iSend: Rethinking Remittance
“One of the biggest barriers for people in pulling the trigger to chase their dreams is fear of the unknown,” says Steve LaBella. “They think they need to have every question answered before they start—and usually that means they never [begin]. You’ll never have all the answers, so collect enough answers to get comfortable, then just do it and keep asking questions as you go. That’s how I’ve lived my professional life.”
For decades, immigrants leaving their homelands to seek a better life on foreign shores have sought to send financial help to the family and friends they left behind. Typically, they relied on money-transfer companies—the best-known being Western Union and Moneygram—and paid dearly for the privilege, often as much as 15 percent of the funds transferred. What’s more, those sending money they intended for utilities or phone service had no control over how it was spent.
Enter iSend. The brainchild of Steve LaBella, who founded the successful bill payment company QuickPay, iSend gives immigrants the ability to pay bills for goods and services—typically phone, electric, gas and household goods—directly to service providers and companies in their home countries. For its customer base, the advantage is trifold, explains LaBella. “You have a control advantage, a convenience advantage and a pricing advantage,” he says. “There’s less time and less risk involved versus recipients’ picking up money and then standing in line to pay bills. Straight off the top, you also cut out the fee charged by the payout location on the receiving end, which is a third of the cost.”
While the advantages for its target customers were clear, iSend needed to line up distribution partners—companies that would accept payments—before taking its service to the market. “Initially we focused on Mexico, Central America and certain Caribbean countries,” recounts LaBella, who notes that the annual market for U.S. to Latin America money transfers alone is more than $60 billion. “Our first hurdle was building relationships with mobile operators and other billers in different countries. In the beginning, you’re selling a dream and a concept and trying to convince companies it makes sense.”
Large mobile operators, however, soon saw the advantage of a partnership that would help ensure reliable payments. Those early relationships, in turn, provided a launch pad for signing on more companies. “Once we had a good base to show what we could do, the conversation changed,” says LaBella. “Not that it is a slam dunk, but it’s certainly a lot easier.”
In fact, over time, iSend has been able to pass some of the transfer costs—the portion of the transaction it collects for its services—onto the companies receiving payments, making the transaction free or nearly free for its customers. Not surprisingly, the immigrant community has enthusiastically embraced the concept, enabling the company to expand by enabling its customers to transfer funds to more than 100 countries.
Competitors looking to grab a piece of the market LaBella created have sprung up along the way, but iSend remains the dominant player. “Other [startups] have been significantly less successful and there’s no question that that is due to the team we have in place,” says LaBella, who handpicked former colleagues to form his startup team. “Our sales and business-development people have to fight all the time to keep our customers and to develop new partnerships. And our technology people are similarly tasked because we have to be up all the time to process more than million transactions each month in real time.”
LaBella, who sold his first startup after four years, does not protest a similar endgame for iSend, but he is in no rush. “”It’s been a wild ride—we’ve been profitable for three years and exceeded our best projections,” he says, adding that the company’s current focus is on expanding its distribution network in Africa and the Middle East. “It’s a big world and we’re looking at expanding in all the corridors across the globe where these services apply.”