a large new market for low-denomination transfers.
Mr. Jones says that using M-Pesa beats visiting a Western Union branch on three counts: The transaction fees are lower, there is no need to wait in line, and the receiver knows instantly that the money has arrived.
Western Union is by far the dominant player in global remittances, operating in 200-plus countries, and recorded $4.5 billion in revenue last year.
Mobile phone networks now cover more than 80 per cent of the world's population and three billion people own mobile phones, creating an unprecedented opportunity to extend the benefits of financial services to the majority of the world's families for the first time, according to Rob Conway, chief executive of the GSMA. “Mobile money transfers are a key driver in the development of a potentially vast market for financial services delivered via the mobile phone,” he said.
President and chief executive of Western Union Christina Gold said the company has a long tradition of innovation.
“Our focus on the mobile money transfer space is an important step in expanding the range of Western Union's global services to a new category of consumers. Our brand, extensive network, and compliance capabilities, combined with the GSMA members' market reach, uniquely position Western Union in the mobile money transfer marketplace,” she said.
The Western Union mobile service will connect operators to its existing global money transfer system, which processed approximately 17 per cent of the world's remittance volumes in 2006.
Once connected to the Western Union service, operators will be able to use their own “mobile wallet” software to enable person-to-person mobile money transfers over Western Union's cross-border remittance network.
The Mobile Money Transfer service will enable consumers to transfer money to or from mobile wallets and will offer a global network of Western Union agent locations for cash-to-mobile and mobile-to-cash transactions. Western Union and its affiliates provide money transfer services across 200 countries through a network of more than 312,000 agent locations.
According to general manager of Western Union Mobile, Matt Dill, Western Union's selling point is that rather than sign 200 bilateral agreements to offer remittances in 200 different markets, “connect into our global network, and we will allow that local service to become a global service.”
