Sramana Mitra: What are some of the other mobile payment innovations that you are monitoring and what are your observations about those?
Nick LeCuyer: There is a wide range of innovation going on. Those innovations span different sorts of markets – they span low-end to high-end devices, different classes of financial services, etc. There are companies in the U.S. that will allow you to deposit a check into your account using your mobile device. Previously you had to go into the branch, use an ATM, or mail in the check. Now you can just take a picture of the check, click and then the money is on deposit. That is very cool. It is a service I use at my bank. There are companies that will allow you to easily turn your mobile phone into a point of sales terminal to accept a credit card payment. If you are a merchant and you are selling stuff and you want to accept card payments, previously there was no way to do that. Today it is really simple. Those are just a few examples. It is a very broad set. Different companies are looking at mobile and the customers they want to serve and saying, “This is a great way to extend the reach of our services using the mobile channel,” especially in countries like the U.S., which have already made the jump to smartphones.
SM: I think another area, where there is behavior change going on, is that people use SMS-based peer-to-peer payment a lot these days. Parents give their allowances to kids with that. Or let’s say you go to a restaurant, somebody pays with the credit card, and you are supposed to be sharing the check, the other people can deposit money into that person’s mobile phone just by sending an SMS.
NL: We have been in the money transfer business for quite some time. We spend a lot of time looking at our customers’ needs to understand why they are sending money and how they like to send it. The use cases and the problems they are trying to solve have to do with three or four human needs. These needs come up because their family or friends are in a different place than they are. Family support is at the core of it. Many of our customers have family members that are very distant and they want them to be able to pay for rent, groceries, school fees, etc. That is really a core human need that is driving a lot of money transfer. A second one has to do with emergency situations. One customer may not be sending money on a routine basis, but twice or three times a year. Their brother might call up and say: “Hey, I lost my job, I had an accident, etc.” Those are family members, so they are helping each other out and they might send money for that. Another core use case that we see is gift-giving. This could be any number of occasions – birthdays, holidays, Christmas, etc. There are thousands of holidays across thousands of different cultures. That is a big use case as well. Those are the center of the bull’s eye in terms of why consumers are sending and receiving money. Then there is a long list of other occasions that we also see pop up and that may have to do with investment purposes, travel related purposes, etc.
SM: Switching gears a bit, do you have much to do with the social trend, or is your main domain the mobile trend?
NL: Within the business, I am less involved in social. Social media is much broader than just the digital domain. That being said, we look at money transfer in Western Union and one of the things that is really interesting about it is that our service itself is inherently a social service. People don’t send and receive money to each other randomly. When you see one individual sending money to another, it typically involves a very close social connection. Typically a money transfer itself is only part of the story. It is usually preceded by or followed by a telephone call. We were one of the very first companies in the U.S. to bring forward into the market prepaid calling cards. Why did we do that? Because our customers would send money to somebody else around the world and the first thing they want to do is placing a call to that individual to say, “Hey, Mom, I just sent you some money. Happy birthday. Here is how you go get it.” That is true even today. Today a large part of our loyalty rewards program has to do with prepaid calling minutes and customers really value that. As technology has evolved we supplemented that and compared to 12 months ago we have a much more active approach in social media as well. But again, one of the things that are so interesting about money transfer is that it is such a personal occasion that is driving it. People don’t want to tweet their mom to say “Happy birthday”; they want to call her.