Boom mobile money service helps spread the wealth
The service, set up by m-Via, allows migrant workers in the U.S. to set up a mobile bank account and more cheaply send funds back to people in their home country.
Boom isn't your everyday mobile banking service.
While much of the attention in mobile payments has focused on affluent smartphone-wielding consumers and their top-tier banks, m-Via has gone the opposite route. The company has built Boom as a service almost entirely devoted to the migrant worker population in the U.S., allowing them to easily set up a bank account they can access on their phone, and use the account to send money back home.
M-Via is tapping into a largely unnoticed, but extremely large segment of the population with its Boom service. The company charges a flat $25 annual fee to migrant workers in the U.S. for their accounts and the ability to transfer money. Those workers, meanwhile, get a more affordable option--Western Union charges a fee each time it wires funds--that is also safer than physically moving money around.
"This dramatically changes the remittance landscape," said Bill Barhydt, CEO of m-Via. "The average user will send hundreds of dollars at a time because of the nature of the fees. With Boom, we saw small, more regular transfers of money."
The service, which officially launches today, will work in the U.S. and Mexico initially. M-Via plans to expand to the Caribbean a few days later. Barhydt said workers in the U.S. send $25 billion a year back to Mexico, and $6 billion back to Haiti, the Dominican Republic, and Jamaica, providing a healthy chunk of their economies. As a result, it's crucial to provide an easier way to aid in remittances.
"Our goal is to kill brick-and-mortar cash services with a mobile bank account," Barhydt said. "This industry needs to be compressed for the benefit of the consumer."
M-Via has quietly set up a network of 15,000 locations in the U.S., including 7-Eleven stores, where individuals can deposit cash into a Boom account. It works like this: a worker will hand over cash to the sales clerk, who hands back a receipt with a one-time token. The person sends a text message to Boom with that token, and the funds are transferred into his or her account. With funds in the account, he or she can send another text message to Boom designating an amount and a number in their home country.
The recipient, meanwhile, doesn't have to pay any fees. The person receives a text message alerting them of the funds, and an account is automatically created for them. Barhydt said that during the sign-up process, Boom customer service representatives will train the person on how to use Boom and redeem the money.
After they've signed up, Boom will send the customer a "Boom welcome kit," which includes a debit card that the person can use to access the funds. If there is no ATM machine, the person can head to one of several thousand local merchants that Boom is working with to either redeem the funds for cash or goods.
Merchants like it because the transfer of funds is in real time, and it increases the likelihood that the person will buy something in their shops, Barhydt said.
Because the service runs on text messages, any phone can be used. But with more low-cost prepaid providers offering affordable Android smartphones, m-Via plans to launch an Android app that provides a more sophisticated view of the funds and more features, Barhydt said.
M-Via is running off a model set up by Safaricom, a Kenya-based Vodafone affiliate. The service, called M-Pesa has helped circulate funds throughout the country in a safe and speedy manner. Boom, however, wants to expand that concept to cross-border money transfers.
Boom has some serious supporters. The accounts are financially backed and guaranteed by CBW. The company is working with the State Department and Secretary of State Hillary Clinton, as well as with local Latino community groups. M-Via is using local community activist to educate migrant workers about the benefits of Boom.
Barhydt said the company was able to sign up a couple of thousand users last year in a quiet trial.
"The community leaders seem to like it," he said. "They're helping spread the word on Boom."