Mobiles have become the latest enablers in the financial eco-system. What is most heartening about this development is that effort has been made to include all mobiles ranging from basic phones that can merely make and receive calls and SMSes to high-end Smartphones and Tablets that are 3G/4G and phones that work on the GSM or CDMA networks.

Mobile Money Transfer

No wonder, that Banks and Payment Service Providers like Xpress Money and Western Union have rushed in to offer mobile-capable services for their customers.

Mobile phones can be used for carrying out the following types of funds transfers (in addition to a whole host of other financial and banking functions):

Transferring money from one account to another, even internationally.

Mobile phones can be used in three ways to transfer funds:

Low-end phones can use SMS to carry out transfers and other banking transactions

Feature phones with GPRS-capability can login to the mobile-specific WAP sites of financial institutions to carry out transactions

The high-end smartphones and tablets can download specific “Apps” that enable them to carry out the broadest possible range of functions as fast as possible.

Transferring money to retailers, for payment of goods and/or services.

Shopkeepers and retailers need to be enabled to accept “mobile money”. When a purchase is made at a “mobile-money”-enabled outlet, money is transferred from the customer’s m-wallet to the retailer’s m-wallet. Mobile money can also be transferred to the beneficiary’s bank account either directly or via a Mobile Money ID.

Transferring money to other mobiles.

One of the paradigm shifting changes mobiles have brought to the finanscape is the Mobile to Mobile funds transfer service which brings within its ambit even those who do not have bank accounts. The remitter needs only to know the mobile number of the beneficiary to effect a transfer. The beneficiary can use this “mobile money” for payments for goods or utilities, to transfer to others or to transfer to his bank account.

The United Nations Capital Development Fund (UNCDF) estimates that there are about 2 billion bank accounts but 6 billion mobile subscriptions for the 7 billion people on earth. And, the growth in mobile phone penetration rates is far greater than growth in access to bank accounts and financial growth.

No wonder, mobile phones are being seen as a major tool in extending financial and banking services to the “unbanked” or the “underbanked”.