“It works like this: you pay cash to your local agent – often at the nearest corner shop, if you live in a city – who then tops up your mobile money account using a secure form of SMS text messaging. That money can be transferred to another person by sending an SMS to their cellphone account. People without mobile money accounts can receive payments in the form of a text code which can be forwarded to their local agent, who exchanges it for cash.
The system relies on what is known as the unstructured supplementary service data (USSD) system that is built into the GSM cellphone network. It is USSD that allows pay-as-you-go customers to find out their credit balance, for example.”
Posts in category 'Financial'
The World Bank’s CGAP and DFID, the UK Department for International Development, undertook a six-month scenario-building project in which almost 200 experts from more than 30 countries helped answer the question “How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020?”
CGAP/DFID identified identified four forces most likely to shape the answers:
• The changing demographics of users
• The actions of increasingly activist governments
• Rising crime
• The spread of Internet access via data-enabled phones even in poor countries and communities
They also isolated four key uncertainties with important effects but uncertain outcomes:
• Which types of entities will be allowed to provide branchless financial services?
• Will providers craft viable business models for services beyond payments?
• How will competition play out?
• How will consumer, business, and regulator confidence be affected by the inevitable failures that will happen?
The work culminated in the CGAP/DFID Branchless Banking Scenarios 2020 Focus Note, that presents four scenarios that interweave these forces and uncertainties in different settings to produce very different trajectories over the next 10 years.
A video discussion with the authors and some of the leaders in mobile and branchless banking was held in Washington, DC in December 2009; you can watch the archived video here.
“We seek to create a community of practice and inquiry into the everyday uses and meanings of money, as well as examining the technological infrastructures being developed as carriers of mainstream and alternative currencies worldwide.
Money costs money for people who are extremely poor and who have limited or no access to banks or credit. For many of the world’s poor, fees for financial services and transactions seriously limit their ability to use or share what little money they have. People have long taken whatever is ready-to-hand to serve the functions of money, from livestock to jewelry, and have used different relationships and objects to help them save, store, and transfer wealth. Today, new communications technologies are being added to this complex ecology of money. This ranges from sharing airtime minutes as an alternative currency, to using mobile phones and point-of-sale terminals for accessing banking institutions, or even as independent systems for saving, storing and transferring wealth.”
The 2010 Annual Report discusses IMTFI’s research in 2008-09 and presents 11 design principles on the creation and implementation of saving services for the poor.
“[In Kenya] with a mobile phone, one can pay electricity and water bills, pay for goods at the supermarket, buy airline or bus tickets, withdraw money from an ATM, monitor stocks, and even check bank account balances. [...]
While ordinary Kenyans are quite happy about the hassles the service has spared them, such as long lines, local banks are not amused. [...]
Safaricom recently extended M-PESA services to Britain, allowing Kenyans there to send money to relatives back home. Plans are said to be under way to take it to the United States, too.”
“Think about what lies within the system of banking: people and businesses. Now, do banks do anything to “connect” people and businesses to facilitate transactions amongst and between people and businesses? When was the last time your bank actually helped you do the following:
- Solve a problem not having to do with a transaction
- Introduced you or your business to others who may need your product or service
- Provided you with new information or knowledge that helped you or your business be more productive
- Helped you or your business grow revenue, besides lending money for you to do it yourself
- Helped you find relevant and relative resources that you need
The answer to these questions is a bank simply doesn’t do any of these things, at least not consistently and as a regular part of their relations with customers.”
What next after the Mobile revolution in Kenya?
by John Karanja
MPESA will be on its own a major driver of the economic expansion of the Kenyan economy and best of all it will take a bottom up approach because it will empower the mama mboga (woman grocer) by allowing her to manage her finances efficiently.
[Now] MPESA needs to move from a payment system to a payment gateway: Safaricom should develop MPESA into a platform where other software developers can build applications on top of the platform an thereby increase utility and reach of this technology.
(Make sure to check the embedded videos)
Nokia Life Tools – a life-changing service?
by James Beechinor-Collins
Recently we saw the release of a bunch of new entry level devices and alongside their launch in Indonesia, was the introduction of Nokia Life Tools for Indonesia. This follows an already successful launch in India and Africa and forms part of a rollout across select Asian and African countries. So does it make a difference? It would seem so, as our selection of videos below suggest. With over 50 per cent of the population in Indonesia reliant on agriculture to make a living, Nokia Life Tools brings a new level of control to them.
