Cash in hand: why Africans are banking on the mobile phone

A wonderful and thorough article from The Guardian on how cell phones in Africa are revolutionizing the way money circulates.

"For consumers in developed markets, using a mobile phone for banking services is a smart add-on to a bank's branch network. But to people in the developing world, the arrival of mobile banking - or m-banking - is potentially revolutionary.

"If money is an economy's lifeblood, improving its circulation plays a critical role. Many Africans living in rural areas, for instance, rely on money sent home by members of their family who work in towns and cities. But getting that cash to a village that could be hundreds of miles away is a tricky business. In Kenya, for example, workers in urban areas hand wages over to bus drivers, who promise to stop off at the worker's home village en route to their destination.

... Services have sprung up that let people transfer cash by text message to other mobile phone users and give Africa's vast number of "unbanked" their first access to financial products. Instead of using a bank branch, these services rely on local retailers who already sell mobile top-up cards."

Read full article.

Mobile Phone Banking In Maldives approved by World Bank

World Bank on Thursday approved a $7.7 million credit to the Maldives to improve financial services for banking by mobile phones, reports All Headline News.

"The mobile phone banking project will create a single currency payment system which offers a set of mobile telephone-based accounts," the World Bank said in a press statement.

The system will enable subscribers to transfer funds to and from bank accounts and to and from telephone-based accounts, according to the statement."

Western Union, RadioShack To Offer Mobile Money Transfers

Western Union is teaming up with Radio Shack and a small wireless company to offer a service that lets people transfer money and pay bills through pre-paid cellphones. The Wall Street Journal reports.

"The service is aimed at immigrants in the U.S. who regularly send money to family members in their native countries. Many of these immigrants don't have bank accounts and send the money by taking cash to a money-transfer service such as Western Union or a host of other firms."

Loans by text message send young Swedes spiralling into debt

According to the AFP, the simplicity of obtaining SMS loans in Sweden is increasingly luring youths into debt.

"The first (SMS) loan was given in the middle of March 2006," said Janne Aakerlund, a spokesman for Sweden's debt recovery agency Kronofogden, adding that the first bill collectors were sent out just three months later.

Since then, the number of un-repaid text message loans has soared: in 2007, Kronofogden was tasked with collecting debts from 20,000 such loans, 35.9 percent of which were granted to people aged 18 to 25.

"There is reason to be seriously concerned about this development," head of the Swedish Consumer Agency, Gunnar Larsson, told AFP."

Related:

-- $300 Loans by Simply sending a Text Message

-- SMS loans could be ruining your Christmas season

SMS share trading service

Australian online share trading and wealth creation platform, Bell Direct, has launched an SMS share trading service.

Customers wanting to buy or sell via the new SMS service simply have to text message their order to Bell Direct in a simple buy/sell-stock code-quantity-price format. Shortly after, they’ll receive confirmation of the order, which, if correct, is then sent back with a hash-encoded time-stamp unique to that order.

Although brand new to Australia, SMS share trading is already extremely popular in South East Asian markets such as China, Malaysia and South Korea.

[via MoneyManagement.com.au]

Bank cashes in on love of mobiles

Customers at La Caixa, Spain’s largest savings bank, are being urged to spurn the queues for automatic teller machines. Instead, as suggested by a campaign being launched today, they should call up a virtual cash machine from the comfort of their 3G telephones. With a few taps on the keyboard, they will have access to most conventional ATM functions, with the obvious exception of cash withdrawal.

[via the FT]

Vodafone to launch mobile phone money transfer service in Afghanistan

British operator Vodafone announced Monday at the industry's annual trade show in Barcelona that it would launch a money transfer service in Afghanistan after the successful introduction of a similar initiative in Kenya.

"An estimated 1.6 million people have begun using the Vodafone scheme in Kenya since its launch in March last year. In a country of 10 million mobile phone users, there are only 400 bank outlets and 600 automatic teller machines."

[via the AFP]

Financial Transactions Through Mobile Phones Set to Increase

A report released by Juniper Research shows that the rush by banks and mobile operators to offer financial services through the mobile phone will lead to just over 612 million mobile phone users generating over $587 billion worth of financial transactions by 2011.

According to Juniper Research, the usage of mobile phones as a tool is a watershed in the history of the sector. In the past, the Automated Telling Machine (ATM) had revolutionized the banking and cash business in a similar manner, although it had taken around 20 years for the industry to leverage its full potential.

