Bank wires going the way of the dodo -

At some point it seemed like Paypal was going to become the world´s one and only internet money transfer service that one would ever need, but luckily for consumers,  there´s growing choice for both consumers and employers to avoid the slow and often cumbersome experience of international wire transfers.

A report published last week by boffins at Juniper Research predicts that electronic payments will not only skyrocket but also go mobile: “Mobile payments for physical goods will treble within three years as sites such as eBay Mobile and Amazon are used increasingly.” It also  forecasts that “mobile ticketing transactions will exceed $100 billion (based on gross transaction value) as soon as 2012”.

But while Paypal recently made some interesting moves like launching a mobile version of its site 

and last month started accepting “guest payments” -just entering your credit card data without requiring a pre-existing paypal account- its performance in some parts of the World leaves a lot to be desired.

In South America for instance, its only development has been the launch of localised sites that more often than not only help by telling you in perfect Spanish that to withdraw funds to a bank account, then it must really be a U.S. based bank account, as the firm doesn´t do business with local banks.

While one would think that banks would get with the programme and be the key players in this market by now, surprisingly they are not, with early attempts like HSBC´s partnetship with Yahoo to create PayDirect failing miserably.

More options, and a bigger pie

eBay´s PayPal reported that it´s user base has been growing to the tune of one million new accounts per month, which certainly indicates there´s room for plenty of players as the virtual pie of the wonga transfer business is expanding.

Flying somewhat under the radar, for instance, is on-line giant retailer Amazon.com with its “WebPay” system which started as a way for third party web merchants to process credit card orders using amazon.com´s payment gateway, but recently expanded to get into PayPa´s turfl by offering person-to-person money transfers.

Amazon´s WebPay will surely take a growing piece of Paypal´s business for Americans who want to send money to each other, and also people oerseas who would rather use that extra income to be spent on amazon.com purchases. What does Amazon.com gain? access to interest-free funds, from all the people accumulating their balance on Amazon.com´s systems. This scribbler largely agrees with comments of rejoice expressed earlier by some forum commentators, who added that “Amazon.com is uniquely positioned to actually give PayPal a run for its money.”  


 
Pundits note that “Paypal tried making money on the float, but it didn't work. Amazon has a somewhat better chance of pulling that off” and that people who receive funds have less incentive to cash out “since they know that the store of all stores” will accept the balance for amazon.com purchases.

But Amazon.com doesn´t stop thinking on person-to-person small money transfers, they want to be in the big game as well, and they are, by offering the use of Amazon.com as a payment processor for your e-commerce web site dubbed “Amazon Flexible Payments Service" And finally there´s “Amazon Simple Pay” aimed at the delivery of digital goods and servives, along with non-profits.

Cash machines as the last-leg or those without bank accounts 

Another under-reported service for Americans needing to send money abroad, which seems perfect to pay overseas freelancers is ATMCash.com - pointed to us by former INQster and colleague John Oram. The service works by loading funds into a reloadable debit card and the firm mails it to the recipient of the funds, who can then go to his nearest ATM cash machine and extract the wonga. Unfortunately, TechEye attempted to give it a run but quickly learned that Britons are shunned as well as everyone else coming from IP addresses outside of the US of A.


But fear not, there´s a solution for UK firms who need to send money world-wide as well. It comes from Travelex, and is dubbed “Cash Passport Payout Card”. It works like ATMCash does for Americans, but comes from a UK company. The firm claims that funds can be accessed at over 1 million ATMs and 24m merchants worldwide,  and that they can distribute cards globally. Finally they cite that British Airways is using this approach “to compensate their passengers in a quick and effective way”. It´s worth a try.

Credit card firms get into the game

Keep in mind that all of these companies doing person-to-person transfers -from PayPal and Amazon.com´s WebPay to the South American flavoured DineroMail.com, all can be funded with credit cards, so it´s very easy for the Visa and Mastercards of this world to get a glimpse, in real time,of the size of this business.
 
With all this activity going on, and the e-payments market set to go through the roof, it was only a matter of time before Credit Card companies got into the game, which is what they are doing now. Last December, the Argentine branch of Visa launched its “Card to Card” service allowing any Visa card holder to send money to another Visa customer, from the Visa web site.

This service, which the firm says was developed locally apparently proved succesful, so Visa is deploying it world-wide, reports the local site MejoresTarjetas this month, here. (Spanish)

One of the advantages of Visa´s “card2card” service is that it allows -at least down here- the money sender to pay the amount in fixed monthly installments -with the usual added interest fee- while the money recipient gets the wonga credited to his account for the full amount and instantly. Subject to each Visa card´s credit limits, of course.

The Dark Ages

As an early adopter of on-line auctions down in LatAm and buying lots of useless tech junk from the U.S. for almost a decade (1995-2004), this scribbler got an early taste of the hurdles for international payments. For paying US sellers of tech junk in the early days of the interweb and having no other options like International Postal Money Orders -because our ,government had privatized the Postal Service and handed the remittances market on a silver platter to Western Union- this scribbler tested everything from hiding cash in the mail -hint: 3.5-inch diskettes with folded greenbacks worked wonders, but that´s probably a reason to be sent to Gitmo by now so don´t do it- to cashiers´ checks.

Finally Paypal arrived promising to solve everyone´s problems -sort of, kinda, but not always, as for receiving wonga you really needed a U.S. based bank account to withdraw funds effortlessly, and you still do in this part of the World, so it s far from being a truly international system.  you happen to receive a foreign cheque, very few banks would accept it, and if they do, clearing can take up to a full month.  But of course, for syphoning wonga from your credit card -sending payments-, Paypal always works.


Our Editor-in-Chief Mike M. also experienced firsthand the hurdles of moving wonga to and from remote corners of the planet to please his team of freelance writers and their flamboyant lifestyles. Six years ago, we wrote about that over there.

Luckily for consumers, the choices for near-instant money transfers keep on growing, and it seems that only the rigid banks and its somewhat outdated SWIFT systems are the ones going to lose, as everyone and his mother doing business on-line -including credit card firms-  are getting into the electronic, person-to-person money transfer business bandwagon.

Conclusion

So... with Amazon.com, Paypal, credit card firms allowing card-to-card transfers, and solutions for those without a bank account like Travelex services, does anyone still think that slow and cumbersome international wire transfers are a good idea?. We don´t. Unless banks improve their collective act, the days of local and international payments between individuals -and from small firms and its overseas workers- using bank wires are numbered.☼