The bank of SMS / Apr 24th 2012

Banking on the move in Africa
Africa is the continent where “mobile money”—monetary transactions on mobile phones—is by far the most advanced. According to a new survey of financial habits by the Gates Foundation, the World Bank and Gallup, in 20 countries more than 10% of adults said that they had used mobile money at some point in the previous 12 months; 15 of those countries were in Africa. For the most part, mobile phones are a substitute for traditional banks, enabling people who live miles from a branch or ATM to use financial services. This is especially important in a country like Somalia, which lacks a functioning government but where 34% of adults use mobile money (often to receive remittances from family members abroad). But sometimes, mobile banking seems to go hand in hand with the spread of traditional banking. In Kenya, where a staggering 68% of adults use mobile money (by far the highest rate in the world), half also have paper-based bank accounts.

Millions to enter banking system through mobile phone system.
BY Drew Hinshaw / May 28, 2009

Accra, Ghana — Most working people here do not exist, at least not in the records of any trustworthy bank: The taxi drivers stash their salaries beneath floor mats and the market women tie their earnings up in the waistlines of their wrapper-skirts. They are the “un-banked” — potential customers but for now invisible, lost among the 80 percent of Africans who do their banking in tin cans and fanny packs. They do not keep the sort of accounts one can present to a loan officer.

Africa’s economy of cash handovers and stowed-away savings has long been a hindrance to the continent’s economic growth, as well as a cause and excuse to deny credit to its poor. But now, at a time when 10 million Ghanaians own a phone, the world’s banks, cell phone networks and aid agencies are coming here to flip one thing into the other — to tweak a few features on a sim card, circumvent some regulations, and voila: The ordinary pre-paid cell phone becomes something not unlike a checking account — a way to text money from person to person throughout this intricate economy. “It’s the next big gold rush,” said Michael Amankwah, CEO of CoreNet, a Ghanaian ATM manufacturer whose business, the chief executive freely admits, “is going to take a big hit,” when cell phone banking takes hold. “It’s the future of transactions and payments here.”

Already, telecom companies in Kenya and South Africa are shuffling millions of dollars in rands and shillings a day, as customers text along their excess income — perhaps to help an ailing but faraway relative buy medicine, or to pay workers harvesting a distant farm. In March, the continent’s largest cell phone network, MTN, announced plans to bring their Mobile Money service to 21 nations — they’ll even throw in an MTN-branded debt card. In Cote d’Ivoire, French telecom giant Orange is hammering out a similar program, and in eight East African nations, including the Democratic Republic of the Congo, the British firm Monitise, which is not a telecoms firm, will do the same. “This is a way to include quite a number of people who are outside the reach of the financial system,” said David Andah, executive secretary of Ghana’s Microfinance Institutions Network. “I’m talking about that woman on the beach selling fish. People who are not linked up at all.”

Analysts expect similar programs to take off in most African countries within a year. They forecast that several hundred million of Africa’s least connected traders, farmers and laborers will be brought into the banking system within three to five years. For the small towns and unreachable villages that have sent generations of talented youths and natural resources to the booming cities, this is an especially big deal. The technology should ease the path of remittances home, and make it easier for agriculturalists to operate multiple, far-apart farms. Those lucky enough to procure a micro-loan will be able to receive payments without traveling for hours. Those hopeful enough to apply for a loan will be able to bring to the counter some evidence of their income, if only in text messages. And in the capitals of each new country where mobile banking takes off, governments face the enticing option of taxing millions more petty purchases a day, in all the impractical corners where bureaucrats seldom go. “As the cash-less society grows, the consequences are going to be pretty heavy,” said Ghana Manager Kofi Kufuor, of Afric Xpress, a company that helps Ghanaians pay their bills and transfer money via text messages. “This is a lot of money we are talking about.” And a lot of people: “You have 6.1 billion people on this planet, out of which only one and half, two billion have an account,” said Prateek Shrivastava, head international strategist for Monitise. “Billions are going to be interested.”

Yet, out of those billions of people — whose infinitesimal transactions were once so extraneous to the world’s financial institutions — nobody stands to benefit quite like Africa’s increasingly powerful telecom companies, the conglomerates who built this continent’s cellular towers and enable its calls. “These guys are going to be more powerful than Google, more powerful than Microsoft, within the locality in which they operate,” Amankwah said. “Already, telecoms move more money than the banks. And they have control over the channels — it’s their sim card. You’re using their network. “These guys are going to be kings.”

africa sms

Mobile Plus and FE-Mobile enter the M-Banking and Remittances Phenomenon
BY Ana Escalante / August 30, 2007

Mobile banking seems to be the new way to “bank the poor.” There are a growing number of companies working with these new technologies, some of which have been featured on NextBillion in the past. Schemes vary from those operating with standard in-country banking transactions to those with foreign remittances. Mobile banking is taking off because it is convenient, fast, simple, and secure – money can be transmitted almost instantly. That, and many people in developing countries now own or have access to a phone.

