Thought Leaders in Mobile and Social: Interview with Nick LeCuyer, VP of Strategy and Distribution at Western Union Digital (Part 5)

Sramana Mitra: What is the upshot of all this? The fact that it is so much more convenient nowadays to do a transaction – you can send money directly from your mobile phone. Has that increased the volume and the frequency at which people make use of the service?

Nick LeCuyer: I will talk about it from a couple of dimensions. Let me first talk about the customer viewpoint, and then I can tell you what it means for us as a service provider. From the customer viewpoint, this is a lot more convenient. It gets back to consumers having their phones with them all the time. What we see is that it changes the patterns. Consumers tend to use the mobile channel differently than they do some of the other channels. On average, the transaction amounts are lower, but in many cases the frequency may be higher. For example, a consumer may send an average of $350 a month – which I estimate is the average, but with mobile they may also send $75 to a cousin to wish him a happy birthday. So, it opens up new use occasions because of the convenience. We see that on the developed market and the emerging market side are lower transaction sizes, but potentially higher frequencies as well.

The other thing about mobile is that it gets to the question of consumer empowerment. You and I here in the Bay Area, we wouldn’t think of this. We have been living a financially served market for a long time. Think of yourself as a consumer in El Salvador, Paraguay, or Uganda. Historically, we always had a good money transfer service there in the retail channel. But the infrastructure is not so good. Maybe they have to take a bus to get to a Western Union location – especially if you live in a rural area. Consumers love that somebody sent them money, but if they have to walk a mile or two down the road to get to the post office or wherever the Western Union agent location is, that is a big commitment of time for them. Now the ability to receive that money directly onto their mobile device is really empowering. It saves them time, it enables privacy and it is convenient. That is a huge customer benefit. When we talk to our customers that are using mobile money transfer – especially in emerging markets – it is not just a question of convenience but convenience equaling empowerment.

SM: Talk to me about the usage models we are seeing in emerging markets on the mobile wallet side. How are these mobile wallets set up? How are they used?

NL: It is very diverse and also still nascent. Depending on the country and how they are set up, mobile wallets may be set up in something that ranges from very basic close loop stored-value program on the one hand to something that looks much more like a GPR card. In some countries it is even bordering a light savings or checking account product. It really depends on the country and the program sponsor. We are still in the early stages.

SM: So a mobile wallet could be sponsored by a bank, a telco, a wireless carrier, etc.?

NL: It can be any third party. The regulatory environments are different in different countries. We want to make sure we are only doing business with licensed counter parties.

SM: Who accepts payment from the mobile wallet also varies from country to country in terms of penetration and what merchants are set up to accept payments, right?

NL: That is right. In many emerging markets the merchant bases are not large, so the products are positioned more around sending and receiving money, bill payments and basic safekeeping of money. In many of these countries, the actual notion of a merchant network is still nascent.

This segment is part 5 in the series : Thought Leaders in Mobile and Social: Interview with Nick LeCuyer, VP of Strategy and Distribution at Western Union Digital
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