New Conductors Speed Global Flows of Money
Tuesday, October 3, 2006
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.