Financial firm makes online push

Xendpay targets share of growing worldwide industry

Jake Holloway says Xendpay is banking on demand for renminbi remittance services. Provided to China Daily

Financial institutions old and new are scrambling for a piece of China's fast-growing 43-billion-euro remittance industry. With money transfers easier than ever, Chinese overseas communities are sending record amounts back home, and are beginning to turn toward more convenient online payment methods to do so.

"Our role is to help the Chinese diaspora who have left the country but still want to help their family back home," says Jake Holloway, who is in charge of the online money transfer system at Xendpay.

The company hopes to accelerate the move toward online money transfers. As much as 60 percent of the current worldwide remittance market still operates on a "cash-to-cash" basis, with customers paying and then collecting money from agents. But with online banking gradually becoming the norm worldwide, international money transfers are beginning to follow suit.

The benefits are clear. By cutting the overheads that come as a consequence of running numerous physical locations, Xendpay hopes the smaller commissions of its online model will encourage customers to send money more regularly. But, of course, access to money is still paramount.

"It's still a big requirement when sending money to China that people are able to collect cash from somewhere local," says Holloway. "It is pretty much the same everywhere in the world. People will always want to pick up cash."

To solve the problem, Xendpay has entered into various local agreements with Chinese banks to offer customers local collection points. While the agreements are convenient for customers, they can leave the company jumping through regulatory hoops.

"China is possibly one of the most difficult places to send money for personal customers, Business, it is easier. We send a lot of money to companies in China but it is usually in US dollars to US dollar bank accounts.

"In terms of sending money to China the restrictions are complicated, and in the past we've been very wary of sending renminbi to China. The whole process has so many restrictions and regulations that can change quite often. It's not something you want to make a mistake on and get someone in hot water, so we are very careful."

By dealing with the red tape for its customers, not to mention saving them a trip to the bank, online payment systems like Xendpay are likely to become increasingly popular in the coming years.

"I like the idea of doing my money transfer completely online," says Shuo L., a Chinese graduate living and working in the UK. Shuo has recently started paying off a loan her parents took out for her in China to fund her studies abroad. By using an online payment system, she has saved herself 145 euros in the last three months.

"It is easy to use, and saves me money, as it would cost me about five times as much if I had chosen to send the money through my bank."

Since Xendpay launched its Chinese language websites last December, registrations from the country have increased by some 70 percent a month. The push in China is part of a wider worldwide strategy to gain footholds in key markets.

The largest inflow remittance markets tend to be developing countries with large emigrant populations. The total amount sent to developing countries in 2011 was 267 billion euros, according to the World Bank. China was the second largest receiver, just a fraction behind India but well ahead of Mexico, the Philippines and Pakistan.

Competition to secure a slice of the market is intense. More established financial services companies such as Western Union have been targeting growth in China for several years. The company has over 25,000 locations across China and over 437,000 locations worldwide.

Like Xendpay, Western Union has also pursued deals with regional banks. Back in 2010 it announced links with banks in Harbin, Jilin, Fujian and Zhejiang, with then chief operating officer Hikmet Ersek pledging that the deals would, "provide the impetus for Western Union's regional city presence strategy in China and reinforce our commitment of being where our consumers want us to be".

While overseas Chinese remittances back to the mainland have risen in recent years, some analysts have pointed to the debt crisis in Europe and high unemployment in the US as factors slowing growth.

The challenge for companies like Xendpay is to raise awareness of their brand not just among the emigrant communities sending money back, but also those who will be receiving it back home. This often means localizing marketing campaigns.

"Baidu is very important to us," says Holloway. "It is the biggest search engine in China so it is important we have a presence. Our policy for our customer marketing is not to translate what's we've done in English into different languages, but to create websites that are specific to that country.

"We make sure they are written by native speakers and the articles are chosen for relevance to that particular audience. For example our traditional Chinese website is really aimed at the first wave of the Chinese diaspora, so we find that is much more popular in places like the UK and France as well as Hong Kong and Taiwan, whereas the simplified one predominantly gets its hits from the mainland."

The company has turned toward the gold-standard of international marketing - sponsoring an English football team. Xendpay's logo appears on Birmingham City's shirts.

"We wanted to get our name out there. Even though we're handling around a billion dollars of payments a year now, we thought we needed a little more publicity and recognition. The sponsorship deal allows customers to check us out in a very simple public way. No one wants to take a risk with a business they don't know, especially when transferring money," says Holloway.

"Birmingham City has Hong Kong owners so there is a connection there already. We've actually put some Chinese advertising in the ground that generates extra traffic from China. It can be quite comforting for people to see the name on a big club's football shirt."

Holloway hopes that this modern approach to both money transfer and marketing will allow his company to more efficiently service a demand that dates back long before the emergence of e-commerce.

"Ultimately where we fit in is with trying to help China's strong family culture and the desire to assist your relatives, even if you are working half way around the world. We want to be known as the cheapest way of sending your money home."

For China Daily