Democracy and Technology Blog

Mobile money

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Mobile money

The Economist has a great special report on mobile phone service in developing countries.
For one thing, “mobile money” is transforming the lives of ordinary people in areas with poorly-developed banking systems.

… a new opportunity beckons: mobile money, which allows cash to travel as quickly as a text message. Across the developing world, corner shops are where people buy vouchers to top up their calling credit. Mobile-money services allow these small retailers to act rather like bank branches. They can take your cash, and (by sending a special kind of text message) credit it to your mobile-money account. You can then transfer money (again, via text message) to other registered users, who can withdraw it by visiting their own local corner shops. You can even send money to people who are not registered users; they receive a text message with a code that can be redeemed for cash.

Mobile money could also transform the lives of many people in the developed world who are without bank accounts, haunted by poor credit scores or would just appreciate a convenient alternative and more competition in the financial services sector.
But it look’s like we’ll have to wait a while.

Given all of its benefits, why is mobile money not more widespread? Its progress has been impeded by banks, which fear that mobile operators will eat their lunch, and by regulators, who worry that mobile-money schemes will be abused by fraudsters and money-launderers.