Virtual money chain: company changes the rules of wire transfers through the Internet.

A faltering global economy is fueling the success of one technology firm. Atlanta-based iKobo Inc. recognized early on that when times are hard, foreigners travel to the U.S. to find work, often leaving family members behind. These immigrant workers often wire money back to their relatives. Specializing in electronic money transfer services and merchant payments via the Internet, iKobo is somewhat of a virtual Western Union. The company, which was launched in 2001, targets foreign workers and small- to medium-size businesses.

The lure of iKobo's money transfer services is convenience, says Marvin Johnson, who was named the company's CEO in January 2002 after iKobo acquired Cipher-Link, the security software company Johnson founded in 1999. CipherLink remains a wholly owned subsidiary of iKobo.

"In the United States, most people have their currency in an electronic value in a bank account, or you have access to some credit facility or credit card," says Johnson, 34. "In the traditional money transfer services, you have to take that electronic value and convert it into cash, go down to a physical location, and fill out a form to transmit the funds to someone else. The person receiving the funds has to go to an agent location and adhere to the operating hours of the agent location in order to get the funds."

Users of iKobo's system simply go to www.ikobo.com and enter credit or debit card information, along with the amount to be sent. Recipients get a reloadable stored-value card in the mail, called an i-Kard, that can be used at ATM and point-of-sale terminals in 170 countries. Additional funds can be uploaded and accessed via the same card, making it highly convenient for people who send money frequently. "We're building our company on repeat business," Johnson says.

Emeka Ohuche, a former management consultant with Deloitte Consulting Group, co-founded iKobo. He now serves as iKobo's president and CFO and has been instrumental in raising capital to fund the company's growth.

Key to the company's business model is cost. "If you look at a traditional money transfer scenario, you have the actual money transfer company in the middle, the sending agent, and the receiving agent," all of whom must be paid, says Johnson. With iKobo, "We're the only middleman in the process." Customers reap the benefits of the savings. Rather than charging a fixed minimum fee, iKobo charges 4% of the money transferred for domestic transactions and 5% of the money transferred for international transactions.

About 60% of the company's money transfers are international, with india, the Philippines, Ghana, and South Africa among the top destination markets for U.S.-based money transfers.

Revenues for 2002 reached $400,000 and the 30-employee company is on track to make between $3 million and $5 million in 2003, largely, says Johnson, because the company is "growing anywhere from 30% to 60% month over month."

The company recently signed two new bank partners in the Caribbean: Global Bank of Commerce Ltd., based in Antigua and Barbuda, and Intercommercial Bank Ltd. of Trinidad and Tobago. The local banks will market and support distribution of iKobo's i-Kard for domestic and international money transfers marking the first-time senders and recipients in these countries will be able to choose a single service that uses either local or U.S. currency for both domestic and international money transfer transactions.