Getting more about famous Ikobo...

In October 16, 2006 some online editions have posted the press release of the officials of iKobo, Inc., proudly declaring that "it completed a $4 million Series C financing round". It was announced that "a global leader in person-to-person online money transfer" funding round was led by Greenhill SAVP (a leading independent investment bank) with additional financing support from existing investors, including Total Technology Ventures, LLC and Council Ventures. The taken steps, hopefully, would be used to rapidly increase the number of active accounts and to ensure the potential sales growth. As to one of the milestones of the new strategy it could be considered the opening of additional office in New York that would be focused on business channel development activities in the largest and most concentrated remittance market in the world. The ambitions declarations, however, are hiding the reasons of the heartbreaking drop of the number of accounts and percentage of the disappointed customers in 2004-2005.

IKobo, Inc. was founded in 2001 with headquarters based in Marietta, Georgia as a one of the 3rd party processor company (as PayPal, 2checkout, CCBill, iBill, StormPay) and offering the send/receive money, pay for online purchases and opening of the merchant accounts. The concept of iKobo services appeared to be very similar to that of PayPal with the major difference that the receiver gets an i-Kard (prepaid Visa electron card). The receiver of funds would be able to withdraw money from any ATM machines accepting VISA. The funds could be than redirected to other iKobo user and to be used for paying the online purchases. The fees of iKobo services were comparative to PayPal's - 4% ($2.00 minimum) of amount transferred which was deducted for each person-to-person transaction and 2.9% + 0.29/transaction charged to merchants, with no mention about the sliding scale based on the volume of transactions via merchant accounts. Unlike PayPal, iKobo user, in addition, was obliged to pay $0.99 as monthly maintenance card fee, $1.50 for each ATM withdrawal. Let's not forget about FedEx charges for i-Kard delivery (as of $9.95 for FedEx express for US or Canada based residents). All occurred expenses made iKobo services higher than those of PayPal.

More than that iKobo claimed to work with both Visa and MasterCard credit cards, and bank accounts. However, the simple comparison of the speed and effectiveness of registration and transaction fulfillment process via MasterCard and Visa, revealed that in most of the cases customers experienced difficulties or even defaults while using MasterCard. From the technical point of view the application for the new user registration included an option to opt out of any future solicitation from iKobo and other third parties; however, this option was only accessible via a JavaScript pop-up window resulting from the clicking of a hyperlink that was significantly smaller than the rest of the text on the site. There were also a lot of complaints about bad customer service and delay in e-mail request responds. What was the most sensible and irritating for the US customers that many of the online live -support managers were barely speaking English and, therefore, unable to solve occurred problem: moreover, the web itself contained a lot of technical and grammatical mistakes.

The other interesting thing was that iKobo offered free of charge i-Kard delivery for a great number of European, CIS and third-world countries imposing $9.95 fee for US and Canada residents. There could be two explanations - either the company was targeting to get the considerable niche of other than USA and Canada consumers so it wouldn't need to spend huge marketing budgets on promoting company at local market and competing with such strong and powerful company as PayPal. Or, supposedly, the company wasn't actually located as stated; this opinion is supported by the refuse of company's officials to reveal information about the partners, PowerSellers using the company services and the volume of processed transactions combines with poor customer support and etc as described above.

The last, but not the least, is that in order to increase the initial cap for sending money ($200/month) the user shall submit the appropriate request and provide the Verification Department not only with ID, but, in some cases, with household, utility bills or even a bank statement indicating good standing. Several users had shared that they received the cap increase without submitting any additional proving papers that can be considered as the direct breach of own policy. We have also found out that, in reverse, some users were obliged to shut down their bank accounts as iKobo asked them to provide it with the copy of both sides of credit card including Security code. And, one more example of abnormality: in 2004 upon the information taken from customers' forum the company was claiming to work in 240 countries. But once the attentive and noisy users started to mock over the non-existence of 240 world-wide countries, the number of countries was considerably decreased to 170. The simple discrepancy in the number of countries was explained by the fact that certain countries are able only to receive or only to send funds and the cited number also included dependencies and territories. As the result, number of discordances, valuable holdbacks for chargebacks, general complaints and higher rates caused the outflow and disappointment of the customers, their switch to other available online 3rd party processors.

In the letter addressed to merchant accounts' holders iKobo notified about an immediate closure of their accounts, advising to remove iKobo as a payment provider from their web sites due to its obligation to comply with direct request of VISA International under their processing regulations. Merchants were confused and frustrated by such unexpected and unpredicted action from their payment processor, a great number of them lost considerable sales volume suffered from followed withholding of revenues locked at iKobo accounts.

