There are more than 2.8 billion unbanked people around the world, with over 50 million in the US alone. Many of these people are poor, not creditworthy and remotely located. Further, many are in communities not serviced by banks. Resultantly, their cash is constantly exposed to the risk of loss and/or theft. These people are deprived of the opportunity to grow with the world of eCommerce, and stand to be left behind in the 21st Century economy. This population could be a liability or an economic asset to their home country. We believe they are a huge untapped asset.
Banks require minimum deposits, balances, and loans, but these people cannot qualify – either being rejected outright for not being creditworthy, or because of an inability to gather the necessary resources. The banks’ internal onboarding costs are well over $100 per new account – making the process of banking this population a significant risk to the bank. AGL’s onboarding costs, by comparison, are under a dollar. Banks have high operational overhead requiring them to service large deposit holders to recover those costs and make profits. Branches tend to be where the money is: it is not profitable for banks to provide bank accounts to small deposit account holders; especially if they are in remote areas. This limits the overall service coverage that a bank can provide.
The AGL system does not burden a bank’s operational overhead. Instead, it operates as SaaS in a private data cloud. This eliminates the need for the bank to purchase expensive computer systems with complex applications and software. Additionally, there is no need to hire more staff to handle mobile banking systems, operations processing, compliance and call centers. AGL provides all of this. AGL’s cash card management system (“Mobile Cash Account”) issues and manages debit-based accounts. This opens up a huge market of potential customers because it is now cost effective to bank the unbanked.
The existing merchant processing organizations and their payment associations “pull” money from their customers’ bank accounts. The entire payment chain sees the customers’ card information. This process is fraught with burdensome consumer protection regulations, yet it is still the number one source of massive consumer information fraud. By contrast, a mobile phone in the hands of an AGL account holder can perform authentication, authorization and settlement within seconds at POS transactions without ever revealing the customer’s information. Payments through the AGL system emulate a cash transaction, wherein customers “push” their money to the merchant. We disintermediate the payment associations, making the transaction both safer for the customer and more cost-effective for the merchant.
AGL’s technology supports a fundamental change in the issuer business of customer acquisition. As the merchants join the issuer’s AGL network, they are linked directly to the customers. They make and save money when they convince their customers to join the AGL network, effectively becoming a new, motivated sales force for issuing banks. Other opportunities – such as social media and gaming companies – can be incorporated into our adaptable payment network, and offer secure payments and money transfers on a global scale.
The AGL system enables payments and money transfers (we treat them the same) to be made and settled instantly (a real-time system) with ‘good funds’ between any parties connected to our participating banks globally. In countries where there is a central interconnected ATM switch network between banks, money can be moved instantly across all account holders, even in banks not connected to the AGL system. The caveat to this is that all account holder participants must be registered as Mobile Cash Account (MCA) members in the AGL network. This ensures that our banks, merchants, and customers are in compliance with AMLA rules, and are protected under bank regulations.
Payment and remittance transactions between banks are run through our virtual mobile network. The customer uses their mobile phone to direct funds from their account to any other account, nationally or internationally. AGL’s technology uses mobile carriers as our merchant processors, and in-country ATM switches for money movement across in-country banks. AGL customers do not need an account in one of our member banks; they only need to be connected to our network.
The AGL system is designed to provide a virtual database with business rules for each bank licensed with us. The database is centrally located, secured and backed up in the US, and is provided to domestic and global banks in the form of Software as a Service (SaaS): nothing to buy, and no need for additional IT resources. Under AGL’s License and Service agreement with the banks, we operate the system for the banks, including all aspects of the issuance, payment processing and account management processes, including multi-lingual call centers. KYC processing is mandatory, and stays within each respective country. Each bank’s information resides within its own virtual database in our private cloud. These databases are like discs stacked on each other. A bank can see horizontally into the stack at their own disc, while the AGL system can see vertically through the entire stack. This enables us to do debits and credits instantly across all account holders in all banks globally, and with guaranteed ‘good funds’. AGL acts as merchant, merchant processor and proxy bank. We are the entire payment process!