(Make sure to check the embedded videos)
Mythes et réalités des usages mobiles dans les pays en développement
[Myths and realities of mobile use in developing countries] – an article series in French
by Hubert Guillaud
Part 1 – Part 2 – Part 3
Bangladeshis rush to learn English by mobile
By Maija Palmer in London and Amy Kazmin in New Delhi for the Financial Times
More than 300,000 people in Bangladesh, one of Asia’s poorest but fastest-growing economies, have rushed to sign up to learn English over their mobile phones, threatening to swamp the service even before its official launch on Friday.
The project, which costs users less than the price of a cup of tea for each three-minute lesson, is being run by the BBC World Service Trust, the international charity arm of the broadcaster. Part of a UK government initiative to help develop English skills in Bangladesh, it marks the first time that mobile phones have been used as an educational tool on this scale.
“Hang around a telecoms industry conference long enough and you start to get big-number fatigue – as one stack of seemingly impressive statistic blurs into the next. The numbers that have stuck with me over the years came from our research into the lives of the working illiterate: people who have jobs and want to keep them – spending time with people who work 16 hours days, 7 days a week with just a few days off per year is not uncommon. Who benefits more from the introduction of mobile money management services – a white-collar worker in New York City or a migrant manual labourer living out of a dormitory in Xi’an? For many access to mobile money services is a game-changer.
For practitioners working in this space (hei) the most useful section is likely to be on mobile phone practices and behaviours: covering mediated use from the perspective of customers; agents and the service providers themselves; charging; and multiple-SIM card practices.”
The December edition will focus on Mobile Money and Payment technologies for Africa.
Download magazine (November 2009)
It acts as an ‘emotion mirror’ in which the intensity of the user’s feelings is reflected.
Research shows that home investors do not act purely rationally: their behavior is influenced by emotions, most notably fear and greed, which can compromise their ability to take an objective, factual stance.
This insight led to the Rationalizer concept in which online traders are alerted when it may be wise to take a time-out, wind down and re-consider their actions.
Mobile tech as a tool for social development is making the front pages in 2009. They are hyped as panathea for global issues such as rural health in developing countries, poverty alleviation, making rural markets more efficient, and activism.
We have been working in this field since 2005 and have been leading industry analysist, with direct work in a number of areas such as elections and democratic participation. While we agree that mobile phones are revolutionizing the developing world, we think it is time to take a very honest and realistic look at the promises of mobile tech for development and social change, and where these promises are falling short — and of, course, why, and what to do about that.
We are starting the series off in our first part with a post by Ethan Zuckerman, a close friend and collaborator of MobileActive.org. He gives a thoughtful overview of some of the key issues that we will be dissecting throughout the month of October.
His reflections on the subject are based on a recent IDRC-sponsored day of conversations art Harvard’s Berkman Center, and why Rip van Winkle might be surprised, and possibly dismayed if he were to wake up now. They were first published on Publius.cc and are a response to A Dialogue on ICTs, Human Development, Growth, and Poverty Reduction, also published on the same site
Here is what you will hear more about in the coming weeks:
- A Penny for your SMS: The Cost of Mobile telephony in many developing countries: why it’s so high, what that does for social development projects, and why it does not have to be that way.
- The Perpetual Pilot Syndrome – and the issue of scale: Much has been said about the many mobile pilot projects that never go anywhere but end when the funding runs dry. We will critically examine the numbers, what it takes to scale, whether it’s desirable, and take a close look at the most recent hype of ‘horizontal scale’ ion mobiles in development.
- Mobiles for Open Societies? Much has been said and written about the power of mobiles in opening societies, enabling political participation, and engagement. We are taking this notion apart with a deeper exploration of key issues, going beyond the hype.
- Are Development Organizations Missing the Mobile Wagon (or just failing to ride it?) A critical discussion of the role development organizations have been playing in using mobile tech to advance their goals – and whhat is working, and what is not.