Mobile financial services are being implemented at a rapid rate and Internet banking services are witnessing a similar trend. The ‘fourth screen’ of financial services is the mobile phone, which is now a pocket ATM. This service enables mobile phone users to conduct banking transactions on the fly.

Mobile Financial Services (MFS) has been segregated into two distinct areas - Mobile Banking and Mobile Payments. The Mobile Payments segment has been predicted to create $22bn transactions by 2011 and it is expected that the number of mobile phone users adopting this service will grow to 204 million.

Further details of the study 'Mobile Financial Services: Banking & payment markets 2007-2011' can be downloaded from the company's website

[via TMCnet]

More Swedes in Debt through SMS-Loans

Since the introduction of sms-loans in 2006 - offering loans of up to 300 US dollars in minutes, simply by sending a text message - more and more Swedes are landing debt. Last year over 20,000 cases were reported to the Swedish Enforcement Agency, responsible for collecting debts. Sveriges Radio International reports.

"A spokesperson for the Agency said that they had not expected so many cases to be reported. Originally they predicted there would be some 10,000 cases.

The age group worst hit are 18-25 year-olds who account for 36% of those in debt.

The wide availability of sms-loans has been criticized heavily in Sweden for having bad credit checks of their customers as well as interest rates which can reach up to 800%."

Related:

-- Quick Loans by Text Messaging in Holland and Finland

-- In Poorer Nations, Cellphones Help Open Up Microfinancing

-- Mobile loan sharks start to bite Nordic youth

-- $300 Loans by Simply sending a Text Message

Bank of America Claims Half a Million Mobile Banking Customers

Six months after rolling out its Mobile Banking service to consumers in the USA, Bank of America says that it has reached a record 500,000 active mobile customers.

According to a recent Tower Group report, that's more than all other U.S. banks combined.

[via Cellular News]

Mobile phones to become London's common currency

London shoppers will soon be able to leave their cash at home and use their mobile phones to get on the bus and tube, pay for coffee and put big-ticket items on credit. The mobiles will contain the same security as chip and Pin cards, combined with the contactless communication system used in Transport for London's Oyster travel card. The Sunday Observer reports.

"Early next year Barclaycard will run a trial of the technology on the back of its new 'OnePulse' contactless card, which was launched in September. OnePulse cards are combined credit cards and Oyster cards, and also allow small purchases (under £10) to be made without entering a Pin.

About 1,000 retailers in the capital are already equipped with the contactless terminals for OnePulse, so putting the technology into mobile phones will not require them to install yet more expensive kit. Several hundred Barclaycard customers will be issued with compatible phones supplied by Nokia, which has been pushing the technology for several years.

... The phone will also record every transaction, so fraudulent use will be immediately apparent. If the phone is lost or stolen, it can be immobilised remotely. Visa will also offer to alert cardholders by text if one of their cards is being used in a suspicious way. Contactless payments by mobile phone could also allay fears that criminals could clone cards by using portable readers and standing next to card users."

Australia. Mobile commerce gets a PayPal boost

PayPal has unveiled Mobile Checkout, allowing people in Australia to buy movie tickets, flowers and other goods on-the-fly. The Sydney Morning Herald reports.

"... With the PayPal system merchants setup their own mobile website, bypassing the telcos, and are charged up to 2.4 per cent of the sale price and a flat fee of 30 cents per transaction."

Finnish Town has Culture on the go with Mobiles

Fancy a dose of culture in the Finnish city of Oulu? According to Reuters, all you need is a mobile phone.

"Get theatre tickets digitally, download a smart video trailer of how the play was directed, order and pay for snacks for the interval and, after a culture-packed night, order a taxi home -- all by just swiping a cellphone over smart tags placed on the menus or around the foyer of the theatre.

The Oulu City Theatre in northern Finland, 600 kilometers (373 miles) north of Helsinki, says it is the world's first cultural institution turn mobile phones into wallets.

... NFC (near-field communication) technology is activated by waving phones over wireless readers, or smart tags, and is widely used in public transport access cards."

Visa offers "virtual" card numbers

Visa is now offering a ‘virtual Visa card' which exists only as a string of numbers on a pre-paid voucher. It's just like Visa card but without the card - or even a bank account, for that matter. APC Magazine reports.

"Each card has a pre-determined value of up to $1000.

