M-Pesa: The new act of banking in Africa
A system of mobile payments which helps some of the poorest people in the world is expanding to new countries.
M-Pesa is a mobile-based money transfer system allowing users to deposit, take out or send money using a phone.
Through M-Pesa, people in countries such as Kenya, where it started four years ago, are able to carry out “branchless” banking. This means they go to a local agent – often a retailer – where they can buy pre-paid e-money which can then be used to send funds to friends or pay bills.
This means that in areas where poverty is rife, things such as sending money back to your family is efficient and safe. It also means managing funds is easier in places where banking isn’t commonly available.
Now Vodafone, which has a stake in Safaricom, the company behind M-Pesa in Kenya, has launched an equivalent system in eastern India. Like Kenya, India has a large number of mobile phone numbers, a market for personal remittances and banking which is inaccessible to a large swathe of the population.
And in Kenya, M-Pesa has been a huge success. As early as March 2010, a report by Ignacio Mas and Dan Radcliffe of charity the Bill and Melinda Gates Foundation noted that the scheme had nine million registered customers, which accounted for 23 per cent of the entire population.
But one aspect, which proved useful in Kenya, is missing. Unlike the original scheme, the Indian M-Pesa system will be regulated by the central bank. So mobile-to-mobile transfers will not be able to bypass banks, and Vodafone’s partner in the scheme, India’s ICICI Bank will screen customers before they can use the system.
But India is a good country to target. It needs to work towards more inclusive banking, and mobile phones are a good way to achieve this: research firm Gartner predicts that India’s mobile service penetration rate – the number of mobile connections to a service, divided by the population – will reach 72 per cent by 2016.
For now the service will cover eastern parts of the country including Kolkata, West Bengal, Bihar and Jharkhand, and a population of around 200 million people. Vodafone claims it will roll out across the rest of the country in a “phased approach.”
Residents are likely to benefit. While apps, scanners and other innovations dominate conversation in the developed world, mobile transfers are continuing to make a difference elsewhere.
Squaring up to cash registers
A payments firm is looking to put the cash register out of business with its latest innovation.
American company Square unveiled the Square Stand in May. This accessory can hold a tablet device but also has an in-built card reader, meaning it can serve as a digital point-of-sale system when used with the right system.
It can serve this function with the help of the company’s mobile app, Square Register, which can give an Apple or Android device payment system functionality.
The Square Stand connects with other gadgets such as bar-code scanners and receipt printers, which may excite budding retailers. But for the time being it is only compatible with second and third-generation iPads.
At the same time, the cost for the stand may put off these not committed to making a serious investment and making some money using the gadget. At the moment it sells for $299.