m-Via Releases Mobile Remittances Solution

m-Via Releases Mobile Remittances Solution

Bringing the advantages of Mobile Transactions to Global Money Transfers

SAN FRANCISCO, CA – January 7, 2008 – m-Via Inc., the leader in innovative mobile transaction
technology and solutions, today announced the release of a new turn-key solution for Mobile
Remittances, bringing the power and convenience of mobile transactions to the problem of international
money transfers.

An international remittance is a person-to-person transfer of funds from a person physically located in one
country to another person in a second country. Before now, the typical consumer had no other choice but
to use a traditional registered money transfer service, such as Western Union, or an informal “hawala” to
send money home to friends and loved ones in another country.

m-Via’s Mobile Remittances Solution opens a new era in international money transfers. Built atop the
proven foundation of the best-of-breed mobile transactions application suite, MoTr™, m-Via’s Mobile
Remittances Solution provides advantages over traditional methods on all measures: cost, speed,
security, convenience, safety.

“Immigrant communities are tragically underserved by existing financial services providers. Through our
Mobile Remittances Solution, we not only help unbanked and underbanked individuals with a service they
need every month, at a better value proposition than any current method, but we also provide a
springboard for more substantial financial services,” said Kenneth D. Kruszka, CEO of m-Via. “Mobile
technology is key to providing a more convenient, cheaper, safer, and more secure way to send money
back home to support your family.”

About m-Via Inc.
m-Via Inc. is a leading innovator of mobile transaction technology, solutions, and services. m-Via delivers
global transaction solutions that are easy to use, highly secure, and extremely cost effective. m-Via’s
revolutionary MoTr™ application suite allows anyone with a cell phone to send, receive and transact
money anywhere in the world. With a combination of standard, turn-key solutions, flexible best-in-breed
technology, and specialized services, m-Via empowers financial institutions, community-based
organizations, retailers, or any other group to provide their customers or members with convenient access
to financial services wherever they are, whenever they want. More information about the company may
be obtained at www.m-via.com.

It’s expensive to be outside the financial mainstream

Millions of people have come to the United States, welcomed by the famous words inscribed on the Statue of Liberty:

Give me your tired, your poor,
Your huddled masses yearning to breathe free…

Well, breathing may still be free, but everything else has a cost associated with it. And, the dirty little secret is that the less money you have, the more expensive things are (and not just as a percentage of income or personal wealth). Take, for instance, financial services. If you have a million dollars, banks fall over themselves to give you free service and make sure all your needs are met. But, if you live paycheck-to-paycheck, many banks would prefer if you don’t even walk in the door.

This lack of welcomeness forces many people to the underbelly of the financial services world: to check cashers and payday loan shops. And the numbers of people in this predicament are staggering: “Nearly 10 million U.S. households do not have a bank account. This represents 9.5 percent of all U.S. households, 22 percent of low-income families, and 8.4 million families earning less than $25,000 per year who do not have either a checking or savings account. ” [source]

Check cashing and payday loan establishments are some of the most predatory businesses in the world. They charge exorbitant fees for the simplest of financial services: giving people access to their own money! Check cashing fees, at least, are regulated by each state. A typical maximum fee is 5% of the check value, although some states (NV, UT, MA, and the non-state Washington DC) have no limit on fees.

Would you stand for having to pay 5% just to cash your paycheck? Neither would I, but millions of people have no choice.

And heaven forbid is someone has an emergency and needs some additional cash before their next paycheck. As was highlighted recently on CNN Money, payday loans carry the “low, low interest rate of 396 percent,” although I’ve seen other reports placing the number over 500%. Granted, these are high-risk, short-term loans, so the interest rates should be higher than would a typical prime-targeted financial product, but still, the only other business that enjoys margins like this landed Al Capone on Alcatraz 75 years ago.

Yes, it’s expensive to be poor, but it doesn’t need to be that way. Everyone deserves access to high quality, appropriately priced financial services. The cure for this ill is a more robust ecosystem for the not-so-well-to-do demographic. But, more on that later. (Spoiler alert: it might just include a mobile component.)

Pay By Touch, an idea whose time has passed

The payments industry is a fast-changing place, where the next great thing can quickly become obsolete. No one knows this better than Pay By Touch. In case you’ve missed the news (here and here), Pay By Touch’s founder, John Rogers, has filed for personal bankruptcy, while the company itself is fighting for its life against an involuntary bankruptcy petition.

Pay By Touch’s pay-with-your-finger approach was an interesting idea. But, let’s explore the reasons why it has failed. First and foremost, the company’s problem stems from the fact that its solution requires specialized hardware at every point-of-sale location. Compare this with Visa’s payWave and MasterCard’s PayPass initiatives. Even with the deep pockets that these organizations possess, convincing merchants to pay for new hardware to process payments under a new paradigm will take years before critical mass is reached.

