Imagine being able to send money internationally via cell phone, even to impoverished nations where access to financial infrastructure such as ATMs and bank branches isnâ€™t convenient.
For many around the world - especially in developing countries - receiving or sending money abroad has become increasingly important, evidenced by the rise in popularity of secure global networks for money transfer services at local merchants with physical storefront locations.
The use of cell phones for such services could increase convenience and uptake of both wireless devices and the transaction systems that run on them.
A pilot program announced Monday between financial services company MasterCard Worldwide and cell phone group GSM Association, spearheaded by 19 mobile operators with networks in over 100 countries, will explore the possibility of securely making international transfers by cell phone to emerging economies in a move that could affect a growing number of migrant workers around the world.
Cell phone use in developing countries is quickly accelerating. Expensive landlines have been quickly surpassed by cheaper wireless cell networks.
Meanwhile, international payments through formal channels are also on the rise. The World Bank estimates that such remittances totaled $257 million in 2005, with informal channel transfers being nearly equal.
Both groups involved in the pilot program stand to reap big benefits from the partnership should it prove successful.
For the association of mobile operators, success would expand the adoption of GSM cell phones. International telecoms are already looking to emerging markets to boost growth, as developed nations are expected to see a substantial slowdown in new mobile subscribers.
For MasterCard - which will use its MoneySend service for the pilot - and for the company's competitors, there could be a substantial increase in the number wireless customers for payment services.
The GSM Association estimates that the program could boost remittances to more than 1.5 billion and quadruple international remittances to more than $1 trillion by 2012.
We believe that this coming together of the mobile and banking industry is a giant leap in mobile commerce, said Sunil Bharti Mittal, Chairman and Managing Director, Bharti Airtel and Board Member of the GSM Association. His mobile company is the largest in India. It will revolutionize the money transfer industry with its advantages, such as reach, ease of use, and lower transaction costs and provide immense benefits to people in developing nations such as India.
Under the agreement announced Monday, MasterCard will work together with its bank partners to provide payment products and international transaction switching, clearing and settlement via its global network, which it says works in over 210 countries and territories using 160 different currencies.
For its part, the GSM Association, which represents over 700 mobile operators worldwide, will see that local operators can partner with banks to deliver the service to subscribers.
We believe that this pilot program has tremendous potential because a person will no longer be tied to a particular place, such as an ATM or a branch office of a bank or other international payments service when either sending or accessing funds, said Rob Conway, chief executive officer, GSMA, speaking from the 3GSM World Congress in Barcelona.
The six-month pilot program will initially focus on person-to-person money transfers where people usually send money back to their home countries, the companies said.
Recipients will receive text messages notifying them of the transaction and will be able to access funds via debit and prepaid accounts at local banks.
The program seeks to serve the vast community of underbanked as well as anyone who wishes to transfer money internationally, said MasterCard's Roy Dunbar, president of Global Technology and Operations in statement.
This pilot provides a unique opportunity to test the use of our global payments products and platform to help create access to the global economy for people facing barriers to participation, he said.
More on the Web: