[Dave Birch] The always excellent Payments News pointed me at a report called Mobile Phone Banking and Low Income Customers: Evidence from South Africa from the The Consultative Group to Assist the Poor (CGAP), United Nations Foundation (UN Foundation), and The Vodafone Group Foundation (VGF). Having had a chance to look through it, I found it confirmed our very bullish thinking on mobile payments in the developing world.

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The report is about Wizzit, which is a mobile banking provider that offers a transaction banking account accessible via mobile phone and debit card. It has about 50,000 customers for its “virtual bank” (there are no branches). Customers can use their mobile phone to make person-to-person payments, transfer money, purchase prepaid electricity, and buy airtime for a prepaid mobile phone subscription. WIZZIT also gives customers a Maestro-branded debit card with which they can make purchases and get cash back at retail outlets and withdraw cash at ATMs. What comes out from the survey of their customers is that banking by mobile phone is not only easier but also cheaper than using a normal bank (with branches and such like).

I thought the most interesting calculation in the report is that of banking fees as a proportion of annual income (these are poor people, remember). It turns out to be around 3% of income for customers using a “conventional” bank and 2% of income for customers using mobile phone banking. By extension, I would imagine that this is true for the majority of the world’s population. The report’s conclusion is very positive:

Ultimately, all poor people need financial services to increase household incomes, build assets, and become less vulnerable to crises. With millions of mobile phones already in poor peoples hands, CGAP, UNF, and VGF see tremendous potential in the power of network operators, banks, and new entrants to deliver financial services through this channel.

Quite. There will be four billion mobile phones in use in 2010 and for (literally) the average inhabitant of the planet the mobile will be their most important channel to money and financial services. This is why SIM Toolkit, NFC and OTA are more important indicators of the future of digital money than web 2.0, High-Integrity Certificates or perhaps even EMV.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public.
[posted with ecto]


  1. Research has repeatedly shown that the world’s poor are often more accepting of paying for financial services than we are in the developed world – certainly the UK. There is sometimes a perception that financial services in the developing world cannot be profitable (for which read: sustainable).
    Our experience is that this is certainly not the case, though any service must severely control its costs, which inevitably leads us to the mobile phone as the delivery mechanism.

  2. I believe 100% in mobil banking as one of the best tool to reach people in Africa and developing countries at large, 10 years ago, noboby bet nor invest one dime on Africa mobil as a lucrative market, today the result a terrific Africa is the fastest growing market in the World and surely have the fastest return on investment in addition to that fact Africa have about 95 % of his population with no access or with no bank account I am currently working on a Very Big project For Africa combining cellphone financial services bil pay etc… Just trust Africa.

  3. The first mobile banking solution deployed in Africa that looked like Wizzit went live in 2002 in Zambia. This solution has been in production since then, runs a profitable business and trade under the name Celpay. Another virtual bank of note is MTN Banking (www.mtnbanking.co.za) also in South Africa with more functionality and higher penetration than Wizzit. Also check out http://www.fundamo.com who provides technology for these deployments.

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