International Money Transfers / Remittances � some ideas on how to reduce the cost
1. Use mobile phone airtime as a currency across international boundaries
2. Use peer-to-peer money transfer
How would or could the above work?
Use mobile phone airtime as a currency across international boundaries
Someone can buy mobile phone airtime scratch cards say in Manila Philippines and transport them to London UK. The buying is ideally at the usual mobile phone airtime card discount price (which is typically 10%?). Philippinos working in London can buy these at cost or at a surplus margin (say 5%) from a physical shop or from a vendor (who may have a distinct location and time every week � e.g. speakers corner, Hyde Park, 1400-1500 Saturdays). The buyer then scratches and sms’s or emails the pin code to the recipient in Manila or elsewhere in Philippines. The recipient then uses that airtime and diverts the money that would have been used as airtime to food or school fees. Any surplus can be sold to friends or unknown persons � the facility many networks have to transfer airtime can be used.
If there is trust, then the airtime scratchcards do not physically need to leave Philippines � they can be scratched locally and the pin codes emailed (using some simple but effective encryption such as 7zip AES256) to the wholesaler or retailer in London, Frankfurt, New York etc..
Obviously at some time the wholesaler or retailers in London want to get their money back to Philippines to fund the operation further � then they can do a cash transfer with someone going home or a Western Union, Moneygram or Bank Transfer.
What is the advantage to anyone?
1. Transfer can be instant
2. small amounts are better catered for (probably $30 or more is the minimum economic amount by WU)
3. If the return flow of money by western wholesaler to recipient country is economic then margins can be kept down to below WU levels
In cases where a global operator (Vodafone, Airtel, Virgin etc) is present in both countries, then they can themselves offer scratch cards or airtime printouts for the recipient country in the sender country through their own branches, thus offering even better economies and positive image spin-off. Also they are effectively transferring money from poor to rich country, which is what many of them are trying to achieve…
And of course, Some MNP’s (e.g. Orange) seem to be moving towards providing not only national domestic money transfer using Mobile Money, but also some international money transfer services.
Use peer-to-peer money transfer
Identify each other by using twitter � e.g. #MT_Manchester_poipet GBP 300 tel 078234567 and #MT_poipet_manchester GBP 350 tel 7856432 (that is pretty close!…). Or there could be a website which facilitates and bulks or aggregates such deals. That could be funded by advertising, or a global NGO could handle that as part of their development assistance (we all know that remittances are poverty-reducing…)
The four parties agree by email, twitter and phone to be in 2 locations (shopping mall, car park, someone’s home etc) at the same international time. One of the parties in each location opens a conference call on mobile phone with speaker. The 4 parties are also communicating by their own phones and maybe sms or instant messenger. Everyone verifies the money is there and correct on both sides. All 4 agree to the deal and the monies are exchanged. Deal done.
In fact, sometimes there may be for example one party sending money Poipet to Manchester and 3 parties sending smaller amounts the other way. That can be done in the same way � all parties can be at the same 2 locations at the same international time.
Why is all this stuff necessary?
Because Western Union and Moneygram at the moment take for example $25 fees on a $180 transaction � which is less than the inefficient and parasitic banks, but is still too high. They need competition and recipients in the Third World need more of that poverty-reducing cash (and the senders in the West are often themselves struggling). Banks typically swallow $100 on a $500 international transfer.
Other ideas that would work?
Let ATM machines accept one-time TAN (transaction authorization codes) numbers which would dispense a certain amount of cash (always a round number of course). And have a bank-operated system whereby someone in a sender country can pay cash while also designating one specific ATM machine in the recipient country (or maybe one town or city with several useable ATM machines to cope with instances of cash-outage or machine malfunction). The security of the code transmission is up to the sender and if that number is hacked somehow the bank has no liability. Then of course the best way is an instant transfer where the sender is on the phone or sms to the recipient who is waiting by the ATM machine.
Proper international electronic bank accounts, which operate online real-time, and can handle immediate instant international transfers. There is nothing stopping it except the inability and unwillingness of conventional banks to continue making huge profits while operating efficiently and providing services which people really want….
Alex Weir, Gaborone, Thursday 15 August 2013