[Dave Birch] That there is an interplay between the technology and monetary policy is obvious. Look what is going on in Africa. People who aren’t allowed to hold dollar bank account hold dollar-denominated mobile top-up vouchers instead. Ugandans without an effective electronic payment system are using M-PESA from Kenya to execute local transactions in Kenyan shillings. Congolese without access to any banking network use mobile money instead (and may never, ever, want or need a bank account as a result). In India and elsewhere the banks have managed put a regulatory finger in the dyke but the pressure is building and money is already leaking away from conventional institutions and networks into newer, mobile-centric, customer-facing organisations. The dam will, at some point, burst. How will governments be able to “manage” the money supply when it is being zipped across borders by mobile phones, global handset hyper-hawala.

At the very first Digital Money Forum, the late Professor Glyn Davies (author of the magnificent “A History of Money“) said that every technology revolution in money led to less centralised control. That’s a good thing, but it also explains why the conservative nature of governments and regulators comes to the fore in questions concerning money. If anyone anywhere in the world can transact in any currency, then the weak will go to the wall very, very quickly. Gresham’s Law on a global scale.

Money is a field in which conservatism, preserving the status quo, is very definitely a bad thing. Caution is not the best course of action. Why? Because the current system is a bad system, a legacy of the pre-information age.

The cost of financial transactions in the developing world could be reduced by as much as 80% through a reform of inefficient payment and securities systems, according to the International Finance Corporation (IFC), a division of the World Bank.

[From Finextra: World Bank calls for financial services expansion in emerging markets]

Technology can, and will, change this. And by revolutionising the technology of money, primarily through the miracle of the mobile phone, technology will enable more innovations that will transform the lives of some of the world’s poorest people.

A Kenya community is working with Grundfos Lifelink and Safaricom to develop a solar-powered water vending system that allows consumers to pay with a credit-filled smart card. When the credit runs out, water-seekers can add more using the M-PESA mobile banking system.

[From Kenya’s M-PESA System Lets Cell Phones Control Access to Water | Sustainability | Fast Company]

Let’s be clear about the dynamic here. These new kinds of mobile phone-based payment schemes are not (as some, I hear, at SIBOS seemed to think) simply poor substitutes forced on desperate people as a stopgap until “proper” bank-based payments such as prepaid open scheme cards arrive on the scene. It is these mobile schemes that match requirements for most of the people, in most of the world, most of the time. They are their own new locus of innovation, distinct from the developed world’s structures, customs and assumptions.

Nokia, for one, has for several years seen most of its growth come from the developing world, so it was quick to notice when poor Kenyans started using their cell phones for banking as well as paying for things. “People aren’t saying, ‘Give me the Web-based version of this,’ ” says Jonathan Ledlie, the Nokia researcher developing Mosoko (mo for “mobile,” soko from the Swahili for “market”). “They’ve never used a Web version.”

[From How Innovations from Developing Nations Trickle-Up to the West | Fast Company]

I love e-payments.

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


  1. Great post. I agree wholeheartedly. As we’ve seen with the problems that caused the credit crunch, regulation can’t possibly contain all innovation. Regulation will (and should) always follow as a useful tool to resolve only some of the problems that arise, but won’t ever solve them all. Anyone relying on current regulatory structures as the basis for complacency, is in for a shock.

  2. Fascinating post, i had no idea about the situation in Uganda. Strange times we live in.
    What’s the solution, a neutral global body?
    It all seems such a mess it’s hard to think of a workable way out of it.

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