- What is the Role of Donors in M4D (if any)? After dissecting whether development orgs are helping or hindering the deployment of mobiles in the social sector, we turn to donors who have discovered mobile tech as their new fad, though are mostly pondering right now how to effectively fund mobiles in development.
- Mobile (In)Security will delve into how networks operate, who knows what about mobile communications, and what that means for activism, advocacy, and social development.
- Mobiles as a Male Enhancement Tool? A close look at the issues of mobile phones and women’s empowerment, both politically and economically.
- Do you have to read to use a mobile? As much as 20% of the global adult population is illiterate. Given the ubiquity of SMS services, as well as text-heavy interfaces, what does that mean for reaching the next billion uses (and serving those that already have a mobile but can not read) effectively?
- Mobile Payments for the Middle Class? We will, of course, take apart the most recent hype about mobile payments and who is benefitting most – as well as who is left behind, promotions in mainstream media notwithstanding.
- So, Realists, What’s Next? No series would be complete with the obligatory look into the future. We summarize key issues, and make some concrete recommendations on how to realistically and effectively think about, and do work, with mobile tech in social and human development and change.
“The weak dollar. A Federal Reserve constantly being second-guessed. It’s times like these when talk inevitably turns to alternative or complementary currencies. While local currencies have come and gone, many involved in social networks are hoping peer-to-peer (or P2P) virtual currencies will, given the momentum to retool the financial system, have more staying power.”
The article features Hub Culture, a social network of globetrotting adventure-travellers, and its digital currency Ven, which is pegged to the dollar, and allows members of the social network to trade goods and services as well as knowledge; as well as the Attent application by Seriosity, which uses a digital currency called “Serios”.
Also look at an earlier Experientia project, called KashKlash.
CGAP, the independent policy and research center dedicated to advancing financial access for the world’s poor, looked at M-PESA merchants in Kenya for clues about the profit drivers for agents .
“We studied 20 agents with 125 locations. We focused on small stores of the kind found in urban slums and rural areas, which make up the vast bulk of M-PESA agents. We spent 3 weeks in the field. What did we find?”
“While producing information costs money, information as such doesn’t necessarily carry monetary value; it mostly carries intellectual, social, artistic, practical value. And that’s why, historically, news has been commercially, publicly, politically and privately subsidized.
That information is not necessarily connected to a physical good (paper) or a concrete service (the delivery), or a limited quantity anymore, making it difficult to measure its price. We have difficulties spending money for digital information because at the end of the transaction we neither save time nor do we hold anything concrete or limited in our hands.”
From the Nokia press release:
“Nokia Money has been designed to be as simple and convenient as making a voice call or sending an SMS. It will enable consumers to send money to another person just by using the person’s mobile phone number, as well as to pay merchants for goods and services, pay their utility bills, or recharge their prepaid SIM cards (SIM top-up). The services can be accessed 24 hours a day from anywhere, meaning savings in travel costs and time. Nokia is building a wide network of Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts.” [...]
“Mobile payments will be the next step for delivering financial services to hundreds of millions of people, both urban and rural, who are underserved by existing payment means, especially in emerging economies.” [...]
“The Nokia Money service will be operated in cooperation with Obopay, a leader in developing global mobile payment solutions, which Nokia invested in earlier this year. The service is based on Obopay’s mobile payment platform, with unique and newly developed mobile elements. Nokia intends the service to be open and interoperable with other payment services as well.”
The announcement received a huge amount of press and blog play – a round up:
CGAP: “This alone isn’t enough to crack open internet banking for the poor: PayPal may claim to be in 190 markets, but its not terribly easy to access the service in all of those places.”
CNET News: “The new service may find a special niche in the U.S., which has lagged behind countries such as Japan in the ability to pay for items on the fly through a cell phone. “Rural consumers will particularly benefit from money transfers and, for urban consumers used to online services, we are enabling services such as payment of utility bills, purchase of train and movie tickets, top-ups, all through their mobile phones,” said Teppo Paavola, Nokia VP and head of corporate business development.”
Deals & More: “It sounds like it won’t just be for the owners of Nokia phones, though, since the company says it will work on ‘virtually any mobile phone.'”
Fast Company: “Nokia has already said it plans to become the world’s largest entertainment network through its vast share of the mobile handset market. Now it looks like the Finnish mobile device maker aims to become the world’s largest mobile bank as well.”
