You'd think something as universal as money would be hassle-free to use. But with banks and card networks acting as invisible middlemen and imposing sizable exchange fees, some companies are creating radical new approaches to move cash from one place to another.
By Fast Company Staff
1. Nice Systems
For connecting banks and other clients to frazzled end users when problems arise. Big brother is on your cell phone—and you just might say, “Thank goodness.” In 2012, Israel-based Nice Systems rolled out Mobile Reach, which seeks to revolutionize customer service for mobile users. Mobile Reach sees knowswhen you’re in trouble before you even have a chance to look for the FAQ. Not sure if you have enough money to pay your rent? Trouble with your phone payments? Mobile Reach, which is used by 25,000 companies—including telecom giant Telefónica—feels your pain and takes you directly to a representative who can help. Empathy goes a long way: Nice cracked $1 billion in sales at the end of 2013. Read more >>
For creating an email-based payment system that is perhaps the simplest way to transfer money ever. Square shook up the world of payments (again) with Cash, a mobile app that enables users to send and receive money for free via email. Senders link their debit cards, and recipients can deposit the money directly into their bank accounts. (Transactions clear in one to two days.) “We know everybody has email, so we know everybody’s able to receive money,” says Brian Grassadonia, head of Square’s Cash team. Just a couple of years ago, Square probably said the same thing about smartphones. Read more >>
For emerging from the shadowy corners of the web into merchants’ cash registers. Bitcoin—sometimes known as cryptocurrency, virtual currency, or fool’s gold—has turned our notion of money upside down. Created by computers and exchanged from person to person (no middleman, no banks, no Federal Reserve), Bitcoin has regulators worried that the untraceable transactions are perfect havens for terrorists and drug dealers. Be that as it may, you can now use Bitcoin to buy Tesla luxury electric cars, schmattes at Overstock.com, basketball tickets in Sacramento, or a cup of coffee. Its value hit a high of $1,242 in 2013, up from $13.50 at the start of the year, and Bitcoin ATMs are popping up in Vancouver, New York City, and areas of Brazil.
For funneling charitable donations to developing countries via smartphone, boosting livestock holdings and income rates. GiveDirectly grants no-strings-attached cash to impoverished families living in Kenya and Uganda, bumping up against the belief that the poor need guidance when spending money. Early data suggest the conventional wisdom is wrong: Kids are less likely to go hungry, and financial investments nearly doubled among GiveDirectly recipients. The brainchild of grad students at Harvard and MIT, the nonprofit has committed and distributed more than $6 million in the past fiscal year, reaching about 30,000 people. The screening process is simple, targeting families with thatched roofs (typically the neediest). Grants average $1,000 each over a nine-month period and are sent directly via SMS—which means no greedy middlemen and they can’t be stolen.
For daring to take on the fee-laden credit card establishment. While other digital-payment startups are built atop a convoluted infrastructure mired in fees and exchanges, Dwolla is building the world a better network. Not satisfied with processing $3 million a day in transactions, it rattled the cages of card companies (and PayPal) when it launched Dwolla Credit, a virtual charge card that costs merchants just 25 cents per transaction, well below the standard 2% to 3% fees most credit card companies charge. Dwolla achieves this by transferring money directly between parties’ banks, which also means merchants receive funds immediately, rather than having to wait three to five business days.
For slashing pesky foreign-exchange costs by creating a transparent peer-to-peer network. TransferWise drives competitors wild with the foreign-exchange rates it delivers: about 0.5% of the transaction (versus the typical 4.5%) to send someone money internationally. The company was launched in 2011 by Taavet Hinrikus—Skype’s first employee—and Kristo Käärmann, Estonians who were working abroad and racking up big exchange bills. TransferWise, which is backed by PayPal cofounder Peter Thiel, has processed more than $400 million in transactions, and services more than 20 currencies, including the U.S. dollar, the euro, and the British pound
For establishing a single login for web users and taking a giant leap toward eradicating the scourge of the Internet: passwords. Simply put, OneID envisions a password-free Internet. Before browsing, users register their personal and financial information just once, and their data is encrypted and stored in the cloud—but no one can unlock the info unless he is on an authorized device. (Think of OneID as a virtual safety deposit box in which users need two keys turned at the exact same time.) Worried about the kids buying stuff on your desktop while you toil away at the office? Just set up OneID to send alerts to your phone for permission. On vacation? You can shut down OneID remotely.
For luring international customers with a mobile-payment network that lets them purchase with a simple click. MasterCard throws down the gauntlet on payments with MasterPass, an international platform that doesn’t care where or how you are shopping. At the mall, MasterPass will soon let you tap your devices at a cash register or scan a digital barcode. When online, load any credit card you want into the digital wallet—even if it’s not a MasterCard. The system will help users track balances, find bargains, and offer real-time alerts while also providing data to merchants on consumer behavior. Coming soon: the ability to pay for your items while you wait in line or browse in stores.
For building a crowdsourced platform for analysts that throws a wrench in the Wall Street monopoly on quarterly-earnings forecasting. Estimize lets anyone—okay, anyone with a taste for spreadsheets and ratios—post his best guesstimates on how much the likes of LinkedIn or Facebook have earned. On Estimize, 3,700 professional (hedge fund managers, asset managers, independents) and amateur users show their chops, besting the pros on Wall Street 70% of the time, says founder Leigh Drogen. (Estimize is reportedly 14% more accurate on average.) Gnip, the social big-data company, is now selling the company’s info to investors, and Bloomberg terminals feature its guesstimates side-by-side with those of traditional financial firms.
For creating a social network that lets traders emulate those with skin in the game. Invest like a guru with eToro, which enables the little guy to follow and copy the market moves of top traders. As it turns out, copying is a shrewd strategy: According to one academic study, returns improve by 10%. It also works out well for the traders, who get $10/month per eToro follower. The system boasts 3 million accounts in 200 countries. eToro, which began as a foreign exchange trading platform, also offers commodities and a handful of stocks in the United States, and will soon debut European equities. Bitcoin was recently added to the menu (of course).
[Illustration by Chris Philpot]Back to all News