Second, biometric payments have been bypassed with the emergence of mobile payments. Consumers don’t mind using a device to make purchases; they just won’t accept having “yet another” device that they have to carry around. But, with mobile payments, consumers simply use their mobile phones as the payment mechanism. And, according to recent surveys, people are more likely to forget their wallets than to leave the house without their cell phones. So, the mobile phone is already a must-have device.

Mobile technology also has some great advantages over POS biometrics:

• Mobile payments can be conducted remotely.
• Mobile payments technology can give you more than just payments. You can also do balance inquiries, check transaction histories, take advantage of mobile coupons and more.
• Mobile payments work anywhere you are, anytime you want.

Pay By Touch failed because its solution was made obsolete before it gained critical mass. Pay By Touch failed by trying to build a new consumer brand (a strategy that wasted $300 million from investors). Pay By Touch failed because the value proposition wasn’t great enough to convince consumers to change their behavior.

A Tale of Two Markets

m-Via’s Chris Sorensen tells “A Tale of Two Markets” in the November 2007 issue of Intele-Card News.

“Like many early stage technology markets, the mobile payments market is starting to split into separate sub-markets. The first sub-market includes both m-Banking (checking bank account balances, transferring money between accounts, locating bank branches, etc), and m-commerce (using a bank account, credit or debit card associated with a mobile phone to make purchases from the phone, pay bills, and buy prepaid airtime).

The second sub-market could be termed ‘m-unbanking’ which focuses on using mobile phones to provide financial services to the roughly 70% of the world’s population who do not yet have a bank account, credit or debit card. …”

The full article is available here.

m-Via at MobileCampSF – San Francisco – November 3

On November 3, 2007, m-Via’s Ken Kruszka will be conducting a session entitled “Mobile Payments: Showing Value to Overcome Consumer Doubts” at MobileCampSF.

Showing value to overcome consumer doubts

The naysayers are out in droves. This time it’s “Mobile banking must overcome consumer doubts.” Yes, it’s natural for people to have fear and doubt about new things. Such is human nature. People like constancy.

But, mobile payments and mobile banking are no different than any other new technology that has every been introduced. And in that regard, the solution to driving adoption is already known: demonstrate undeniable value.

The value proposition is the key to driving adoption of mobile financial services. And that is precisely where mobile banking fails. Mobile banking, at this moment in time, does not offer enough value for people to look beyond their fears and apprehensions. Mobile banking is just another way for people to access their bank accounts. But, people can already access their accounts almost anytime they want. Therefore, we’re seeing that, in terms of mobile banking, the main benefit seen by consumers is the up-to-the-second balance inquiry ability. Yes, that is a very helpful feature in today’s always-on-the-go world. But, it’s not enough.

The greater value proposition is in mobile transactions, such as mobile remittances. Mobile transactions provide undeniable value to a systematically underserved market segment: the unbanked. There are over 40 million unbanked people in the US alone. And, roughly 70% over the world’s population is unbanked.

Mobile transactions bring the financial services infrastructure to this untapped consumer. Mobile transactions raise this consumer to a first-class financial citizen. Mobile transactions provide necessary tools that are currently unavailable.

So, when pundits debate the readiness of consumers for mobile banking, they are missing the whole point: Mobile banking is a vitamin, but mobile transactions are a pain pill.

m-Via at Prepaid Cards Europe – London – October 24-25

This October 24-25, m-Via’s Chris Sorensen will be presenting “Stars and Mag Stripes: what lessons can Europe learn from US prepaid successes?” at Prepaid Cards Europe.

So, if you’re going to be attending the conference, please introduce yourself to Chris!

m-Via at CTIA – San Francisco – October 23-25

This October 23-25 several of the m-Via team will be attending the CTIA Wireless I.T. & Entertainment conference at the Moscone Center in San Francisco.

This year has a great line up of speakers and panels including keynotes by Steve Ballmer (CEO, Microsoft) and Dustin Moskovitz (VP of Engineering, Facebook).

So, if you’re going to be attending CTIA we’re looking forward to seeing you there!

Western Union’s entry is good for mobile remittances industry

Western Union, GSM Partner for Global Mobile Money Transfer Service was the headline of a press release a couple days ago.

We expected to see this announcement some time ago (even before the GSMA announcement in February). It will be very interesting to see how Western Union launches a mobile offering without creating conflict for their franchisees.

This is good news for the mobile payments industry – the most difficult and expensive part of building a new market is converting non-customers into potential customers. Western Union will spend a significant amount of money educating their consumers about the safety and convenience of mobile remittances. Once they have done the heavy lifting, it wil be easier (and cheaper) for competitors to lure away the converted users with better services and pricing.