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A niche among giants
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2 entrepreneurs in B'klyn capture a corner in the growing card-based
money transfer business
BY TANIA PADGETT
STAFF WRITER
March 9, 2005
You won't find anything about stored value cards in the liturgy at
rabbinical school. Nevertheless, two rabbis from Brooklyn chose that
field
after finishing their studies, and now they're hoping to help bring the
cashless culture to local immigrants with a business that enables
people to
wire money quickly and cheaply.
Chesky Malamud, 31, and Eli Popack, 29, are aiming for a slice of the
$150
billion money transfer business, through their company, MapCash
Holdings,
which markets stored-valued cards - for use in the Caribbean.
By their own account, the duo is going up against some big financial
powerhouses. Still, the potential market for card-based money transfers
is
too big to ignore, and it doesn't fit neatly into the banking world's
network of push-button money transfers. In fact, 86 percent of all
transactions between people in the United States and Latin America and
the
Caribbean are picked up in cash at an office or bank branch, according
to a
study authored last year by consultant Manuel Orozco for the Pew
Hispanic
Center.
"We believe that there is room for everybody," said Malamud, who
explained
that he and Popack became intrigued by the business after they finished
their rabbinical studies. "We also believe that our product will give
us an
edge."
Like the big companies Malamud and Popack are focusing on remittances -
money sent by customers in industrialized countries to their homelands.
But
unlike the big companies, they are marketing debit cards to people who
receive remittances instead of the people who send them.The reason? It
is a
lot easier to target customers in countries that typically receive
remittances, said Malamud. "In the United States, trying to find the
people
who send money to family overseas is like looking for a needle in a
haystack."
Last year, the duo teamed up with IGPC, the Inter-Governmental
Philatelic
Corp. in Manhattan, a company that promotes stamp collecting and has
relationships with post offices in 70 different countries. The idea was
to
promote the debit cards through post offices in Caribbean countries,
because
post offices have bigger distribution networks than banks and more
people
feel more comfortable going into them, said Malamud.
To sign up for the cards, customers fill out an application - found at
their
local post office - providing the name and address of the sender or
senders.
Once the application is approved, the sender can wire the money (up to
$1,000) from 4,000 locations in the United States that have a
relationship
with IGPC. After the transaction goes through, the recipient can
download
the money from the card at an ATM machine or a store that accepts Visa.
Recipients can store up to $2,500.
The cards cost $3, and each transaction costs $9.95 - which makes it
substantially cheaper than other wire services, Malamud said.
For example, it costs $43 to send $500 from New York to Jamaica through
Western Union, he said.
To prevent criminals or terrorists from using the card, MapCash checks
the
applications through the U.S. Treasury's Office of Foreign Asset
Control,
which has a database of money launderers and terrorists. The procedure
enables Map Cash to know its customers - a requirement of the USA
Patriot
Act.
MapCash is operating in St. Kitts, Dominica and St. Lucia, and Malamud
and
Popack are planning to launch operations in another five countries at
the
end of the first quarter.
Interest, so far, has been high, with thousands of applications, said
Malamud.
Although they are off to a running start, big money transfer companies
are
not far behind.
The launch of the business comes as card technology becomes
increasingly
popular in the money transfer industry. Giants of the industry
including
Western Union, MoneyGram and even Visa have either launched their own
products or are planning to do so quite soon.
For Malamud and Popack, that means the market is still wide open, but
likely
to become quickly crowded with large competitors. The duo will also
have an
uphill battle when it comes to persuading people to switch from picking
up
cash to picking up a card.
"While the technology is fairly efficient, not everybody is likely to
jump
on board so quickly," said Orozco, also a consultant for the
Inter-American
Dialogue, a think tank in Washington, D.C. "People who are used to
sending
money the traditional way are likely to be stuck in their ways."
Copyright (c) 2005, Newsday, Inc.
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