After tinkering with its mobile remittance service for a couple of years, startup m-Via is launching the service under the brand name Boom, with the promise of making transferring money between unbanked users cheap and easy. The service, which is debuting at Secretary of State Hillary Clinton’s Global Diaspora Forum on Tuesday, aims to undercut existing wire transfer services such as Western Union with a solution tailor-made for mobile.
The system works somewhat like PayPal, but for unbanked migrants looking to send money to people in the U.S. and in their home countries. Users open a Boom account for $10 annually, then add cash to their accounts at 15,000 locations in the U.S., including more than 6,000 7-Eleven locations. Each deposit costs $2, but transferring money between Boom accounts is free. So a user in Mexico (the service is launching in Mexico, with Haiti following soon) opens a Boom account and pays $2 to pull out money from their account after receiving a money transfer from the U.S.. Recipients can use a debit card to withdraw money from an ATM, or get cash from 25,000 locations in Mexico.
Boom is designed to lower the cost of transferring money, especially to multiple people, which is often how users like to send it. Services like Western Union can add fees of $15 on average per transaction, said Peter Kelly, m-Via’s VP of business development. The service is also meant to work for the 80 percent of people in the world who don’t hold a bank account, but who carry mobile phones. Users can add cash to their account at participating locations and get confirmation through their cell phones. They can then transfer money to other Boom members by text message, or via phone call to a Boom operator.
“Our goal is to provide financial inclusion for the 80 percent of people who are unbanked,” said Kelly. “We want to make it easy for these people to share their wealth.”
We’ve seen more personal payment offerings recently from Square, Visa and American Express’ Serve . But those work primarily for people with bank accounts and debit or credit cards. But we’re starting to see more companies looking at the sizable opportunity in the cash market. Boom said there are $25 billion in remittances made between the U.S. and Mexico each year. PayNearMe, (see full disclosure below) another start-up, is also looking in this direction, and recently expanded its offerings for unbanked consumers. Boom leverages PayNearMe’s integration in 7-Eleven’s point of sale system to offer its own services.
Kelly said Boom, which has been testing over the last year in the greater Los Angeles area, can serve as a bank account for consumers who have never opened one. As users see it’s safe, it will inspire them to keep more money in their accounts. He said in addition to Haiti, Boom is looking to expand next to the Philippines and Latin America. I think Sunnyvale Calif.-based m-Via, which is backed by RRE Ventures, has a good head start on this market, and is smart to work with 7-Eleven to make cash remittances easier. There hasn’t been a lot of innovation in this space, but now with PayNearMe and Boom, we’re starting to see Silicon Valley take on this overlooked opportunity.
Disclosure: PayNearMe is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.