Wednesday, January 12, 2011

Paying for things with your phone

Mobile payment systems and mobile banking is definitely not my area of expertise, but my eye was caught recently by this quite interesting story on Peter-Paul Koch's QuirksBlog.

That lead me to a 2009 article at the GigaOM website: Kenya's Mobile Banking Revolution, where I read that

local incumbent Safaricom had started a minute-sharing service for its prepaid cell phone plans a few years back. The idea was to enable users to send minutes to family members in rural areas, who weren’t otherwise able to buy prepaid phone cards. However, Kenyans quickly came up with other uses. “Lots and lots of people were using it as a surrogate for currency,” Eagle said. “[You] could literally pay for taxi cab rides using cell phone credit."

I was sort of dimly aware that mobile phones had transformed African society in ways that Americans only barely understood, but (I am an American after all) I hadn't paid much attention. This story in Wired discusses other uses of the new technology; it's strange and new and takes some thinking about.

As usual, Wikipedia has a very thorough entry with lots of references to chase.

Getting back to Koch's article, he makes the fascinating point that America and other societies are behind in adopting some of these new technologies and techniques, precisely because we are so far ahead in other respects:

Part of the reason mobile banking is so succesful in Kenya is that the majority of the population is not eligible for a bank account, let alone a credit card. Thus they are actively looking for an easy alternative to carrying around lots of bank notes.

In contrast, the West has solved this problem a while back with its existing banking and credit card system. That system doesn’t really work very well on the Internet, but we’ve all grown used to that situation and haven’t really looked for solutions.

Thus it’s the West that is behind here. The mobile economy needs something that’s more user-friendly and more accessible than the current credit card system. Operator billing fits the ... well ... bill.

All told, a lot of very interesting things to read and think about, though I don't have much to add. Are you up on this stuff? Send me good links to make me smarter!

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