Michael Kent (pictured), the CEO and founder of a mobile remittance firm linked to a partnership with Facebook, explained to Mobile World Live what is drawing the social networking giant and others to P2P mobile money.
One is the presence of near ubiquitous mobile penetration, which is the means to send and receive cash. The second factor is where Facebook has its strength.
“There are two things with remittance transactions” commented the boss of UK-headquartered Azimo. “One is the physical cash and the other more complicated bit is information flow.”
A remittance transaction involves authentication of the sender but also telling the recipient when cash is on the way, and how they can access it.
Facebook could act as “a facilitator of that flow of information which will bring down the cost of sending money,” said Kent.
He was also careful to issue the customary “can’t confirm or deny talks” statement with regard to Facebook, following a media report earlier in the week.
Kent said Facebook is not exactly the only company interested in mobile remittances. Other internet giants as well as mobile operators are also scoping out the opportunity.
The reason for the interest is not hard to find. A report this week by the Overseas Development Institute remittance market said Africans are paying a ‘super tax’ because of charges levied on remittances by incumbents Western Union and Moneygram.
The report gives the example of the UK from where $5 billion was remitted to Africa in 2012. A reduction in average UK remittance costs to the global average would increase transfers by $85 million, rising by $225 million if charges were lowered to five per cent.
The charges are typically 8-9 per cent at present, whereas a newcomer’s charges are significantly lower. Kent says Azimo’s fee is 1-2 per cent.