Recently, NextBillion got an e-mail from Mobile Plus and FE-Mobile telling us about their new venture: enabling low-value payments and remittances through mobile phones. Mobile Plus is a small group of entrepreneurs that have built secure payment mechanisms and low value cross border mechanisms for developing countries. According to their press release:

Mobile Plus Ltd provides low-cost international call credit and remittance services using a dual purpose card. FE Mobile Ltd provides the SecureLink™ mobile security platform…Consumers will purchase pre-paid vouchers in denominations £20, £50 and £100 and transmit the voucher number to the recipient who has a choice: either to make low cost calls or to redeem the voucher (less a small fixed service charge) for cash at a local participating outlet.

Mobile Plus and FE Mobile are not the first companies to provide these types of services, but I still think the whole idea behind m-banking is very interesting. I recently blogged about a similar venture from ISI, and Rob also blogged about ARYTY earlier this year – both companies provide similar services. I think it’s excellent that these services are becoming available to the people living in the BOP, because it gives them access to financial services and the ability to receive money from relatives abroad without the costly punitive fees and charges of incumbent remittance providers.

Although there is no one “global” company for m-banking, those I have found so far cover either one country, a small group of countries or a specific region- such as the case of ARYTY, G-Cash and Smart Money in the Philippines; WIZZIT and MTN Mobile Money in South Africa; M-Pesa in Kenya; Celpay in Zambia and the Democratic Republic of Congo.







“WIZZIT is a cellphone-based banking facility whose target market is the estimated 16 million unbanked or underbanked South Africans – about 60 percent of the country’s population. Unlike its competitors (FNB and MTN), WIZZIT does not require users to have a bank account and is compatible with early generation cell phones popular in low-income communities. The facility even works with customers who use pay-as-you-go cellphones – another distinction. In addition to being able to conduct cellphone-to-cellphone transactions, WIZZIT account holders are issued Maestro debit cards that can be used at any ATM or retailer. WIZZIT charges per-transaction fees that range from 99c (USD 0.15) to R4.99 (USD 0.78) and does not charge a monthly fee nor require a minimum balance. There are no transaction limitations – the service is purely pay-as-you-go. WIZZIT employs over 800 “Wizz Kids” – typically unemployed university graduates from low-income communities – to promote the product and help unbanked customers open accounts.”


[ From the archive, originally posted to spectre Mar 30, 2007 ]

Kenya sets world first with money transfers by mobile
BY Xan Rice in Nairobi / March 20, 2007

The ping of a text message has never sounded so sweet. In what is being touted as a world first, Kenya’s biggest mobile operator is allowing subscribers to send cash to other phone users by SMS. Known as M-Pesa, or mobile money, the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector. 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.

Developed by Vodafone, which holds a 35% share in Safaricom, M-Pesa was formally launched in Kenya two weeks ago. More than 10,000 people have signed up for the service, with around 8m shillings transferred
so far, mostly in tiny denominations. Safaricom’s executives are confident that growth will be strong in Kenya, and later across Africa. “We are effectively giving people ATM cards without them ever having to open a real bank account,” said Michael Joseph, chief executive of Safaricom, who called the money transfer concept the “next big thing” in mobile telephony.

M-Pesa’s is simple. There is no need for a new handset or SIM card. To send money you hand over the cash to a registered agent – typically a retailer – who credits your virtual account. You then send between 100 shillings (74p) and 35,000 shillings (£259) via text message to the desired recipient – even someone on a different mobile network – who cashes it at an agent by entering a secret code and showing ID. A commission of up to 170 shillings (£1.25) is paid by the recipient but it compares favourably with fees levied by the major banks, whose services are too expensive for most of the population.

Mobile phone growth in Kenya, as in most of Africa, has been remarkable, even among the rural poor. In June 1999 Kenya had 15,000 mobile subscribers. Today it has nearly 8 million out of a population of 35 million, and the two operators’ networks are as extensive as the access to banks is limited. Safaricom says it is not so much competing with financial services companies as filling a void. In time, M-Pesa will allow people to borrow and repay money, and make purchases. Companies will be able to pay salaries directly into workers’ phones – something that has already attracted the interest of larger employers, such as the tea companies, whose workers often have to be paid in cash as they do not have bank accounts.

