Case study

Xoom

Leading digital money transfer provider. Earthport helps Xoom reach more destination countries with secure and cost-effective payments.

John Kunze, Xoom's CEO talks about how Earthport helps Xoom be successful in the international remittance and person to person (P2P) payments market.

Xoom is a leading digital money transfer provider that enables consumers to send money and pay bills for family and friends around the world in a secure, fast, and cost-effective way, using their mobile phone, tablet computer, to more than 30 countries around the world.

We have put a lot of work into making our payment corridors as efficient and cost effective as possible. We pride ourselves on our service to the Philippines, Latin America and India as well as the breadth of international communities we can serve in the US. We monitor customer satisfaction closely and are always striving to improve this.

We are now seeing a lot more payments originating from our mobile channel - from our mobile app and the mobile version of our website. 50% of our transactions now originate from the sender's mobile device and half of our customers overall are now sending payments from their mobile device. This trend shows how payment are evolving from offline to digital desktop to mobile.

What were your requirements when you starting talking to Earthport?

Efficiency, convenience and cost management.

With Earthport's efficient service, international payment fees can be less than 15% of what a bank can charge and the currency conversion can account for less than half of the FX spread.

Retail bank wire transfers are inconvenient and too pricey for customers now. They can charge between $25 and $35 for an international wire. The FX spread applied can be up to 5% of the value of the payment. The bank's operational process is also fallible. Retail money gets lost. The chain of counterparties won't support t lost transaction; the customer is inconvenienced and loses out.

We also saw an opportunity with Earthport to reach more destination countries with payments. Earthport have the relationships in place to transact across six continents, meaning we don't have to build that level of operation ourselves. With Earthport we now offer a convenient and transparent service to Australia, Canada, the UK, Western Europe and Vietnam.

What benefits have Xoom achieved from Earthport solution?

Earthport presents a big opportunity to the industry to provide customers with better, alternative payment products.

Earthport has saved us the investment cost and time to build the relationships we'd need to have in place to have our own footprint in all these destination countries.

It is very time consuming to build the operations to deliver payments directly into one country, and then you have to replicate all the systems and processes for each new country. That includes configuring our customer operations, our networking centre, our accounting group, treasury and systems integration. With Earthport, we just do this once and enjoy a much faster time to market - it’s a "one-stop-shop".

Let’s look at Vietnam as an example. Once Earthport launched this country route, we were immediately on board as the first client to provide this service to our customers. It meant we could launch or ‘light up’ this country route immediately, and Earthport could guide us through the set- up. It is a nicely sized market for us – $6bn is flowing from the US to Vietnam.

Earthport presents a big opportunity to the industry to provide customers with better, alternative payment products. It takes many years to build up great business and volume so it is important to get in early with a great service. The validation capability that Earthport provides is important here. It gives our customers a good user experience. We can catch errors before any payment is sent and we hope Earthport will continue to innovate in this area, as it is a major advantage in international payments.

How was the experience working with Earthport and what's next?

We have had a positive experience with Earthport’s technical integration and API integration. The customer service has been very good. All our expectations have really been surpassed.

Quality is crucial to our business at Xoom. More successful transactions for our customers mean higher levels of customer loyalty, and we’re obsessive about our customer experience. What’s great with Earthport is that our customers are given clear instructions on providing the correct data. We carefully monitor our yield rates - the number of transactions sent without any errors – as the higher the yield rate the higher the customer loyalty. Payments failing even five per cent of the time greatly impacts the number of failed customer experiences. With Earthport we have a one-stop shop for reconciliations and accounting. Having access to state of the art technology is a major asset for any business.

Some of our customers do tend to shop around. Loyal, satisfied customers stay with us and transact again and again. Look at Amazon as a great example of a business that is growing successfully through a relentless focus on the customer and loyalty. That’s the business model we’re interested in.

We want to relentlessly improve the service our customers see and the back- end systems and processes that support that experience. We were an early adopter of Earthport’s innovations and hope to continue to see progress in service quality. Something we are discussing with Earthport is being able to get confirmation the bank deposit has been made back to the originator. The challenge is to remove any ambiguity so the sender knows with absolute certainty that the money has arrived in the beneficiary’s bank account.

What about future trends for remittance business?

I think that people will continue to send cash for a long time to come. However, as time progresses we will see more transition from cash to digital as bank deposits offer so much convenience and safety for customers. We expect customers will just become more sophisticated in their use of banks and we will see this progress to mobile payments.

Eighty per cent of payments to India from the US are now to bank accounts. This penetration of bank payments is staggering and has happened in the last ten to 12 years, which I think is indicative of the general trend towards international bank payments.

If we look at the Philippines, there is a big initiative going on to get broader, deeper penetration of bank accounts per household. This is being led by the top five banks. Banks are becoming a safer option for the community and banking the beneficiary is now seen as a profitable way for longer-term business, as well as supporting financial inclusion.