Mobile Money :The New Way

Posted in Finance Articles, Total Reads: 1694 , Published on 30 August 2013
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Mobile Money also known as mobile wallet is a payment service which is gaining immense popularity in emerging nations. Mobile money which enables users to transfer money to another mobile user without using credit card and without the need of the receiver to have a bank account. This payment service having application in various bill payments, tickets booking is becoming the buzz word. 



Let us go through an example to understand how mobile money works and why it is so useful. Let a mobile phone user needs to send money to his family member in town who either doesn’t have access to banks or doesn’t know how to operate banking facilities. In this case all existing money transfer modes are inefficient. There comes mobile money to the rescue. Where ever you are staying it is highly probable that you might be a having a mobile phone connection. The mobile phone connectivity is far more than banking connectivity. The people here register for the mobile money with any one the mobile money service provider. Then a mobile wallet is opened which is attached to the customer’s mobile account. This mobile wallet account is easy to open and manage. The customer simply tranfers the money but just sending a text message to the receiver. The receiver shows the retail outlet of the mobile money service provider. The receiver get the cash money handed over and the sender’s mobile wallet is reduced with the amount transacted. Here a customer can send money to the remotest of the location and with out any much problems. 

Such payment services are filling the gaps that are currently not being resolved by banking services. Mobile money has become a strong tool for financial inclusion that is much needed in country like India where currently only 34% of total Indian population is covered with financial sector. Rest of the 66% does not have access to banks for financial transactions. Whereas mobile services penetration is around 79.28%. This figure can easily explain the capability of Mobile money. Some notable service provider includes M-pesa In Kenya, Vodacom in Tanzania, Smart Money in Philippines, Airtel Money in India etc.

Mobile Money has become so much successful in some countries, that it has a part of their lives and is inseparable to there GDP.


We are talking about Kenya, for which mobile money has become part of country’s economy. Mobile money which contributes to as much as 25% to the country’s GDP is the centrifugal force in the country’s economy. M-PESA mobile money system which was launched in 2007 by Safaricom, which is country’s largest mobile network operator is being used by over 17million Kenyans. Many Kenyan People lives in cities like Mombassa or Nairobi uses money money to send money to their relatives at home. 
Such services are growing in other countries like India and Bangladesh also.In India BEAM has signed up 14m customers and does 1m transactions every month. In India Airtel is offering its mobile money services, Vodafone has recently launched its M-pesa services.

I believe Mobile Banking has a decent start in Indian Market and will catch up quickly. And this could be the real connect between the bharat who resides in small towns across the country and India who stays in metropolitan cities. This technology will go a long way for implementing much needed financial inclusion .


The article has been authored by Ashish Aggarwal, IIT Roorkee


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