New Conductors Speed Global Flows of Money
Cellphones Make Transfers Faster, Cheaper
By Mary Jordan
Washington Post Foreign Service
Tuesday, October 3, 2006; A01
MANILA -- It was 10:33 p.m. when Dulce Amor Bandoy's cellphone
beeped with her favorite kind of message.
"You have received 1,321.00 of G-Cash," read the text on her
phone's glowing screen.
That meant her uncle in London had just deposited 1,321 Philippine
pesos -- about $26 -- into her Globe Telecom cellphone account,
which Bandoy uses like a bank. "My phone is now my wallet," said
Bandoy, 29, a cheerful woman with a sparkling smile.
The cellphone-based system that conveys cash between Bandoy and her
uncle has the potential to revolutionize the way hundreds of
billions of dollars are moved around the world, according to
experts who study global cash flows.
Cash that relatives working abroad send home is not only vital
support for millions of families but a cornerstone of national
economies from Mexico to Lesotho. The World Bank estimates that
global remittances last year topped a quarter of a trillion
dollars, with $13 billion flowing into the Philippines alone.
But traditional methods of moving money in small, personal amounts
can be slow and costly. Western Union, the world's largest
money-transfer business, would charge $22 in fees on a $26 transfer
from London to Manila. Banks also demand substantial fees and often
take two or three days to complete a transfer.
With cellphone use booming across the developing world, from the
open deserts of Africa to Bandoy's densely populated neighborhood
in sultry Manila, handsets that cost as little as $30 are enabling
struggling nations to leapfrog past the need for land-line phones
and ATMs.
The money transfer to the four-inch gold Nokia in Bandoy's hip
pocket is a glimpse of the future, said Dilip Ratha, an economist
and remittance expert with the World Bank in Washington. "I really
think this is the way forward," he said. "In three years I would
expect to see this all over the world."
Eugene Bandoy, 50, is a Filipino architect who lives in London and
helps other expatriates buy property back home. When potential
buyers want to take a look at condominiums or houses in the
Philippines, his niece shows them around. He sends her cash to
cover her expenses. But that can be frustrating and expensive,
because the fees for wiring small sums can nearly equal the amount
being sent.
So in November, when Bandoy heard at a Filipino community event
that he could send up to $200 through his cellphone for as little
as $7, he eagerly signed up.
"It's not just cheaper for me," he said, wearing a whimsical tie
covered with drawings of Volkswagen bugs and a white cap spun from
Scottish cashmere. "It's more convenient for Dulce -- she can pick
up the money at a shopping mall late at night long after banks are
closed." She could also use any of 1,500 other locations, including
department stores and licensed pawnshops.
Last month, Bandoy needed his niece to go to Quezon City, just
outside Manila, to show a condominium to a woman who works in
London but was home on vacation and interested in buying. But
Dulce, like so many people struggling to get by in this country of
almost 90 million people, said she didn't have the $1 for a bus or
train ride to meet the client.
She called her uncle and told him, "I need money or I can't meet
her."
So on the afternoon of Sept. 11, Bandoy walked up the steps to a
second-floor office in a stately office building in Kensington,
central London. There, Gen Ashley was waiting in the one-room
office of her remittance company, Twilight Express.
Ashley, a sharp, friendly businesswoman, has thousands of
customers, who among them send about $2 million a month home to the
Philippines. Recently, she said, several hundred of them have begun
asking her to send money through the two giant Philippine phone
companies, SMART and Globe Telecom.
"It is definitely growing," she said.
Ashley pointed out that some banks are responding with more
competitive prices. And, she said, many people prefer to continue
sending money the way they always have; for some, that means paying
money-transfer services to have cash hand-delivered to their
parents' doorsteps. "People are not used to getting money through
their phone," Ashley said. "Some are uncomfortable with the idea.
