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New Conductors Speed Global Flows of Money
Cellphones Make Transfers Faster, Cheaper

By Mary Jordan
Washington Post Foreign Service
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.

She called her uncle and told him, "I need money or I can't meet her."

So on the afternoon of Sept. 11, Bandoy walked up the steps to a second-floor office in a stately office building in Kensington, central London. There, Gen Ashley was waiting in the one-room office of her remittance company, Twilight Express.

Ashley, a sharp, friendly businesswoman, has thousands of customers, who among them send about $2 million a month home to the Philippines. Recently, she said, several hundred of them have begun asking her to send money through the two giant Philippine phone companies, SMART and Globe Telecom.

"It is definitely growing," she said.

Ashley pointed out that some banks are responding with more competitive prices. And, she said, many people prefer to continue sending money the way they always have; for some, that means paying money-transfer services to have cash hand-delivered to their parents' doorsteps. "People are not used to getting money through their phone," Ashley said. "Some are uncomfortable with the idea. They worry, 'What if I lose my phone?' "

In recent years, growing numbers of people in the Philippines, as well as in countries as diverse as Japan and Zambia, have begun using new features on their mobile phones to pay bills, buy goods and transfer cash to relatives in the same country.

But international money transfers by this method have been slower to flourish, in part because regulators are trying to assure this new channel won't be used to launder money. Tightening the monitoring of international cash flows has become a prime goal of U.S. authorities who are trying to prevent terrorist attacks.

The Philippines, noted for embracing cellphone innovations and heavily reliant on remittances, has plowed ahead on its own. For now, however, phone companies are limiting international transfers to relatively small amounts, such as $200.

Globe Telecom officials said Filipino workers in 17 countries, including the United States, can now use their phones to send money home. In the United States, they said, the service recently linked up with remittance centers in California, Nevada and Texas.

In the London office, Bandoy turned over the cash in the pound equivalent of the amount he needed to get to his niece, plus a $7.50 commission (Globe says that it collects 50 cents of that). Ashley began twirling her fingers across her computer keyboard. Bandoy had already registered with her, producing his passport as identification, an anti-laundering precaution.

She clicked on his name and up popped his account information. Dulce Amor Bandoy was listed as his recipient, and Ashley scrolled down to her cellphone number and clicked.

She typed in the amount he was sending and the day's exchange rate for the British pound and Philippine peso. Then she hit the "send" button to move the order to the phone company. Seconds later, a message appeared on her screen, confirming the transfer.

It was 3:32 in the afternoon in London -- 10:32 p.m. in Manila.

At that moment, 7,000 miles away, Dulce Amor Bandoy was sitting in the rented room she shares with three other women. A charcoal sketch of herself -- a self-portrait -- hung on her little slice of the wall.

Bandoy, who stands 4-foot-11, has recently tried to turn her savvy with cellphones into an informal repair business. At 10:33 p.m., she was intently focused on reprogramming a customer's black Nokia cellphone when her own phone, sitting on her bedside table, pinged with the much-anticipated message.

Ashley's order in London had flowed over a computer network to a Globe Telecom office in the Philippines. There it generated the local text message to her phone. "I was so relieved when I read that the money had arrived," she recalled. "I was thinking, 'What am I going to do if it doesn't?' "

Next morning, she tucked her phone into her cream-colored cargo pants and headed to Robinsons Mall, walking past a supermarket advertising that customers could pay for their groceries via their phone accounts. She climbed up to the third level, past McDonald's, T.G.I. Friday's and Starbucks, and walked into the glitzy Globe phone store, where customers can browse the flashiest new phone models and pick up G-cash, as the company calls money transferred via phone.

The music and lights of the place were much more to Bandoy's taste than the numbing silence of a bank lobby, she said, noting that this store stayed open as late at 10 p.m., while many banks close at 3.

She quickly wrote her name, phone number and address on a "cash-out" form and handed it to the clerk. She would take out only 1,200 of the 1,321 pesos and use some of the remainder to pay her phone bill. The clerk looked up her account on his computer and then sent a text message to her phone that read, "To Cash out 1,200.00 of G-Cash from Globe Robinson's Place, Reply with your MPIN."

She typed her four-digit mobile personal identification number into the phone pad and hit reply. The clerk had the confirmation he needed. Less than five minutes after arriving at the store and after paying 26 cents -- a 1 percent fee -- she walked out with about $24 worth of Philippine pesos.

She hurried out of the mall and hailed a taxi to rush her to the train station.

By 10:30 a.m., she was walking a potential buyer through new condominiums in a middle-class area of Quezon City.

"She loved it! She signed the contract!" Bandoy recalled later.

That night, she said, she treated herself to a celebratory dinner of fried fish, rice and a Coke in her room. Before she dropped off to sleep, she said, she did what she does every night: She placed her cellphone right next to her on her pillow.

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