Non-banks: mobile money innovations

Necessity is the mother of invention – and it’s no different when your country lacks the infrastructure that many of us take for granted.

Billions of people in the world can’t get access to a bank.  While westerners might joke about how attractive this might be, it’s a serious issue in developing nations.  

Being able to make a living out of what you can produce yourself is often seriously restricted by the physical distance between your home and any potential market.  You’re confined to whatever market, if any, you can find within walking distance – a place where you can personally exchange your goods for cash in hand.

If you had access to a bank, you could have an agent (say a friend or relative) in a far-away market conduct the transaction for you and put the money in your account, where you could access it at home.  Without a bank, you have fewer choices and greater poverty.

 Of the 2.5 billion people who don’t have access to a bank, 1 billion do have a basic mobile phone that can send texts.   And this is where it gets inventive.

Without banks, text messaging on mobile phones is now being used to transfer cash and pay bills.  Systems like Zap and M-Pesa in Kenya have led the way.  Thousands of local agents such as shopkeepers will top up your mobile money account in exchange for cash – and you can then transfer the money to someone else using a system based on SMS text messaging.  Even if you don’t have a mobile money account, you can still receive payments via a special text code which the local agent will honour for cash. 

This opens up a raft of new possibilities for millions of people, especially those living in rural areas.  They can send their goods away to different markets and still access the revenue at home through their mobile money account.  They can pay for education and bills, and easily send money to family members who rely on them. 

This is why Nii Quaynor, a computer scientist and entrepreneur from Ghana, says that the internet is as important to Africa’s future as food and water. 

Beyond mobile money accounts, internet access through mobile phones will be the next stage – giving millions far greater access to public services, education, knowledge, and social media that connects them to the rest of the world.  

[With thanks to New Scientist magazine]

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2 Responses to Non-banks: mobile money innovations

  1. eivai says:

    Good to see that some people really write good content nowadays. Offtopic: I don’t know why but i’m having javascript errors viewing your website on Internet Explorer.. can you check it please? Best Regards

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