The card is activated by entering the account's reference number (provided at the time of purchase) through a secure Web site, which generates a one-off Visa account number, expiry date and three-digit security code. These are sent to the customer via email or an SMS message.

The VCard can then be used online as if it was a real Visa card, up to the limit of its pre-paid value."

Western Union Pushes Cell Phone Transfer

Western Union said Thursday it is teaming up with cell phone service providers to develop a system that would allow consumers to transfer money from country to country via their mobile phones.

"... The Denver-based money-transfer company expects to launch its mobile service in the second quarter of 2008. It will connect a cell phone user to a Western Union operator who will complete the transaction using special company software.

Thirty-five cell phone operators that belong to the trade association will participate in the program. The association represents more than 700 mobile phone operators in 218 countries and territories to promote easy use of wireless services."

New Zealand Bank Advertises Mobile Service on Notes

Since 1992, living legend and Everest conqueror Sir Edmund Hilary, or plain Ed to his friends, has been featured on the face of New Zealand's $5 note.

Late last year New Zealand's ASB Bank turned this note image into an advertising medium to launch a new banking technology called "pago" (pay & go).

Essentially, pago lets customers use mobile phones to pay for services while on the move. Friends set up digital/virtual wallets, linked to their everyday bank accounts. They can then text cash to one another or to pago-linked businesses.

To launch the service, they offered the following campaign:

First, the bank placed peelable stickers showing highly pixilated images of Sir Ed over his regular portrait on 5,000 $5 bank notes. They seeded these stickered notes into circulation. When any curious member of the public peeled off a sticker, they found a message on its back promoting pago and directing them to the Web site, www.pago.co.nz.

Second, the bank's agency had New Zealand artist Maurice Bennett create a highly pixilated 3D version of the entire $5 note. It was fashioned from 1,250 books of appropriately-colored Post-It notes, totaling 30,000 individual stickers, each of which promoted pago and the new technology's Web address.

The target audience for the campaign was the highly mobile "Digital Natives," today's tech-savvy youth audience who tend to be highly cynical of conventional marketing messages - and are seldom at home. The strategy was to use money to capture their attention.

And pixilating Sir Ed proved effective. Well over a thousand of Auckland's Digital Natives had signed up for the new service in the first few days.

The sculpture was displayed at Auckland's central Britomart train station, allowing commuters to tear off a Post-It sticker as they walked by. The art installation was decimated within a week. But, by then 30,000 travelers and their numerous friends knew all about pago.

The promotion was completed by turning bus stop shelters into Hypertag/ Bluetooth terminals that dispensed digital pago money credit to the curious, via infra-red relays to cell phones.

[via Numismater]

Mobiles to become digital wallets

The UK's big five mobile phone firms have switched on a payment system that turns handsets into digital wallets. The BBC reports.

"Called PayForIt, the scheme is designed for those buying goods and services with a value of up to £10.

The industry hopes it will be used to pay for ringtones, train tickets, parking fees and eventually as a payment system on web shops and sites.

Any cash spent via the scheme will automatically be added on to a customer's phone bill."

Pay your Highway Tolls with a Cell phone Without Stopping the Car

Telecoms Korea reports that LG Telecom has launched a service that allows drivers to pay highway tolls with their cell phone phones, reducing the time spent at toll gates up to a seventh as well as saving toll both running costs by 23 percent.

"The service, named PassON, is linked to the “high pass” service of the Korea Expressway Corporation.

When a car with OnBoard Unit passes toll gates, the toll is automatically subtracted from “high plus card”.

LGT’s PassOn service made the service possible on the mobile phone supporting Bluetooth to help drivers pay tolls with mobile phones."

GPay. Google patent application for SMS payment system

According to intoMobile, Google has just fpublished their patent application for an SMS text message-payment system, ostensibly called “GPay,” that would facilitate private transactions between a merchant and a customer for goos and services.

A computer-implemented method of effectuating an electronic on-line payment includes receiving at a computer server system a text message from a payor containing a payment request representing a payment amount sent by a payor device operating independently of the computer server system, determining a payment amount associated with the text message and debiting a payor account for an amount corresponding to the amount of the payment request, and crediting an account of a payee that is independent of the computer server system.

Mobile phone credit cards

The Herald Sun reports that a cell phone phone with a built-in credit card will be tested in Melbourne next year in an Australian-first.

"Telstra, NAB and Visa are developing the trial, which will let customers pay for goods and services with a wave of their mobile phone.

