Mobile money

Hi Everyone

After having written a few posts that have given me some comments that I’m biased towards India and trying to think negative, I’m now back with a post that I think is more about hope or possibilities.

The background for this post is an article I read in The Economist about mobile money. Ok. Fine. I agree that this article is mostly about what’s happening in Kenya and not about India. But I think that what is written in the article is really interesting and also highly relevant for India. India is off course a vast country, and at the countryside the availability of banks and ATM’s are probably not that great. I’m not biased now am I? Just trying to tell the fact. And off course India have a huge young population that lives and works in the cities. If I’m correct, a lot of them send money home to their families in the villages. Honestly, I don’t know how this most often happen. Most probably they don’t take a lot of cash with them when they go home. Do they use banks? I know that for example Filipinos living in Norway uses companies like Western Union, but I haven’t seen many Western Union offices in rural areas of India.

Why not use your mobile phone instead? Most people in cities in India today have a cell phone, or maybe even more than one. And probably most people at the countryside also. Using this to transfer money sounds like a fantastic idea to me!

According to Wikipedia there are a few of such initiatives in India already. One of them is actually a something that seems like a joint venture between the phone company I use in India and the bank I use there. This is cool! I would absolutely like to apply for this! There seems to be at least one Indian company that provides a solution for this, money-on-mobile. But when I log into their home page and try to download the application, I only get a message saying Coming Soon………. Can anyone please update me on when that will happen?

Is this something that can be developed by some IT-companies together with NGO’s? India do have some of the most brilliant IT-companies in the world. Can and will they take a lead here? Or is this a potential market for some startups?

Talk to you soon!

Karsten

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2 thoughts on “Mobile money

  1. When it comes to servics, India has some impressive solutions. From the foodbox system in Mumbai to financial services. Financial services, official and unofficial are very sophisticated. If someone wants to send money to the vilage, they can use the postal service. Business people transfer vast ammounts within and outside India, using the havala sysstem. It is simple to use, fast and efficient. You pay your local broker here, and the money is imideately available at the broker near to the person you want to transfer money to. Your local broker will give you a number which the reciever of the money can use. The cost is very competative and the exchange rate is better then banks. it is however illegal.

    Comodities like sugar, rice, lentils, etc are sold in a very sophisticated manner. You can buy cash, you can buy on credit or you can purchase for future delivery. All interest is calculated on a daily basis.

    When it comes to banks, villagers usually use monylenders. Ok moneylenders have a very bad name, but they do provide micro banking at a minimal cost.

    For example a street vendor may take out a loan of 500 rupees. Typically they will have to pay back 600 for a weeks loan. Sounds exhorbinant, but in actuality it is not. The vendor can purchase fruits and sell it at 30% per day. making a profit of Rs 150 per day. Within 6 days he has made 900 rupees of profits.

    Unfourtunately moneylenders have a bad name, becase they use very violant ways to get the money back. For example someone may take out a 500 rupee loan to cover doctores fee and is away from work. The debt will them ballon fast, of he does not start to repay. Banks would not be able to handle such small customers.

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