SAFELY SPOTLIGHT
For Africans, Mobile Phones are the new Banks
by January 10, 2012 • 2:04 am
Much of the recent media buzz around cellphones has focused on the time teens spend texting or new apps to download for your smartphone. What you don’t hear about as often is how cellphones are changing the third world.
As of March last year, there were over 500 million active cellphones in Africa. That’s up from under 2 million in 1998. The influx of cellphones has naturally caused a revolution in the way that people communicate with each other. Surprisingly, however, it’s also drastically changed the way people use money.
Billions of dollars hidden in mattresses
More than 230 million African households have no access to banks. That’s not surprising, considering that 65% of Africans work in rural farming communities.
Most people keep their savings at home. At any time in South Africa alone, there’s the equivalent of 1.8 billion US dollars stored in mattresses and cookie jars.
Money on your mobile phone
Recently, entrepreneurs have attacked the rural banking problem through an unlikely medium: mobile phones.
One example is M-Pesa, which was founded in 2007. For just a few cents, M-Pesa lets you transfer up to $500 to anyone with a mobile phone. The wide availability of cellphones combined with M-Pesa’s cheap prices have led 25% of Kenya’s population to use the service.
M-Pesa and their competitors, Wizzit and Airtime have changed people’s lives. Now, young urban professional can easily transfer funds to relatives in the countryside rather than making the long trek home.
Small businesses have benefited, too. Retailers can pay for merchandise using their phones instead of lugging around dangerously large bundles of cash. People can also use M-Pesa to shop online, eliminating the need for credits cards to purchase things on the web.
Mobile payments in the US
Mobile payment services like Google Wallet and Square’s Card Case are just starting to appear on the American market. Since most Americans have credit cards, it’s unlikely that these services will take off like they have in Kenya. Looks like for now, it’s unlikely I’ll be able to text you a check any time soon.
Would you want to ditch your bank for your phone? Comment on facebook.com/safely.com.
Photo via Kiwanja.
