August 28, 2005

Africa's cellphone boom creates a base for low-cost banking

p7b.jpg The second article in a week on low cost (mobile) banking in Africa, this time by the thoughtful and well written Christian Science Monitor.

"Cellphones are already used for music downloads, text messaging, and video games. But here in South Africa, they are beginning to perform another function: personal piggy bank.

It's a high-tech solution designed to help poor people here who never have had access to banks, cash machines, or credit cards. And it's another example of using digital technology to fast forward development in remote areas.

Earlier this month, one of South Africa's main cellphone networks and one if its largest banks launched a new cellphone banking system that they hope will bring millions of poor South Africans into the official economy for the first time.

The venture hopes to build on the rapid spread of pre-paid cellphones to create a whole new banking system, one designed for low-income users that have long been under-served or ignored by traditional banks.

MTN Banking replaces a physical bank with a system that uses a patented security mechanism, and requires only a phone call and a government-issued identity number to subscribe. There are no monthly charges, only fees for each transaction.

... For many poor South Africans, the system offers a first step into a world that can help them save, send, and receive money. With a few key punches, they can send money to a relative or pay for goods without ever seeing a paper bill - a benefit in a country with a high crime rate."

related article: - Cell phones as currency (The Guardian)

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