Financial Times: “The developing world will likely be Nokia’s first target as it seeks to roll the programme out. [...] Nokia sees a market opportunity here, and said there are 4bn mobile phone users today, compared with 1.6bn bank accounts.”
Kiwanja/Ken Banks: “Details remain a little sketchy, but Nokia Money appears to be operator-independent, meaning mobile owners on any network can send or receive payments to anyone else on any other network. This would be a direct challenge to many existing models which require users to switch networks, or to be on the same network as the mobile service they’re looking to use. In addition, it looks like Nokia Money users can sign-up without needing to swap out their SIM cards, making up-take of the service considerably more efficient logistically. If this thing were to grow, it could grow fast.”
Register Hardware: “Unimaginatively called Nokia Money, the service will enable you to send money to someone else using their mobile number.”
Reuters: “Mobile money is one of the hottest topics in the wireless world, but so far take-up of services has been limited mostly to a few emerging markets, as in developed countries, the popularity of online banking has been a brake on mobile money.”
Techcrunch: “Nokia will hardly be the only player in these emerging markets — other competitors include mChek and Paymate.”
The Register: “Nokia isn’t the first company to look at payments via SMS – your correspondent managed to pay for a meal by text back in 2002, just – but with Nokia’s brand behind it, and a focus on economies where traditional banks are hard to come by, it could be the one that makes it.”
Wall Street Journal: “‘This is absolutely what Nokia should do,’ as there will be big demand for mobile financial services and because the company has so far struggled to offer attractive, easy-to-use applications that rival those provided by the iPhone’s App Store, said Evli Bank analyst Michael Andersson, who has has an accumulate rating on the share.”
“Hyper-localized currencies have been popping ever since the economy went sour–not surprising, since local currencies also gained popularity during the Great Depression. Five local Massachusetts banks have developed Berkshares–there are 185,000 paper notes are already in circulation–each of which is designed by a local artist. California’s Humboldt County has distributed $130,000 in currency since 2005, and Canada’s Toronto Dollar moved $90,000 worth of currency in the past year.”
But there is work to be done: according to technology research company Gartner, only 3 percent of people in North America are expected to conduct mobile payments in 2012.
“Despite growing agreement on the potential of technology to expand access to finance, or branchless banking, there is surprisingly little data publicly available about low-income users. This Brief draws on some of the first ethnographic research on M-PESA, one of the earliest success stories in mobile phone-based delivery of financial services. The research offers insights into how poor people use M-PESA, its impact on their lives, and some unexpected consequences.
This Brief presents 10 observations on how poor people use M-PESA and how it has impacted their lives.”
(See also this news story on The Guardian)
“However, the mobile phone revolution continues to leave large parts of the continent behind.
While countries like Kenya, South Africa and much of North Africa are approaching 100% mobile penetration, in Burundi, the Central African Republic, Eritrea, and Rwanda it is less than 30%.
Low incomes, illiteracy and large signal black spots are all obstacles to the sale and use of mobile phones. Taxes, which can be as high as 30% in countries like Tanzania and Uganda, are also a disincentive.
Telecoms experts say that many African markets remain too risky for mobile phone companies, which have targeted more stable and wealthy countries first. “
In which contexts do alternative uses, e.g. savings, become popular and why?
The final report will be presented during autumn 2009 and made available at the project blog. Meanwhile, they sent a dispatch to the CGAP blog:
“While M-PESA in Tanzania has had a hard time competing with its sibling in Kenya in user uptake, there is one way of sending money via the mobile phone that is very popular in the country. That is by using airtime top-up vouchers. The most common way to do this is to buy an airtime voucher, scratch it in order to get the code and then text the code in an SMS to the person you want to send money to. It is then up to the recipient to go out and sell the code to people who want to buy airtime, or resellers and shops that in turn will sell it to people wanting airtime.”
He asserts that “user-centric identity, “the ability of individuals to carry their information from one site to another in a “cloud” of their own making, will become increasingly important.
Article on Future Banking in which John Clippinger describes some of the ways in which traditional information asymmetries between enterprises and their customers are being redressed to allow individuals more control over their personal information.