Dialing dollars across borders wirelessly

Money wiring is going wireless.

Remittance giant Western Union Corp. said Tuesday that it was rolling out a service that would enable consumers in the U.S. to send money to relatives in Latin America using their cellular phones.

Targeted at Latino immigrants and their families, the service aims to piggyback on the soaring popularity of mobile phones in the developing world by making it more convenient for customers to send and receive money. Global remittances surpassed $300 billion last year.

Half the world’s population -- about 3.3 billion people -- now has access to mobile phones, according to the United Nations. The ubiquitous devices are enabling companies to market communication, financial, entertainment and other services to low-income customers in emerging economies that they had difficulty reaching before.

“This is the first consumer technology that is as prevalent in the [remittance] sending market as it is in the receiving markets,” said Matt Dill, general manager of Western Union’s mobile division.

Englewood, Colo.-based Western Union has teamed with two Texas companies, Fort Worth-based RadioShack Corp. and Affinity Mobile of Dallas, to offer the service.

Here’s how it works. Customers can go to any of RadioShack’s 4,300 stores nationwide and purchase one of Affinity’s prepaid mobile phones. The phones are marketed under the Trumpet brand and range in price from $19.99 to $79.99.

The phone kit includes a “stored value” card that functions as a debit card and can be accessed from the cellphone -- a concept known in the industry as an electronic wallet. After activating the card, the consumer can load as much as $2,500 on it, using cash or a credit card. That can be done at RadioShack, Western Union’s 47,000 U.S. outlets or any of the 65,000 convenience stores, pharmacies or other retailers that are also part of the national network.

To send money, the customer types a few keystrokes into the cellphone to determine how much to send and to whom to send it. Transactions can be conducted in English or Spanish. The recipient gets a text message on his or her phone, along with a security code, which can be taken to any Western Union agent in Latin America and the Caribbean to pick up the money.

Western Union currently charges $9.99 per transaction to send up to $1,000 -- the same as at its walk-up locations. Dill said the company would be looking to lower those costs as the business grows to reflect savings from not having to build bricks-and-mortar stores. It also wants to hook customers on the convenience of sending smaller amounts more frequently without visiting a Western Union outlet.

He said the company was exploring technology partnerships in India and the Philippines to provide similar services there.

People in parts of Asia and Africa are already using cellphones to make purchases in stores and conduct other financial transactions.

Consumers in the United States have been slow to adopt so-called mobile banking or “m-banking” on their cellphones, in part because ATMs are so prevalent and because most people can do online banking on their computers.

Not so in many developing countries, where bank branches and laptops are scarce. The majority of the world’s people, about 5 billion, lack bank accounts, Affinity Chief Executive John Carney said.

He said the privately held company had them in mind when it was developing the secure financial platform on which the new remittance system runs.

Carney would not disclose the size of Trumpet’s subscriber base. He said the company was looking to market its platform to other carriers, with the aim of expanding mobile banking around the globe.

“The biggest opportunity is in economies . . . with a high penetration of cellphones but with a low penetration of banking infrastructure,” he said.

Carney said the system had a number of safeguards built in to protect both senders and receivers.

Though m-banking is apparently in its infancy, a slew of companies are interested in the business, said Nick Holland, senior analyst at financial services consulting firm Aite Group, who has studied the trend.

He said cellphone transactions enable low-income consumers to build their credit histories and enter the financial mainstream.

“The mobile phone is really changing people’s lives,” he said. “It’s enabling business models that couldn’t have been considered before.”

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marla.dickerson@latimes.com