They worry, 'What if I lose my phone?' "
In recent years, growing numbers of people in the Philippines, as
well as in countries as diverse as Japan and Zambia, have begun
using new features on their mobile phones to pay bills, buy goods
and transfer cash to relatives in the same country.
But international money transfers by this method have been slower
to flourish, in part because regulators are trying to assure this
new channel won't be used to launder money. Tightening the
monitoring of international cash flows has become a prime goal of
U.S. authorities who are trying to prevent terrorist attacks.
The Philippines, noted for embracing cellphone innovations and
heavily reliant on remittances, has plowed ahead on its own. For
now, however, phone companies are limiting international transfers
to relatively small amounts, such as $200.
Globe Telecom officials said Filipino workers in 17 countries,
including the United States, can now use their phones to send money
home. In the United States, they said, the service recently linked
up with remittance centers in California, Nevada and Texas.
In the London office, Bandoy turned over the cash in the pound
equivalent of the amount he needed to get to his niece, plus a
$7.50 commission (Globe says that it collects 50 cents of that).
Ashley began twirling her fingers across her computer keyboard.
Bandoy had already registered with her, producing his passport as
identification, an anti-laundering precaution.
She clicked on his name and up popped his account information.
Dulce Amor Bandoy was listed as his recipient, and Ashley scrolled
down to her cellphone number and clicked.
She typed in the amount he was sending and the day's exchange rate
for the British pound and Philippine peso. Then she hit the "send"
button to move the order to the phone company. Seconds later, a
message appeared on her screen, confirming the transfer.
It was 3:32 in the afternoon in London -- 10:32 p.m. in
Manila.
At that moment, 7,000 miles away, Dulce Amor Bandoy was sitting in
the rented room she shares with three other women. A charcoal
sketch of herself -- a self-portrait -- hung on her little slice of
the wall.
Bandoy, who stands 4-foot-11, has recently tried to turn her savvy
with cellphones into an informal repair business. At 10:33 p.m.,
she was intently focused on reprogramming a customer's black Nokia
cellphone when her own phone, sitting on her bedside table, pinged
with the much-anticipated message.
Ashley's order in London had flowed over a computer network to a
Globe Telecom office in the Philippines. There it generated the
local text message to her phone. "I was so relieved when I read
that the money had arrived," she recalled. "I was thinking, 'What
am I going to do if it doesn't?' "
Next morning, she tucked her phone into her cream-colored cargo
pants and headed to Robinsons Mall, walking past a supermarket
advertising that customers could pay for their groceries via their
phone accounts. She climbed up to the third level, past McDonald's,
T.G.I. Friday's and Starbucks, and walked into the glitzy Globe
phone store, where customers can browse the flashiest new phone
models and pick up G-cash, as the company calls money transferred
via phone.
The music and lights of the place were much more to Bandoy's taste
than the numbing silence of a bank lobby, she said, noting that
this store stayed open as late at 10 p.m., while many banks close
at 3.
She quickly wrote her name, phone number and address on a
"cash-out" form and handed it to the clerk. She would take out only
1,200 of the 1,321 pesos and use some of the remainder to pay her
phone bill. The clerk looked up her account on his computer and
then sent a text message to her phone that read, "To Cash out
1,200.00 of G-Cash from Globe Robinson's Place, Reply with your
MPIN."
She typed her four-digit mobile personal identification number into
the phone pad and hit reply. The clerk had the confirmation he
needed. Less than five minutes after arriving at the store and
after paying 26 cents -- a 1 percent fee -- she walked out with
about $24 worth of Philippine pesos.
She hurried out of the mall and hailed a taxi to rush her to the
train station.
By 10:30 a.m., she was walking a potential buyer through new
condominiums in a middle-class area of Quezon City.
"She loved it! She signed the contract!" Bandoy recalled
later.
That night, she said, she treated herself to a celebratory dinner
of fried fish, rice and a Coke in her room. Before she dropped off
to sleep, she said, she did what she does every night: She placed
her cellphone right next to her on her pillow.