Mobile Phones Can Expand Financial Services In Emerging Markets
14 February 2006
The Philippines shows the potential of mobile commerce as an alternative to cash
14th February 2006 - Barcelona - 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, which focuses on the use of mobiles for micro-payments in the Philippines, found that mobile-enabled commerce, or m-Commerce, can address a major service gap in developing countries that is critical to their social and economic development.
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 Philippines, 3.5 million people are using a service that allows them to transfer money over the two major mobile networks operated by SMART Communications and Globe Telecom.
The key success factors in the Philippines model identified by the report include the ability for users to load prepaid airtime credits and to transfer both cash and airtime credits between customers, plus the low values set by the operator for prepaid top-ups or credit transfers. Typical top-ups of US$ 47 to 57 cents are allowed (equivalent to around four to five minutes of calls) while transfers between customers of both cash and airtime credits were permitted as low as US$ 4 cents, serving the target market's familiarity with "sachet purchasing" - the practice of purchasing goods in very small quantities.
The experience in the Philippines shows that m-Commerce has the capability to bring advantages to all stakeholders:
- For users - 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;
- For operators - a significant increase in text messaging revenues and a large drop in customer churn
- For consumers - m-commerce is more secure and flexible than cash, allowing consumers to make payments remotely
- For the banks - an increase in their customer reach and the added cash float available to the bank
- For the retailers - added business opportunities through the sale of prepaid account credits
- For micro-finance institutions - the ability to advance funds into remote areas and have regular repayments that do not significantly inconvenience the user
- For service industries and utilities - the ability to get payments electronically from a significant portion of the overall population
The report is available online and can be accessed by visiting each of the websites listed below:
http://www.infodev.org/
www.worldbank.org/ict
About the GSM Association For further information contact:
David Pringle
GSM Association
Tel: +44 795 755 6069
Email:press@gsm.org
Mark Smith
GSM Association
Tel: +44 7850 229724
Email: press@gsm.org
About infoDev:
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. Since its creation in 1995, infoDev has been a pioneer in promoting the innovative use of ICT as a tool for poverty reduction and sustainable development. http://www.infodev.org/
For further information contact:
Joan Hubbard
infoDev
Tel: + 1 202 473 5847
Email: jhubbard@worldbank.org
About IFC:
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications. http://www.ifc.org/
For further information contact:
Henny Rahardja
Global ICT Department - The World Bank Group
Tel: + 1 202 473 4857
Email: hrahardja@worldbank.org
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