February 13, 2007
New Frontiers For Cellphone Service
A wonderful article today in the WSJ on how telecom firms see potential in the world's remotest regions - by providing (the first) biodiesel-fueled base station, organizing communal cellphones, offering new payment options for lower-income customers and mobile banking, which lets people who don't have bank accounts use their cellphones to transfer money.
The whole article is a must read, but here are excerpts from the part referring to mobile banking:
"... For some companies, emerging markets are an incubator for new services such as mobile banking, which lets people who don't have bank accounts use their cellphones to transfer money. The concept is starting to take hold in some markets, such as the Philippines and South Africa.
Kenyan operator Safaricom Ltd., a joint venture between Telkom Kenya Ltd. and Vodafone, is launching a service called M-PESA that lets customers without bank accounts transfer money using text messages.
Customers using M-PESA, which stands for mobile money, get a new chip installed in their phone at no cost so they can add credit to their account at street kiosks, gas stations or shops -- basically any seller of cellphone airtime credit. They can send the credit to any other Kenyan mobile phone via a code-bearing text message. Recipients then take their phone with the text message to a retailer or similar outlet to pick up their cash.
The service may, someday, include other financial transactions, such as paying utility bills and taking out small loans, says Nick Hughes, head of mobile payment at Vodafone, of Newbury, England. Customers initially will be able to make only domestic money transfers, but the company hopes to take the service to other parts of its global network.
While the potential of such services long has been discussed for developed markets, they have failed to take off there due to well-established alternatives such as debit cards and credit cards. And industry experts note a number of challenges for mobile banking in general, including technological and regulatory requirements."
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