Mobile phones replace cash, debit cards, credit cards, ATMs and even banks! The Economist reveals all!
Many of us have heard rumours of upcoming payment and credit card services by phone, indeed they are common in Japan, South Korea and the Philippines, however it seems that such servsices can truly benefit developing countries far more. For proof look to South Africa The Good News. (Oh no not again!)
Running a hair salon, grocery store or supplying goods? All payment transactions out, paid in, cash transferred, utility bills and of course paying mobile bills can be handled by Wizzit. Think of the advantages if you do not live near a bank branch, an ATM, or cannot get credit. Of course removing branches radically reduces both financial risk and operating costs, Wizzit claims services are a third cheaper, thus they can afford to serve individuals making multiple small transactions.
South Africa was one of the first to introduce mobile ATM’s in 2004 or Mzansi to taking banking to the populace. Banking by phone is chasing the 16m South African adults (more than half the adult population) who still have no bank accounts… but 30% do have mobile phones.
Already over 0.5 million use Wizzit as their bank, 8 in 10 customers had no bank account, this was achieved using an old developmental participatory approach or modern marketing tool… ‘peer to peer’ networking, in this case using 2000 unemployed people or ‘Wizzkids’ as mobilisers.
In many middle income and developing countries from Brazil to Kenya mobile coverage has overtaken fixed telephone lines quickly due to high pricing and the difficulty of getting a phones. Initially crediting prepaid time became a mechanism to transfer money… now we are seeing the development of integrated mobile banking platforms in a surprising array of countries as communities and countries skip physical banks and move straight from cash to mobile. Including M-Pesa micro-credit in Kenya and Celpay in Zambia and Congo. Keep on top of developments with Mobile Africa.
Imagine the possibilities in countries transitioning from post conflict to a more stable scenario. Mobile phones are common, banks if they exist provide appalling service, many people are not ‘credit worthy’ in the traditional sense, professionals need to get cash to families widely scattered, migrant workers return funds to family at significant cost, suppliers cannot provide significant credit. In short mobile phoning bank could slash transaction costs, free up liquidity, and enable micro credit schemes to flourish will reducing risk. No doubt the Hawallah’s will be the first to see the potential.
Next time I leave the beaten track perhaps I can leave the greenbacks at home with my credit card!