BARCELONA, Spain — The global economic downturn is slowing growth in remittances and could hinder efforts by wireless carriers and financial companies to persuade people to transfer money with their mobile phones.
"The workers that are traveling overseas are losing their jobs," Matt Dill, a senior vice president at Western Union Co. and the head of its digital ventures unit, said here this week at the Mobile World Conference sponsored by the GSM Association, a wireless trade group.
"People are going to be saving more, sending less, [but] trying to maintain communication with their families," Mr. Dill said, and many people might not want to experiment with new ways to send money home.
Western Union has been a part of the GSM Association's Mobile Money Transfer program since it was introduced in 2007.
The trade group endorsed three more companies this week as providers of mobile remittance services, including Visa Inc.
The value of international remittances sent to developing countries grew nearly 16% in 2007 over the previous year, but the World Bank has said that the value grew only 6.5% last year, to $283 billion, and will fall nearly 1% this year.
Nearly all the money gets sent through money transfer organizations, such as Western Union and MoneyGram International Inc., or more informal methods.
And though there is growing interest in mobile remittances, the anticipated demand may not be taking off as fast as some researchers had anticipated. Juniper Research Ltd. cut its forecast this month for mobile money transfers, predicting that about $73 billion would be sent through phones in 2011, or 50% less than its earlier estimate.
"The amount of flow is going to change," said Roy Vella, Royal Bank of Scotland Group PLC's director of mobile. His company also received the GSM Association's mobile remittance endorsement this week, along with Belgacom International Carrier Services.
Royal Bank remains committed to mobile remittances, Mr. Vella said, and the global downturn does not "fundamentally change the need to move money across borders."
Gavin Krugel, the head of strategy and development for the GSM Association's mobile remittance program, said there are 54 mobile money transfer projects in operation or development, including services available now from the Philippine operators Smart Communications Inc. and Globe Telecom Inc., and Kenya's Safaricom Ltd.
These services are offered by carriers and are used mainly for domestic transfers, though some bank-operated services are in the pipeline.
Besides the economy, regulatory issues are often a hurdle for international remittances, Mr. Krugel said.
MasterCard Inc. and the GSM Association organized a remittance test two years ago to let Philippine workers in the United Arab Emirates send money home from their mobile phones, but the project was delayed by various regulatory complications, he said.
Another barrier to mobile remittances, according to observers, is that the payment card infrastructure remains weak in many of the countries where people receive money, making it difficult for people to turn a remittance into cash.
Pam Zuercher, the head of Visa's global mobile initiative, said mobile remittances could let receivers spend money electronically, instead of with cash. For example, they could convert a remittance into a prepaid card or make purchases with funds stored on their phones.
"It's never been about the card; it's the 16-digit account," Ms. Zuercher said.
