Ikobo comes to Russia. Interview with Ikobo CEO

March 6, 2008. IKobo, Inc has announced the launch of the Russian version of its web site http://ru.ikobo.com/enru that will allow the company to considerably enhance its Russian customer support, to enlarge the customer base throughout world-wide spread Russian-speaking community. The Russian version of the web site has the same options as the existing English version. The clients will easy understand how to use the iKobo card, to find the locations to withdraw funds and to determine applicable fees and charges.

IKobo, Inc was founded in 2001 with headquarters based in Marietta, Georgia and at present time is named leader in online P2P money transfer services.

CEO of IKobo, Inc - Blake Patton has commented the launch of the Russian version of the company's web-site in the exclusive interview for Ecommerce Journal.

Mr. Patton - how did you come up with the idea to establish IKobo company?

As it is a well-known fact IKobo company was founded by two immigrants who had realized the necessity of the convenient, easy and secure way to transfer the money to our closest ones. In difference to the giants such as Western Union and Money Gram, the founders decided to use the prepaid card that would facilitate the P2P money transfers. It provides the cardholder with the convenience of the access to a large network with over 1.2 ATM machines; the prepaid card can be used for the payment of the purchases in retail stores and online; it also provides the cardholder with all benefits applicable to the prepaid cards. At the same time, it guarantees the security and cost-efficiency of the financial transactions.

I-Kard carries Visa brand. What factors had determined the Visa preferences as a partner of IKobo?

IKobo is very careful in choosing the partners for its business. We have advanced standards as to security matters; we look to the history of company and its success of development within specific market, that's why any company we would consider as potential partner shall correspond to our high standards. We have chosen Visa due to its high level of security, to large network, to world-recognition of this particular brand, and to the high store value of its products.

Why did IKobo decided to use a prepaid card?

Our average customer transfers money twice a month, usually to the same receiver and to the same location. We have decided to use prepaid cards to facilitate and to secure processed P2P transactions that allow us to eliminate the card fraud and provide our customers with a secure, easy and convenient way to transfer the money. Visa Electron had perfectly fit into our requirements. IKobo Visa Electron is issued by MetaBank basing on the US license issued by Visa U.S.A., Inc.

Talking about the fraudulent transactions - how do you eliminate the risks?

First of all, during the registration the client receives the unique name, password that will be further used during the login process and account number that will be associated with this particular client in the system. Secondly, all our cards are PIN-based with embossed name of the client, so in order to receive the access to the funds stored in the card - the person has to have all mentioned above personal information. Thirdly, all transactions are monitored by our Risk-management engine. The system filters all processed transactions by matching them to 280 rules. Once the account demonstrates any suspicious or unusual activity, the accountholder would be immediately contacted by our Risk-management department. It is also applicable in case of the change of the sensitive information as to the accountholder name, password and etc. Provided the suspicious activity determined, the funds will be returned to the account of sender with immediate notification of the client.

Why did IKobo choose Russian market for its strategic development?

First of all, we are aware of the big capacity of the Russian market as it comes to the money transfers' segment. Secondly, we decided to develop the markets non-covered by our competitors that would allow our company to focus on the enlargement of the network, building the offering rather than focusing on marketing. In order to provide our customers with convenience and easy access - we have taken a strategic decision to translate our English version of the web-site into Russian and Spanish. We have an advanced technical infrastructure that allows us to track all changes in all three versions of the web and to ensure the absolute correspondence of the information on them.

How IKobo would provide Russian customers with the technical support?

We have two different departments that support card senders and card receivers - it allows us to split the flow of customer's contacts into two and to provide a better customer support related to the particular issues- sending or receiving the money. Secondly, we have the toll free numbers so the client may reach the customer support department at his convenience. Meantime, the statistics shows that over 60% of all contacts of our customers are held via e-mail, therefore, we are able to forward any client's request to a specific department basing on the posted questions to ensure the proper answer. We also accumulated the FAQ questions and posted the answers on our web site.

