The proliferation of mobile communications in developing countries has the potential to bring a wide range of financial services to an entirely new customer base, according to a new report commissioned by the Information for Development Program (infoDev) in partnership with the International Finance Corporation (IFC) and the GSM Association.
The report focuses on the use of mobiles for micro-payments in the
In many developing countries, particularly in rural areas, access to financial services is limited. A large proportion of the population are excluded from formal banking systems and make payments entirely using cash, which is far less secure and flexible than electronic payment mechanisms. However, in the
The key success factors in the
The experience in the
For users there is an opportunity to become engaged in the formal banking sector, to facilitate and reduce the costs of remittances, and to enable financial transactions without the costs and risks associated with the use of cash, including theft and travel to pay in person.
Operators enjoy a significant increase in text messaging revenues and a large drop in customer churn, while for consumers m-commerce is more secure and flexible than cash, allowing consumers to make payments remotely. In turn, retailers benefit from added business opportunities through the sale of prepaid account credits.
In the finance sector banks see an increase in their customer reach and the added cash float available to the bank. Micro-finance institutions have the ability to advance funds in to remote areas and have regular repayments that do not significantly inconvenience the user.
* infoDev is a multi-donor partnership with close ties to the global operational capacity of the World Bank, and equally strong relationships with a number of key donors. It helps the donor community and developing countries address the opportunities and challenges of ICT for development.