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Mobile devices, which have fundamentally changed so much of the electronic payments business, are now shaking up the cross-border remittance market. Twelve-year-old Xoom Corp., a relative newcomer to the business, says 37% of its transactions in the third quarter originated on mobile devices, compared to 22% a year ago. More than a third of its nearly 1 million account holders are now steady mobile users, the San Francisco company says.
Helping to fuel these trends is a mobile app Xoom launched in June that streamlines access to its payment service. The app follows a mobile-optimized version of its Web site that it introduced two years ago using technology from mobile provider Usablenet Inc.
“Xoom is fast becoming a mobile company,” Julian King, senior vice president of marketing and corporate development at the company, tells Digital Transactions News. In this respect, the upstart appears to be setting the pace for the venerable money-transfer business. “Xoom in the U.S. market has been a front-runner” in mobile, says Julie Conroy, a senior analyst at Aite Group LLC., a Boston-based research firm.
Xoom, which depends heavily on bank-account funding to avoid credit card interchange costs, allows U.S. users to send money to recipients in 30 countries. Recipients can have the funds sent to their own bank accounts to avoid picking up cash at retail outlets. “We’ve innovated heavily [in mobile] but we have innovated heavily also in bank deposits,” says King. Transfers funded from bank accounts are priced at $4.99 each for amounts up to $3,000.
With the mobile service, first-time users must sign up for a Xoom account. They designate the name of a recipient along with the recipient’s country, bank name, and bank-account number or a location where the cash will be picked up. Most Xoom users fund transactions with their bank account and send money to the same people. So on subsequent transactions, they can use a feature called QuickSend that allows them to authorize a transfer with a single swipe across the mobile screen. Accounts are protected with a user-name-and-password combination.
While the service will work with a feature phone that can access the mobile Web, it works best with a smart phone. The app is available for both iPhone and Android users. About half of U.S. mobile-phone users now have smart phones, Conroy says. “Given the smart-phone penetration [in the U.S.] and how quickly it’s growing, we’re pretty well situated with the customer base,” King says. “Customers appreciate the ability to send money anytime from anywhere from a device their kids aren’t using.”
Conroy cautions, however, that stronger authentication may be necessary over time, not just for remittances but for all mobile payments. “As more and more transactions move to mobile, the bad guys are following,” she warns.