250 Telstra and NAB customers will be supplied with a mobile phone embedded with contactless near field communications (NFC) technology, with a Visa application loaded on to the SIM card.

The merchants -- there are expected to be about 30 named for the trial -- have not been finalised, but trials in the US and parts of Asia included fast-food restaurants, cinemas, petrol stations and supermarkets. "

Patents Could Bring Mobile Phones Closer to ATMs

Diebold, the company that produces electronic voting machines, announced that it has acquired five U.S. patents that allow mobile phones to interact directly with ATMs. Wireless Week

"Diebold said that the technologies will allow mobile phone owners to find ATMs, order cash withdrawals remotely, generate electronic checks, transmit wireless payments and conduct other transactions more securely and conveniently than they do now."

Quick Loans by Text Messaging

Dutch consumers have a new way to take out loans: by SMS. Springwise reports.

"Finnish Ferratum just launched its short-loan service in the Netherlands.

Customers can borrow EUR 100 ($136) , 200 ($271) or 300 ($407) for a term of 15 days, by texting Ferratum their name, date of birth, bank account and address. If they've pre-registered, the money is in their bank account within 10 minutes.

First-time customers have to wait 24 hours and speedy loans come at a cost: Ferratum charges a hefty 25% processing fee."

Bank to use cell phones to record money collection online

According to The Yomiuri Shimbun, Kansai Urban Banking Corp. is to introduce a new system in August that will enable employees who visit clients to collect money to issue a receipt using a mobile phone and a small printer connected to its headquarters.

"... Under the new system, a list of customers' names and amount of money to be collected are entered into software installed in the mobile phone.

When the employee receives money from the customer, he or she will report it via the mobile phone to the bank's headquarters and then print a receipt using the small printer, which also has a communication function.

The customer can confirm the transaction on the spot. "

In Poorer Nations, Cellphones Help Open Up Microfinancing

In many developing countries, where bank branches and A.T.M.’s are few or nonexistent in rural areas, cellphones may finally make financial services practical such places, fitting in the palm of one’s hand. The New York Times reports.

"Mobile devices have the potential to take financial markets outside urban areas, allowing banks to provide services like loans and savings accounts in rural regions, according to a report by Vodafone and Nokia, published last week."

Call for new regulatory framework to allow greater access to financial services via mobile phones in developing countries

A new regulatory framework is needed to encourage financial transactions by mobile phones and transform access to financial services in developing countries, claims a new policy report 'The Transformational Potential of M-Transactions', published today (4 July 2007) by Vodafone in partnership with Nokia and Nokia Siemens Network.

"... Lack of access to banking services is currently forcing people to rely on a cash-based economy with little security, a more casual informal labour market and a lower tax base for governments. The report concludes that financial services are critical for economic development and inclusive financial services for the unbanked are essential for poverty reduction.

Over the last two years, pilot programmes in Africa and Asia have highlighted the potential for mobile phones to deliver basic financial services in developing countries. The report shows how these services provide the first real opportunity for many poorer people to get on to a formal "banking ladder" with benefits including reduced threat of crime, time saving and secure savings opportunities.

However, existing banking regulation is currently inappropriate for the growth of m-transaction schemes. Vodafone, Nokia and Nokia Siemens Networks are calling for regulators to ensure they do not restrict commercial experimentation or limit the schemes to sub-economical scale."

Key suggested changes to regulation are detailed in the report.

[Nokia Press release]

Pay by Voice

A new online and cell phone service called Voice Pay, uses biometric voice analysis to authenticate users. The company says its technology is so reliable that it will guarantee all payments. Mike Walker's Blog

"According to founder Nick Ogden, who also set up the World Pay scheme in 1994 (a predecessor of PayPal), Voice Pay should make it much easier to buy items online or on the go, while dramatically reducing fraud. "Voice authentication is the way to go, Ogden says, because "the world is becoming increasingly more mobile, as hardware becomes increasingly keyboardless."".

Money transfers by text message

Anam a Dublin-based company that has specialized in new styles of cellphone messages, on Monday begins offering a service they say could revolutionize money transfers. The IHT reports.

"The service allows users to choose a name from their mobile phone address book, type in "cash" with the amount to be sent and press "send" for a transfer to be made from their bank account to another person's bank account.

An automated system calls the sender to confirm the person and amount being sent and, if confirmed, a text message is sent to inform the recipient that the money is on its way.