There are concerns about security, but Safaricom insists that even if someone’s phone is stolen the PIN system prevents unauthorised withdrawals. Mr Joseph said the only danger is sending cash to the wrong mobile number and the recipient redeeming it straight away. The project is being watched closely by mobile operators around the world as a way of targeting the multibillion pound international cash transfer industry long dominated by companies such as Western Union and Moneygram. Remittances sent from nearly 200 million migrant workers to developing countries totalled £102bn last year, according to the World Bank. The GSM Association, which represents more than 700 mobile operators worldwide, believes this could quadruple by 2012 if transfers by SMS become the norm. Vodafone has entered a partnership with Citigroup that would soon allow Kenyans in the UK to send money home via text message. The charge for sending £50 is expected to be about £3, less than a third of what some traditional services charge.

{The following correction appeared in the Guardian’s Corrections and clarifications column, Saturday March 31 2007 : The claim in the article above was wrong. The mobile banking system may be the first in Africa but two companies, Globe Telecom and Smart Communications, have been operating money transfers in the Philippines since around 2005.}




GCASH, Globe’s flagship M-Commerce service, was born from a simple goal of transforming a mobile phone into a wallet. With its launch in October 2004, GCASH has effectively given Globe and TM subscribers access to a cashless and cardless method of facilitating money remittance, donations, loan settlement, disbursement of salaries or commissions, and payment of bills, products and services, with just a text message. GCASH requires only a mobile phone and a one-time registration, with a minimal charge of P1.00 per GCASH transaction. GCASH dramatically expands the menu of mobile commerce transactions, and has provided the low income economic class and overseas workers access to the relevant services below:
Domestic and International Remittances : Sending of money via GCASH as supported by a wide cash-handling network, including leading local and international remittance companies backed by reputable settlement banks
Micro-Payments : Payments for purchases from the growing list of merchant partners, including essentials such as government taxes, medicines, boat fares, food, mobile prepaid credits (load), and schools and office supplies
Micro-Credit Payments : Allows disbursement of loan principals and payment of loan interest and amortization payments to lower income consumers with limited access to banks
Bills & Tuition Fee Payments : Allows payment of bills of various utility companies, internet service providers, insurance companies, as wella s schools and universities
Donations : Provides a quick and safe processing of GCASH donations to different institutions

“This video profiles the use of G-Cash in Cantilan, a Filipino farming and fishing community 5 hours away from the nearest operational airport. The video features interviews with customers (there are 8,900 in Cantilan) and agents from a few of the 60+ small businesses, including pharmacies, bakeries, restaurants, who accept G-Cash as a payment method.”


RBAP (Rural Bankers Association of the Philippines)
Globe Telecom Philippines Joins with Microfinance Providers in the Rural Bankers Association of the Philippines (RBAP) to Supply Mobile Banking Services to the Rural Poor
by Brett Rudder / September 16, 2008

“The Rural Bankers Association of the Philippines (RBAP) and Globe Telecom Inc, the Philippines’ second largest telecommunications provider, have partnered to extend mobile banking services to rural banks, allowing their customers to conduct transactions using mobile phones. The effort brings the mobile banking service G-cash, managed by Globe Telecom’s subsidiary G-Xchange Inc, to 375 participating branch locations. Microfinance institutions under this program become “cash in” and “cash out” outlets that are accredited to convert actual money into electronic money and vice versa.

RBAP is a consortium organization of approximately 700 rural banks in the Philippines. Its Microenterprise Access to Banking Services (MABS) assists its members in increasing access to banking services for the microenterprise sector. The US Agency for International Development has supported MABS since 1998. The central bank of the Philippines Bangko Sentral ng Pilipinas (BSP) has approved G-cash and expects the market for these services to grow by at least 20 percent over the next year. RBAP reports that the gross loan portfolio of MABS microfinance institutions is equivalent to USD 41.1 million and that their savings deposits total USD 36.6 million.”


“XacBank, Mongolia’s largest microfinance institution recently launched its partnership with Kiva, the world’s first person-to-person micro-lending website. XacBank’s clients are now featured on Kiva.org, and individual lenders from around the world can make small loans of $25 over the Internet to micro entrepreneurs in Mongolia. These small loans help businesses such as butcher shops, furniture stores and beauty salons to succeed while enabling hardworking Mongolians to provide food and education for their families.”

