Entrepreneurs have tried to disintermediate the $300 billion-or so that immigrants send back home every year for quite some time.  Western Union and MoneyGram dominate the business and charge a lot.  Should be easy to cut out the middleman, right?  Wrong, although some new models are making a dent.

Card to card solutions don’t work at volume.  Mobile solutions don’t work at volume. The internet works in some channels, like US to India or US to Philippines, but not in the biggest corridor, US to Latin America.  I think the problem is two-fold: business model and behavior change, but that’s for another day.

Instead, I’m excited about an announcement today by IDT and Regalo Card (it’s so new, I can’t even find a link of the wire on the net, yet), “IDT To Distribute RegaloCard’s Mobile Money Transfer Service To Over 150,000 Retailers Nationwide.”  Basically, how this works is that you can buy a gift card in the US for a Peruvian grocery store where your family shops.  The card costs nothing and the funds are instantly available.  If you’re sending money home, this is a way to do so for FREE and to ensure that your hard-earned dollars are being put to the uses you intended: the new fridge, the groceries, the shoes, whatever.  Not uncle Harry’s bad habits.

iSend is another company that leverages existing behavior, paying your bills, into a remittance: by paying mom’s bills in Brazil.