Western Union uses mobile commerce for money transfers

Money transfer services firm Western Union is increasingly using m-commerce to complement its existing online operation and 435,000 outlets across more than 200 countries.

The company’s first foray into m-commerce took place more than a year ago in the Philippines, where much of the population had little or no easy access to banking services. Western Union teamed up with the largest mobile operator in the Philippines and created a system that provides users with a virtual bank account that they can manage through their phone to send money, pay bills and buy goods.
“People found this a convenient way to access a financial service,” says Khalid Fellahi, senior regional vice president at Western Union.

Under the scheme, customers can have funds paid directly into a mobile wallet which they can use to carry out transactions via their mobile handsets.

“We looked at the service providers that were strong in the security space and had a certification programme in place. We found renowned vendors with good technology such as [SAP subsidiary] Sybase 365 and we proposed that they connect their platforms to our systems,” Fellahi says.

The scheme generated a great deal of interest, and not just from potential users. “While mobile operators were the first to start with the mobile wallet, the banks realised that this was a good way to not only serve their existing customer base but also capture new customers that they could not serve before because of the country’s infrastructure,” says Fellahi.

After its success in the Philippines, Western Union explored other markets where mobile operators were leading the way in banking and identified Kenya as an ideal place to expand its m-commerce operation.

“That’s where we had our second integration, which is live today. We started sending transactions from the UK to Kenya using the M-Pesa mobile wallet sevice developed by Kenya-based Vodafone subsidiary Safaricom. We’re seeing a fantastic consumer adoption.”

Western Union is now rolling out similar projects in 21 countries including Malaysia, Libya and Tunisia, as well as more developed countries where there are a lot of migrant workers, such as South Africa and Canada.

“We approached our customers and started asking what they were interested in and whether a mobile tool would be appealing. We got good feedback and built a series of mobile apps for smartphones – iPhone, Android and BlackBerry. These will go live in 2011,” says Fellahi.

The smartphone apps will enable customers to replicate what they are able to do on the Western Union web site, which means they can initiate a money transfer using their credit or debit card, and send the funds from their handsets.

All these initiatives mean that in many parts of the world Western Union customers do not have to worry about store opening hours or gaining access to a computer in order to send or receive money in a matter of seconds – a major advantage given that many of its customers are busy people who have to hold down more than one job.

“We think the mobile channel will become very important for us as well as other financial services at large,” says Fellahi.