A new way to transfer cash
Bank ATMs soon may be used for sending cash person-to-person

By Gail Liberman and Alan Lavine  Last update: 7:57 p.m. EST Nov. 10, 2008  PALM BEACH GARDENS, Fla. (MarketWatch) --

If you're without a bank account, you soon could have a low-cost way of sending cash to others -- using your cell phone and a bank ATM.

Amid criticism that banks aren't doing enough to attract those who lack bank accounts, a Charlotte-based company, Privier Inc., is courting financial institutions to provide this service.
Privier's patented "ATMSend" would let the so-called un-banked transfer cash without requiring the sender or recipient to have a bank ATM card or bank account. The system would use bank ATMs that permit cash deposits, said Charles Polanco, chief executive of Privier.

Western Union Co. in Englewood, CO., and MoneyGram International in Minneapolis, currently dominate the money transfer business. Combined, the two companies have 22% of the market, according to a report in June by Marketdata, a Tampa, Fla. market research publisher. However, new competition is rapidly emerging from Visa, MasterCard, Wal-Mart -- and the latest mobile technology allowing for financial transactions using cell phones.

Privier would equip screens of participating bank ATMs with icons reading "Send Cash" and "Pickup Cash." A cash sender and recipient would press appropriate buttons to automatically activate the ATM for an "ATMSend" transaction, Polanco said. Each bank would determine limits regarding how much cash could be transferred.

The sender first would have to register a cell phone through a participating bank either online or via telephone, entering a name, address, birth date, Social Security number and cell phone number. Privier would verify the user's identity and check information against the Office of Foreign Assets Control list of terrorists.

At a participating bank ATM, the sender could then click "Send Cash" and enter the cell phone number. A 10-digit withdrawal number automatically would be text-messaged to the cell phone number provided. The sender could follow prompts at the ATM to enter cash into the machine and provide the recipient with the authorization code along with the amount sent. With that information, the recipient could obtain the cash at an ATM within the participating bank's network.
All funds must be picked up at once, and if funds go unclaimed, senders would be notified to pick up the funds at an ATM location after 30 days.

Many money-transfer options

Mobile finance that uses cell phones for financial transactions is a growing technological area because 80% of the global population is covered by a cell phone network, Marketdata reports.
Polanco pointed to data from the Chicago-based Center for Financial Services Innovation indicating that 106 million persons in the U.S. lack a bank account. More than half, he said, have Social Security numbers; however many are distrustful of banks.

Meanwhile, the money transfer remittance marketplace is a $6.1 billion industry, slated to grow 8% in 2008, Marketdata said. Large U.S. banks already in the money transfer business include Bank of America Corp, Citigroup Inc., Wells Fargo, BB&T Corp and U.S. Bancorp (USB:
USB the report said.

These programs often are limited to specific countries. Bank of America offers free transfers for people who have a bank account.

Western Union Co. has been piloting mobile money transfer through arrangements with two Philippines-based wireless services operators, Globe Telecom and Smart Communications. Right now, it costs as little as $2.56 to send up to $100 for a mobile transfer from Hawaii to the Philippines, said Kristin Kelly, a spokeswoman with Western Union. Cash also may be sent to the Philippines from the United Arab Emirates, Singapore and Hong Kong from Western Union locations.

In the U.S., Western Union recently wrapped up another pilot with a prepaid phone through Trumpet Mobile, a brand of Affinity Mobile in Dallas. People who bought a prepaid phone at Radio Shack stores got a free prepaid card. They were able to add funds to the card by giving cash to an agent at certain locations, like Western Union offices. The card could be used like a credit card or linked via the cell phone to Western Union's account data base. The Philippines pilot will be expanded to other markets, Kelly said. The Trumpet Mobile pilot was successful, and currently is being evaluated, she said.
Through the U.S. Postal Service's "Dinero Seguro" program, you can wire money from nearly 3,000 U.S. post offices to up to 10 countries. You can send up to $2,000 in 15 minutes to arrive at a specific participating bank branch. Government-issued identification is required for transfers over $800, and fees range from $10 to $20. However, domestic wire transfers are not available.

Wal-Mart Stores Inc. touts low fees for money transfers in partnership with MoneyGram International. Domestic transfers at Wal-Mart stores cost $11.46 for amounts up to $200 and international transfers cost $9.46 for amounts up to $1,000.

Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest book is "Quick Steps to Financial Stability" (Que/Penguin). You can contact them at www.moneycouple.com.