Do you have Russian toll free numbers and Russian-speaking representatives to assist your Russian clients?

Unfortunately, at present time we have only American toll free numbers that are available for the certain areas overseas; however, with the development of the network we consider it as a potential strategic step. As to your second part of the question, we have 2 employees who speak Russian, however, they are not settled on the clock- base. With the increase of the Russian customers we will certainly increase the number of the Russian-speaking representatives.

On the web site it was mentioned that the receiver located overseas will have a temporally issued g-Card. When do you expect the exchange of g-Kard into IKobo card?

We plan to terminate the exchange the g-Kard into IKobo card by April 8, 2008 offering our clients a free delivery of the IKobo card. The other thing is that the receiver located overseas who receives the funds from a US sender and non-US sender will have two I-Kards. This inconvenience is explained by the American regulations of banking industry prohibiting the US banks to issue cards outside of the USA.

IKobo is famous by its low fees for P2P money transfers. How did you achieve it?

First of all, IKobo doesn't have any agencies or branches, all the transactions are processed online that allowed us to cut the operational expenses and, as a result, to keep the fees low. Secondly, we have decided to focus on the building the offering rather than receive fast but one-time profit charging enormously high fees. Therefore, we have decided to offer our clients $5 fee per every $1000 transferred from the bank account and $5 + 3% for the transfers from debit/credit cards. The limit of money transfer is $3000 per 30 day rolling period. In case the client plans to send the amounts over $3000 than he has to file the request to Risk-Management Department. This strict requirement is explained by the prevention of mis-use of our products, including money-laundry.

All your transactions are processed in US dollars. Do you plan to develop other currencies for the funding?

We have chosen US dollar as globally accepted type of currency. The integration of other currencies will immediately bring the exchange fees, sometimes not very favorable for our clients. In addition, the value of the stored funds in currencies other than US dollar may be changed due to the change of the currency rate. In other words, it will bring instability and insecurity of our customers that we would like to avoid.

A lot of companies providing their clients with money transfer services offer the clients to fund the accounts in digital currency or e-gold bullions. Do you plan the integration of such typical for the online companies funding means?

As it was mentioned prior, our first concern is the security, that's why rather than integrating of insecure digital currency or e-gold not backed up with any existing in the real world official currency we have decided to use the existing banking system and a world-recognized currency - US dollar. In addition, due to the fact of the use of the prepaid cards we have no virtual account model funding.

Can IKobo accountholder fund the prepaid card by other ways than through IKobo system?

No. IKobo card can be funded only through direct money transfer from the bank account or credit/debit card to the prepaid IKobo card.

Do you plan to implement reward programs to show the appreciation to your clients?

It might be considered as an idea, however, we do not intend to implement it in the nearest future.

What other markets do you target?

We plan to develop the network in such markets as Philippines, Brazil, China, Thailand, and Romaine, Ukraine.

What problems does IKobo face while expanding its network?

The major problem is that it is not that easy to acknowledge the potential customers with the product. It is especially crucial as the best advertisement is considered to be mouth by mouth. Secondly, the fact that the clients are located overseas brings additional frustration and concerns to the security of transactions as some countries, especially merging markets, have lower standards of the security than those of the USA. Thirdly, in some countries the ATM network doesn't support chip and PIN - based cards.

Do you plan to cooperate with Russian card issuers?

We do plan it as a prospective step of our strategic development, however, due to the differences of regulations and levels of security we might postponed this action. Meantime, we plan to develop the private labeling of IKobo cards with the logo of the companies- partners, acting as the card processor for them. It might be considered as the first successful step of cooperation with the companies located overseas.

What are your strategic goals for 2008?

First of all, we are very focused on the increase of the number of active accounts on, at least 15%, basing on the present numbers. Secondly, we plan to promote our services in local communities through 5-6 corridors. In future, we plan to offer our clients mobile P2P money transfers.