While such a service could be useful for anyone who has run short of cash while sharing a restaurant bill, the real target group for Anam is immigrant workers who send money home.

The market for overseas remittances is substantial. A study by the World Bank estimates that overseas workers from developing countries sent more than $72.3 billion back to their home countries in 2001.

"Our system is intended to allow people to cut back on trips to money transfer outlets," said Jote Bassi, the marketing director of Anam. "This system offers tremendous convenience, and there is no reason why the operators and banks involved could not undercut the current channels for money transferring."

Related services:

-- Maxis Malaysia unveils cell phone money transfer M-money

-- Using text message to send cash

-- India Tests Sending Money through Mobile Phones

-- Kenyans to transfer money using cell phones via M-Pesa service

-- Mobile carriers create a global system to facilitate cash transfers

Zimbabweans help loved ones at home

Inflation in Zimbabwe is soaring, and its citizens abroad are pitching in to help relatives at home _ giving part of their earnings in South Africa, for example, to Zimbabwean businessmen there, who then truck food, cooking oil and other scarcities across the border.

"Now a high-tech solution has arrived, with Internet-based companies allowing Zimbabweans across the globe to go online to buy their loved ones everything from fuel and food to generators.

Web site Mukuru.com offers an alternative to long queues at gas stations short of fuel. Once a friend or relative has logged on and paid for fuel, the company sends a short message to the recipient's cell phone in Zimbabwe containing a 10-digit number the person can exchange for vouchers at a designated coupon office.

They can then fill up their car at stations that import fuel independently and sell at market rates, rather than having to scramble for fuel when it becomes available locally at prices heavily subsidized by the government."

[via PR-inside]

Maxis unveils cell phone money transfer

Malaysia's top mobile phone operator Maxis has tied up with the Philippines' Globe Telecom to introduce a new mobile international money transfer service called M-money (but this is not a first, as they claim - see links below), enabling thousands of Filipino workers in Malaysia to remit money to their families back home. Associated Press reports.

"Under the system, Maxis customers can wire up to 500 ringgit ($143) per transaction to Globe subscribers in the Philippines, who can retrieve the money at Globe's 6,000 outlets, the statement said.

Maxis customers must cash in the money with Maxis before making any overseas remittance and are charged only a five ringgit ($1.47) service fee per transaction, less than half the fee that bank charges, it added."

Related:

-- Using text message to send cash - Smart Communications, the system of using text messages to transfer cash now delivers at least $50 million a month to families in the Philippines, according to Washington-based lender International Finance Corp . According to bank data, nearly 8 million Filipinos in more than 100 countries sent nearly $100 billion home over the past 30 years.

-- India Tests Sending Money through Mobile Phones - India's Bharti Airtel has joined hands with The GSM Association to launch a pilot program that will eventually enable over 25 million Indians abroad to remit money to India through their mobile phones.

-- Kenyans to transfer money using cell phones - Safaricom, Kenya's biggest cell phone firm, on Tuesday launched a money transfer service Known as M-Pesa, or mobile money. Apart from transferring cash - a service much in demand among urban Kenyans supporting relatives in rural areas - customers of the Safaricom network will be able to keep up to 50,000 shillings (£370) in a "virtual account" on their handsets.

-- Mobile carriers facilitate cash transfers - A group of 19 mobile operators with networks in more than 100 countries and representing more than 600 million customers joined forces to create a global system joined forces on Monday to make it easier and cheaper for hundreds of millions of immigrants and migrant workers to send money home by using their mobile phones.

Cellphone Banking Is Coming of Age

Bank of America has launched a mobile service for its 20 million online customers, bofa.mobi, reports Moco News.

"The mobile service will allow customers to check balances and view transactions (on checking, saving, credit cards, mortgages, home loans), pay bills, and transfer money between accounts and to other Bank of America customers.

The NY Times has a review article on mobile banking services based on Bank of America‘s effort as well as that of Citibank, which launched a downloadable application to offer its service. A good point is raised: “While banks may not charge for making transactions on a phone, cell carriers do.

And Business Week reports on Barclays Banking recent launch of mobile banking services.

"Customers can access Barclays' online banking systems via a Barclays.mobi' link on a web-enabled mobile.

The free service will initially allow the bank's pre-registered 1.9 million online banking customers to check their account balance and statements, with more services to be added shortly.

Customers can view pages from Barclays' online banking service in an updated format - designed specifically to be viewed on mobile phones. "