Wiring Money Turns Wireless in New Plan
Wednesday, April 2, 2008
Western Union Co., hoping to boost its share of the money-transfer market, is teaming up with RadioShack Corp. and a small wireless company to offer a service that lets people send money through their cellphones.
The service is aimed at immigrants to the U.S. who regularly send money to family members in their native countries. Many of these immigrants don’t have bank accounts and send the money by taking cash to a transfer service such as Western Union or a host of other firms.
Western Union, which already has a big share of the $300 billion global money-transfer market, hopes the cellphone service will bring in new clients and encourage existing customers to use it for a broader range of money transfers — such as paying utility bills and sending money domestically. People without bank accounts now pay these bills in a variety of ways, including at convenience stores.
Wireless companies have long sought ways for customers to use cellphones to manage bank accounts or as virtual wallets in place of credit cards. While these applications are popular in Asia and parts of Europe, they have gained little acceptance in the U.S., where tech-savvy consumers already check bank accounts online and see little advantage to using cellphones instead of credit cards.
Past money-transfer efforts using prepaid cards, ATM networks and computers “never had traction in the remittance space, since the technologies in the developed world [from] where the money was sent weren’t equally represented in the developing world where the money was received,” said Matt Dill, general manager of Western Union Mobile. “The true value of mobile banking may be realized in places where the cellphone is the dominant consumer technology.”
RadioShack and Western Union are offering the service in conjunction with Trumpet Mobile, a small wireless provider whose parent, Dallas-based Affinity Mobile LLC, developed the secure financial platform used in the service. Trumpet hopes to use the service to sign up more phone customers.
To use the service, people go to one of RadioShack’s more than 4,000 stores and sign up for a Trumpet prepaid phone, which is required under the program. Customers can then load up to $200 onto their phones for cash transfer via Western Union’s network either within the U.S. or internationally.
RadioShack hopes the service will help it beef up wireless sales. Many of the chain’s stores already handle payments for Sprint Nextel bills and RadioShack’s own credit cards. The Fort Worth, Texas-based company will use its retail staff to promote the program.
“People do not know much about moving money on a mobile phone. It’s been a ground-up education for our sales force and will be for our customers,” said Bob Kilinski, senior vice president of wireless marketing for RadioShack.