Are Mobile Operators the Next Banks?

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The GSMA anticipates that 2008 will be a seminal year for mobile payments and that by 2015, 1.4 billion people will benefit from mobile financial services.  

A partnership with Western Union has seen the GSMA spearheading the deployment of mobile money transfer services with the likes of Bharti Airtel in India and Globe and Smart in the Philippines.   Mobile payment provider Mi-Pay sees the mobile phone operators in recipient countries as being the potential key to enabling mobile-driven money transfers on a truly global basis.  The critical factor here is that unlike almost any other service, mobile operators and their distributors have outlets everywhere selling pre-pay phone vouchers.  These outlets take cash from consumers and feed it back up a well-established supply chain to the operator.

Mi-Pay can enable this pre-pay network to seamlessly distribute cash – the only payment means that is known and trusted by a large percentage of emerging markets – whilst at the same time putting mobile operators in control.    It is relatively simple to enable the mobile operator or their distributor to also act as a cash remittance service. The operator can offset the local balance of pre-pay top-ups held on their behalf by vendors and distributors against their actual foreign exchange market requirements and keep the balance offshore in a hard currency account.  The distributor and vendor can double their commission income and the consumer can retrieve their remittance from their local vendor at their convenience without having to travel.   Operators can therefore, unlike Western Union, transfer cash autonomously whilst reducing transaction costs to consumers.  What is more, because these networks are privately owned, they are not always subject to the same regulation that threatens the success of other mobile remittance techniques.  

Mobile operators are already recognisable and trusted brands in each of their respective countries (more so than many banks), which makes the transition to financial services a great deal easier.

By becoming a trusted financial partner, mobile operators have the potential to dramatically increase their profitability whilst at the same time creating a platform that can be used to introduce all kinds of financial services to their subscribers. It’s a situation where everyone benefits.

By M. Bilal Khalid  via Telecom-Grid-Pakistan

Facebook comments:


  • so in essence, we’re talking about again moving back a couple of decades in terms of financial transparency.

    although i agree it would be a “seamless” manner in which mobile operators would dispense cash via their topup merchants, but have you considered the effect that has on the economy in general?

    by keeping the foreign exchange abroad and having local dealers send money here, what you are essentially stopping is the foreign exchange from reaching here. unless the money LEAVES the foreign shore and ARRIVES at a local one, it is not counted towards the boost of economy. The side effects of this are, the cash reserves of the country does not increase, infact, the money already in the country is moving around, which might create economic activity interally but plays havoc when you have debts etc to pay off. WHICH is why foreign aid is always so welcomed in a country like ours (effects are also played upon exchange rates but thats a totally different topic).

    otherwise, dont you think it would just be easier to print our own money and distribute it to generate that economic activity?

    lastly, a scenario such as that described in the post is essentially regulation-free which is a can of worms just waiting to be opened.

    guys, it took us a long time to get out of the ‘badla’ system… lets not go back!

  • print *more of* our own money…

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