BERLIN — In Tanzania, a hospital sends money by text message to women in
remote areas so they can pay for bus fare to travel for critically
needed surgery. In Afghanistan, the government pays its police officers
by text message to skirt corrupt middlemen. In Pakistan, the biggest
financial network is not a bank, but a unit of Telenor, the Norwegian
mobile phone operator.
While storefront bank branches and online banking are ubiquitous in the
United States and most developed countries, in less-developed countries
only a small fraction of the population is served by banking services.
Mobile banking first appeared in the Philippines in 2001, when two
operators, Globe and Smart, introduced their own domestic payment plan.
In most mobile banking models, the person sending a payment sends the
amount by text to the recipient’s phone number.
The person receiving the payment goes to an authorized local agent,
typically a mom-and-pop retailer that also sells prepaid mobile phone
cards, and withdraws the cash.
In parts of Latin America, Africa, the Middle East and Asia, more than
90 percent of people typically carry at least one mobile phone, a
technological tether that mobile operators are exploiting to become
retail bankers to the emerging world.
“Five years ago, there was hype around mobile banking but no real
numbers in terms of customers,” said Mung Ki Woo, vice president of
electronic payments and transactions at Orange, the wireless unit of
France Télécom. “Now we are starting to see significant numbers. I think
the potential of mobile banking is huge, going forward.”
Since December 2008, Orange has signed up one million people for its
Orange Money mobile banking service in six African countries: Mali,
Senegal, Ivory Coast, Madagascar, Kenya and Niger. In Kenya and
Tanzania, subsidiaries of the British mobile operator Vodafone now
process more international wire transfers than Western Union.
In Kenya, Vodafone has 13 million customers and in Tanzania, six million
customers for its mobile banking service, which generated 670 million
transactions last year, primarily for domestic or international money
transfers, said Peter Cornforth, a Vodafone business development manager
for the service, called M-Pesa. Pesa is the Swahili word for money.
In Kenya, coffee growers routinely pay their field workers by text
message, and in Tanzania, Vodafone customers pay the national electric
utility, Luku, by text. In Dar es Salaam, Tanzania, a rehabilitation
hospital called C.C.B.R.T. sends bus fare via texts to women who travel
to it for surgery to correct fistula incontinence, a common side effect
“Apart from being a serious new business for operators, these services
for the first time are connecting people to critical banking services,
and making positive changes” in their lives, said Mr. Cornforth, who is
based in London.
Telefónica, the Spanish operator that is a market leader in Latin
America, plans to start mobile banking services in four South American
countries next year. Globally, the number of mobile banking users is
expected to surge more than sixteenfold, to 894 million by 2015 from 55
million in 2009, according to Berg Insight, an industry research firm
based in Stockholm.
Almost all of those mobile banking customers — 78 percent, or 697
million people — are in Asia, Africa, the Middle East and Latin America,
according to Berg Insight. In Europe and North America, mobile banking
remains secondary to personal computer-based Internet banking. Even so,
the on-the-go convenience of mobile banking is attracting users in the
About 10 percent of U.S. bank consumers use mobile banking, usually to
transfer money, make payments or monitor bank accounts, said Teresa A.
Epperson, a partner at Mercatus, a Boston company that advises banks and
financial institutions. As more U.S. consumers buy smartphones, mobile
banking’s market penetration is expected to exceed online banking’s,
which currently is about 50 percent, by 2015, Ms. Epperson said.
“This is only going to get bigger, in our opinion,” she said.
The potential is great in Latin America, where only 35 percent of the
people have bank accounts, only 19 percent have bank cards but 90
percent have mobile phones, said Pablo Montesano, the head of mobile
financial services at Telefónica.
Investors are also beginning to recognize the potential of the
technology. In September, a leading maker of mobile banking technology
for SIM cards, a French company called Gemalto, bought Trivnet, an
Israeli company that makes financial transaction management software for
mobile operators, for $40 million.
Only six months earlier, Trivnet had won the contract to supply mobile
banking technology in Latin America to Telefónica.
Amit Mattatia, the Trivnet chief executive, said that 10 to 15 operators
next year are planning to start large mobile banking operations in big
markets in Latin America, the Middle East and India. Citing
confidentiality, he declined to identify the operators.
“Because so much of the world is under-banked, consumers want these services very much,” Mr. Mattatia said.
As the cost of a simple mobile phone has fallen below $20 in most of the
world, mobile banking is becoming affordable in emerging markets.
“This is now poised to explode in the developing world,” said Philippe
Vrignaud, a senior vice president in Singapore for Gemalto.
In Pakistan, where only 14 percent of the people have bank accounts, Telenor introduced mobile banking in November 2008.
The service, called Easypaisa (100 paisa equal a Pakistani rupee), now
has 500,000 active users who sent transactions worth a combined 5.5
billion rupees, or $64.1 million, in the first quarter of this year.
Most were domestic money transfers, which are limited to $120 a
transfer. Telenor exacts a fee of as much as 5 percent of the
Easypaisa is available at 11,000 independent retail agents that make up
Telnor’s distribution network, which outnumber the 8,300 combined
branches of all Pakistani banks.
Within three years, Telenor plans to expand the number of retailers in its network to 36,000.
“This service is about addressing the unmet needs of the consumer,” said
Aamir Ibrahim, a vice president and chief strategy officer at Telenor
Pakistan. “I think this is suitable for all of our markets everywhere.”