The remittance model is one that is here to stay, as detailed during a panel of CEOs at Innovation Project 2017. Despite the saber rattling that may be emanating from Capitol Hill and beyond, with specific aim at money flowing to and from the United States and Mexico and other areas south of the border, the prevailing notion of the discussion, which took place March 16, moderated by Global Economics Group founder and CEO David S. Evans, was that “the horse is out of the barn,” as BillMo CEO Steve LaBella put it.
The rise of mobile technology and digital payments has made it convenient and efficient to move money in amounts small and large, typically from workers to loved ones in other locations.
In an interview with PYMNTS structured off the panel discussion, LaBella stated that the emergence of a business model (BillMo’s) that lets senders transfer money from phone to phone (for as low as 99 cents per transaction) is one that also allows for ancillary services to be attached, including bill payment and shopping services that have loyalty rewards.
“The recipient registers with us,” the executive told PYMNTS. The funds, via digital transfer, can be redeemed in a variety of use cases, where some types of behavior can even be incentivized, he elaborated.
Across a wide variety of activities, funds can be used directly by recipients to shop at retail outliers (with a couple of thousand stores participating now in Mexico), said LaBella, with the goal of having as many as 100,000 locations in Mexico on the roster by year’s end.
In this use case, there may be added lure of, say, offering an additional 20 pesos that can be redeemed at a given store in order to encourage traffic and buying activity. Other use cases involve prepaid airtime and funding the digital wallet itself, said LaBella. With activity done digitally, the cash is deployed in ways that can be observed and measured and goes beyond just picking up funds through an agent.
The opportunity is a large one. LaBella stated that the remittance market remains at least a $500 billion global opportunity, with a carve-out of BillMo’s own existing and targeted markets at present, via Mexico and Latin America, standing at about $50 billion (with Mexico the largest single contributor at about half that).
The concern among some industry observers that the Trump administration and others may shrink that pie a bit on geopolitics is not necessarily a game-changer for BillMo, he said. Even a decent (or growing) slice of a shrinking pie can mean substantial growth for BillMo and others — and, as a reminder, the business model that is in place for his company is a bit different than is seen across the industry.
In the case of this upstart, the funds sent using mobile technology and debit cards give BillMo revenue streams that stand in contrast with more traditional players, which focus on getting individuals to send money as remittances. BillMo, he added, looks to gain its own installed base of remittance recipients (who pay no fees to receive money).
The executive said that movement to countries such as Guatemala and Honduras, part of an overall strategy to branch into new markets (and Canada may also be on the list), is based in part on high mobile phone penetration rates. Among new initiatives could be administration of government benefits, as part of what he said would be natural “market expansions.”