Bank ATMs soon may be used for sending cash person-to-person
By Gail Liberman and Alan Lavine / 11.11.2008

If you’re without a bank account, you soon could have a low-cost way of sending cash to others — using your cell phone and a bank ATM. Amid criticism that banks aren’t doing enough to attract those who lack bank accounts, a Charlotte-based company, Privier Inc., is courting financial institutions to provide this service. Privier’s patented “ATMSend” would let the so-called un-banked transfer cash without requiring the sender or recipient to have a bank ATM card or bank account. The system would use bank ATMs that permit cash deposits, said Charles Polanco, chief executive of Privier.

Western Union Co. in Englewood, Colo., and MoneyGram International, in Minneapolis, currently dominate the money transfer business. Combined, the two companies have 22% of the market, according to a report in June by Marketdata, a Tampa, Fla. market research publisher. However, new competition is rapidly emerging from Visa, MasterCard, Wal-Mart — and the latest mobile technology allowing for financial transactions using cell phones.

Privier would equip screens of participating bank ATMs with icons reading “Send Cash” and “Pickup Cash.” A cash sender and recipient would press appropriate buttons to automatically activate the ATM for an “ATMSend” transaction, Polanco said. Each bank would determine limits regarding how much cash could be transferred. The sender first would have to register a cell phone through a participating bank either online or via telephone, entering a name, address, birth date, Social Security number and cell phone number. Privier would verify the user’s identity and check information against the Office of Foreign Assets Control list of terrorists.

At a participating bank ATM, the sender could then click “Send Cash” and enter the cell phone number. A 10-digit withdrawal number automatically would be text-messaged to the cell phone number provided. The sender could follow prompts at the ATM to enter cash into the machine and provide the recipient with the authorization code along with the amount sent. With that information, the recipient could obtain the cash at an ATM within the participating bank’s network. All funds must be picked up at once, and if funds go unclaimed, senders would be notified to pick up the funds at an ATM location after 30 days.

‘The Grameen-Obopay Bank A Billion Initiative’ / August 05, 2008

Obopay, Inc., the pioneering service provider for payments via mobile phones, and Grameen Solutions, the company globally recognized for promoting economic and social development through information and communications technology, today announced a unique, first-of-its-kind alliance to use mobile technology to deliver banking services to a billion of the world’s poorest people by 2018. The Grameen-Obopay Bank A Billion Initiative will provide access to affordable financial services, including cross-border remittances, money transfer, payments, savings and credit accounts. By empowering life and work endeavors with mobile technology that is ubiquitous even in the most impoverished and remote corners of the world, Grameen-Obopay is bringing the full power of banking to those who need it most. “I was inspired to found Obopay when I was volunteering in Africa and saw that while people in remote corners of the world often lacked access to the most basic financial services, they almost all had mobile phones,” explained Ms. Carol Realini, CEO of Obopay. “We are thrilled to embark on a partnership with Grameen Solutions, and look forward to working with them to bring truly powerful mobile banking services to people everywhere.”

With more than 3 billion connections to GSM mobile communications networks currently active globally and emerging markets responsible for 85 percent of new connections today1, mobile technology can effectively deliver financial services to billions of underserved people on every continent. Until now, even the most basic financial services have been unavailable to the world’s poor because they are physically inaccessible and/or far too expensive to be practical. Using mobile technology to deliver banking services overcomes previously limiting restrictions of space and time by using existing infrastructure to give even the most underprivileged access to financial services.

Grameen Solutions’ CEO Mr. Kazi Islam explained, “We carefully evaluated globally available mobile money service providers with a view to identifying a partner that fits with our vision and mission. Obopay is clearly that partner, and we look forward to maximizing the global potential of mobile financial services with them. By using a technology that is already pervasive — the mobile phone — we will clearly be able to have a dramatic impact on global poverty.”

Working initially in Mumbai, India and in Bangladesh, The Grameen-Obopay Bank A Billion Initiative will begin delivering services in October, 2008. Commenting on the association, Mr. Aditya Menon, Executive Director and CTO, Obopay India, said, “Obopay’s partnership with Grameen Solutions is a clear and powerful validation of Obopay’s ability to have a dramatic and transformational global impact on personal finance.” Grameen was founded by Professor Muhammad Yunus, the founding father of the microfinance movement and recipient of the 2006 Nobel Peace Prize. Prof. Yunus commented that, “Mobile based financial services will bring more power to poor people. I’m excited about the partnership that Grameen Solutions and Obopay have created.”

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