Whilst the idea of keeping your money in a bank account seems commonplace to most in the developed world, for large parts of the developing world it is either a novelty or a pipe dream.
There are many advantages to having a bank account, such as keeping your money safe, earning interest and also having access to credit and other financial services. However, much of the developing world is unable to enjoy these benefits due to the lack of a physical banking infrastructure and affordable services.
This is where the mobile phone comes in. Thanks to improvements in mobile infrastructure across the globe, mobile phones are bringing banking to areas that physical bank branches would never have been able to reach. Mobiles and a new wave of services are allowing users to set up bank accounts, make payments to one another, use their mobile as a point-of-sale device and even receive their salary on their phone using a stored value account. In emerging markets, those services only require basic phones and well known field proven technology such as SMS & USSD
One country which has truly embraced mobile payments is Mexico. There Gemalto has worked with network operator Telcel and banks Banamex and Banco Inbursa to create Transfer, a mobile payment platform designed to reach the country’s millions of unbanked citizens, which account for more than half of the country’s population. Since its launch in 2012, Transfer has opened up secure and convenient banking for anyone with even a basic mobile phone. The service works by associating a simplified bank account with the user’s unique mobile phone number, whereby money can be loaded securely through direct cash deposits or money transfers.
With simple mobile phones, users can exchange money to each other, make payments and buy airtime. This service enables small businesses to accept mobile payments in exchange for goods and services, for example street vendors and food trucks.
Others in the industry are also innovating to move mobile payments forward. Venmo, a P2P mobile payments app developed by PayPal, reported earlier this year that it saw transaction volumes of $300 million in the first quarter of 2014 in the US. Back in 2007 a Kenyan operator named Safaricom pioneered a service named M-Pesa which has been a key factor in the widespread adoption of P2P mobile payments in that country.
The majority of that expansion comes from the emerging countries, where P2P mobile phone payments has a very positive impact on the social life of the unbanked. The idea of simply carrying a mobile phone instead of cash or cards will no doubt be commonplace, and it is emerging nations who are at the forefront of this revolution.