Money transfer services designed for immigrant populations are helping consumers more effectively send cash back home and manage where and how funds are spent.
Global payments company iSend provides a service for consumers to send funds to specific places, either by using a bill pay mechanism or sending funds on a gift card to a particular merchant.
“Our focus is always on the seamless transfer of value,” says Steven Labella, CEO of the Middlebury, Conn.-based company. “We don’t want to be a cash-in/cash-out system; we think there are easier and less expensive ways to move value.”
Softgate Systems, which serves the underbanked through a network of independent neighborhood-based payment centers, partners iSend for international top-ups and bill pay.
“Instead of sending just cash, you’re directing your cash to specific places and people, ensuring that those funds go to places and the families get what they need,” says Brenda Amarant, vice president of marketing at Softgate Systems. “The partnership was a natural extension. We serve a lot of customers that are recent immigrants with tied to family back home…and they want to control how [their families] spend money.”
The underbanked market has gained a lot of attention over the past several years and there are a lot more choices in offerings, Amarant says.
PayPal Inc. has extended products for transferring cash onto cards, including allowing consumers to load cash through the Green Dot MoneyPak prepaid cards and through Coinstar machines. While PayPal’s system lets users load funds onto specific cards, startup Fuze Network enables consumers to give cash to an agent to load onto any credit, debit or prepaid card.
Payments companies are trying to take advantage of the $400 billion a year remittance market that’s been overlooked in the past. Many companies focus on a specific service, but iSend offers remittances, mobile top-ups and bill pay all in one spot.
While financial services and payments companies in the U.S. are leveraging mobile to serve the underbanked population, Labella says its customers are typically less tech-savvy so they rely on in-store or online experiences.
“Typically our customers are folks that are coming to the U.S. or other origination countries, like Canada and the U.K., that come to work to support families back home,” he says.
The company has grown quickly since its launch in 2007, says Labella, currently serving customers in 100 countries and has more than 500,000 users a month. This year, iSend will do more than $200 million in transactions.
With the market crowded, one reason Softgate chose iSend was because of Labella’s long history in the payments space, says Amarant.
Labella started a domestic bill payment company called QuickPay in 1996. He sold the company to American Payment Systems in 2000 and four years later, the company was bought by CheckFree Services, the largest bill payment service in the U.S. Labella was then asked to lead the walk-in bill payment unit for CheckFree.
In the future, iSend wants to work with mobile carriers to open up more ways recipients of mobile top-ups can use those funds, Labella says. Recipients are currently limited to using the top-ups as their existing mobile plan denotes. For example, if a consumer’s plan only allows for calls, the top-up can only be used for calls. But Labella wants consumers to use the top-ups in whatever way they see fit, such as text messaging or Internet access.