From 2005 iKobo, has taken a strategic decision to focus on online money transfer targeting the countries non-covered by other companies with the similar package of services. At present time in accordance to official statistics, company is dealing with 145 countries world-wide (which is 8 times more than available by MoneyGram and 3 times more than WesternUnion), providing convenient and cost efficient way to transfer money. It uses an open network of Visa merchants and ATMs numbering more than 25 million. IKobo allows to use credit and debit cards, bank accounts or Moneta@online to send a re-loadable VISA Prepaid to recipient. The card is accepted wherever VISA is accepted and might be use for money receiving/sending, transferring between iKobo accounts.

While log in to iKobo web site you would find out the pleasant promotional rates for money sending that would allow the user to send the money world-wide for only $5.00 with disregards to the amount sent. However, once you get more attentive, you would find that to send money using your credit card would cost you $5 + 3% (with additional fees and some restriction in the areas that might apply). It offers 2 options to deliver your re-loadable VISA: by the regular mail (applicable only for US &Canada residents) for $1.99; or FedEx. Note, that for local US and Canadian consumers the delivery by FedEx is offered only as FedEx express rate at $11.95 USD, for other countries - FedEx express (3-7 days, in practice up to 10 days) at $24.95 or FedEx Economy (14 days or less, in practice up to a month, depending on receiver's location) at $ 11.95. IKobo conserved the monthly maintenance fee equal to $0.99, ATM withdrawal fee $1.99 and added the declined ATM withdrawal fee $0.99. Imagine that there is no explanation what to do and what are the terms and conditions of obtaining the new card once it got stolen or lost card. Assuming that the receiver would be charged with at least FedEx rate again to receive a new card and unable within this period to withdraw money by any other mean.

This year, starting from June 11, 2007 iKobo notified US based senders about some implemented innovations that, to our mind, have caused nothing else but confusion and disturbance, instability and inadequate reaction of account holders. In its press-release (we are not sure how many users are reading any press releases posted by their service companies) iKobo acknowledged its US senders with the fact that beginning on June 11, 2007 their recipients would receive a new iKobo VISA Prepaid Card with their name embossed on it. In other words, the card that is currently in the possession of the recipient would be active until the money on it is withdrawn. In case, the recipient would discard his current card, the money would be lost. What any of us would do once you receive a new card? Definitely, the first move - to shred the old one, so followed by that natural move there is a big percentage of receivers that would lose their money.

The other thing is that if the recipient receives funds from a US sender and non-US sender he should keep both cards. It means that said receiver would have to pay double maintenance fees, double ATM withdrawal fee and double declined ATM withdrawal fee, if applied. Only with this card (means sent by US sender) the recipient can pay for the online purchases. The new card would provide the recipient with 24-hour automate phone access to PIN set up and ability to check last 5 transactions, report lost/stolen card and to be transferred to live agent. The card might be activated by phone or online via web site. Sounds like offering the privileges to recipients receiving funds from the US-senders. It seems that the company intends to increase the cash outflow from US to other parts of the world, some sort of dollar export loosing its value on currency markets or, in reverse, can be taken as the respond to the increased volume of money transfers from US-based emigrants to their families world-wide.

After June 10, based on US Federal Laws, a US-sender shall provide the money transfer company with full social security number (if any of you would imagine the number of illegal immigrants working on the territory of the USA and sending money back home to their families, you would understand that the company by insisting on such restrictions cuts the number of their potential customers). There might be two main reasons - the increased money-laundering and fraud cashing transactions processed via online banks and money transfer companies and the tentative of US senders to evade questions of IRS and other authorized bodies controlling the online money transfers. In addition to said above such US senders would be limited by 2 recipients per 30-day rolling period (if you intend to send money to a larger number of receivers you, as a US based sender, shall contact Roger Glenn via e-mail sales@ikobo.com or phone 678.213.1269). The receivers can receive the money from up 2 receivers per 30 day period. Provided the expiration of 30 days period sender may create the profiles for 2 new recipients (not complicated process but still takes time). Qualified senders may send up to $3000 USD per 30 day rolling period the criteria of being named a qualified sender aren't disclosed).

And the last abnormality remarked the delivery of new card to US based receivers by a FedEx express promotional rate $9.95 was valid from June 11 to July 31st, 2007 only, after July 31 - the regular rate of $11.95 was be charged. One more factor bringing the chaos among iKobo users.

In conclusion, we would state that to our mind iKobo could be considered a good solution for the users frequently sending small amounts of money to the same recipients located in the countries non-covered by other money transfer companies. The iKobo user, however, shall be aware about potential changes in VISA policies that might cause the changes in policy of iKobo, tightly chained to it. And no one can predict if in the future it wouldn't cause again the closure of accounts.

Natalia, reporter of Ecommerce Journal