One of the most interesting knock-on effects of the whole "banking for the unbanked" movement (especially the M-PESA system in East Africa) is that these services, developed for the "base of the pyramid", are now working their way over to the West. Of course, in the process of this "bottom-up" innovation the services go from meeting fundamental needs to become more superfluous services in a Western society, that are just convenient more than anything else. But I'm not against convenience, and I couldn't help posting this great (and sustainable) example of mobile micropayments from Denmark that I read today:

11 March 2011 // Denmark to swap stamps for texts

Run out of stamps? In Denmark you will be able to use a mobile instead.

People stuck for a stamp in Denmark will soon be able to send a text message to pay the postage on a letter. From 1 April, the Danish post office is introducing The Mobile Postage service that does away with stamps for standard sized letters. Instead, people will send a text to the post office and get back a code they write on the envelope. Danes sending a text bearing the word "PORTO" to the 1900 number will get in return a code that must be written on a letter in the place they would usually stick a stamp. "Mobile Postage is a useful supplement for those in need of a stamp regardless of place and time," said Henrik Larsen, a spokesman for Post Danmark.

Sweden's post office is also considering introducing the service and is planning trials.

Link: http://www.bbc.co.uk/news/technology-12703744

20 Jan 2011 // Families in the Philippines uprooted by disaster have begun receiving text messages which they can cash like checks to buy food. The pilot project makes use of the widespread availability of mobile phones in the Philippines, which is known as the “texting capital of the world”.

The Philippines is one of the most phone-savvy countries in the world, but it’s also prone to violent storms and conflict, which force people from their homes and threaten them with hunger.

In emergencies like these, WFP often helps by setting up “Cash for Work” projects that help uprooted communities get back on their feet. With the cash people earn as they work on rebuilding homes and communities, they can buy the food they need. 

Now, in the texting capital of the world, WFP is testing mobile phones as a way of distributing the cash.

“It’s like a digital wallet—almost like a bank account,” said WFP Country Director Stephen Anderson, who explained that giving participants cash in the place of food rations allows them to buy a wider variety of food in a way that favours the local economy.“Our survey shows that they are spending up to 70–80 per cent of the cash on food,” he added. “We think that’s a good thing.”

Link: http://www.wfp.org/stories/hope-arrives-text-families-philippines

25 Oct 2010 // Tavneet Suri of MIT and  Billy Jack of Georgetown have resurveyed ~2,000 Kenyan households about their perceptions and use of the M-PESA phone-based money transfer service. The first survey took place in the fall of 2008; this one took place in fall 2009. The results are just out:

// M-PESA is rapidly propagating down market to poorer, less educated, more rural customers. In the 10-month period between the two survey rounds, the percentage of households using M-PESA increased from 43% to 70%. During this period, the percentage of M-PESA users who were unbanked increased from 25% to 50%, while the percentage of rural users increased from 29% to 41%.

// Agents are working better, and liquidity issues are sorting themselves out. A much larger percentage of users in Round 2 trust their agent (95%) than did users in Round 1 (65%), even while the number of agents quadrupled during the 10-month period from 4,000 to 16,000.

// Awareness is almost 100% - The percentage of households who don’t know about M-PESA fell from 18% in Round 1 to 3% in Round 2.

// Increased use for saving - The percentage of users who use M-PESA for saving increased from 75% in Round 1 to 81% in Round 2.

Full article: http://blogs.cgdev.org/open_book/2010/10/m-pesa-reaching-poorer-people.php

Somali Islamist group al-Shabab has ordered mobile phone companies to stop their popular money transfer services, saying they are "unIslamic".

Despite years of conflict, Somalia's telecommunications sector is thriving. Mobile phones are a common sight in the capital, Mogadishu, and three companies currently offer mobile phone banking.

But the al-Qaeda linked group has given them three months to stop, and one mobile phone company official said he had "no option but to obey" the order.

Al-Shabab says mobile phone banking could expose Somalia to interference by Western countries, through the international partners of the Somali telecommunications firms.

Some observers believe the ban may be intended to block a rival to the traditional money transfer systems, known as hawala, which al-Shabab can influence, or tax, more easily.

The hundreds of thousands of Somalis living abroad use hawala and mobile phone banking to send money back to relatives still in the country. One Mogadishu resident told the BBC he was very disappointed by the ban.

"This is the sole lifeline of the whole economy - the service was so useful to both poor and rich people," he said.

Full story at the BBC:

http://www.bbc.co.uk/news/world-africa-11566247

A group of d.school students recently returned from Kenya, where they spent 2 weeks working with Nokia Research Africa and the University of Nairobi to develop health-related mobile applications. The trip was the culmination of months of work in connection with a new class at the d.school, "Designing Liberation Technologies".

Starting in April, Stanford d.school students worked with computer science students at the University of Nairobi to identify the design needs of health care providers and low-income mobile phone users in Kenya. The students then developed prototypes of mobile applications to support delivery of health services in urban areas. In August, a group of students travelled to Nairobi to meet with NGO partners, test prototypes, and advance plans for the future.

Although relatively few Kenyans have heavy-duty, feature-rich smartphones like the iPhone, Kenyans make very sophisticated use of the technology available to them. For instance, it is not uncommon for Kenyans to own multiple SIM cards and swap them in and out of their phones as necessary to take advantage of favorable in-network and off-peak pricing structures.

By 2009, nearly 40% of the adult population in Kenya held an M-Pesa account, and the user base is still growing strong today. Originally intended to be a tool for making safe and secure payments, M-Pesa has gone on to do a lot more. By replacing cash, M-Pesa has solved a nagging security problem that chilled all kinds of financial activity in Kenya - including savings. Unsurprisingly, the overwhelming majority of Kenyans do not hold a brick-and-mortar bank account in their name, and M-Pesa is quickly taking the place of cash-stuffed mattresses. According to a recent study by several American economists, three quarters of M-Pesa users it to save money, and many M-Pesa users say it is the most important savings tool they have.

Building on the insights gained during their research, the 20 d.school students came up with the following applications:

mNote: an online archive for community health worker notes. This application empowers community health workers by preserving the flexibility and control they appreciate in their current paper notebooks, but adding digital knowledge management capabilities.

M-MAJI ("mobile water"): an electronic information system that allows people to use their mobile phones to identify clean water sources in their community. The application seeks to decrease the time and money spent searching for water, improve water quality, and foster vendor accountability by providing a mechanism for user feedback.

Babybank: a dedicated savings plan designed specifically for pregnant women in the slums of Nairobi. By leveraging a popular cell phone payment system, M-Pesa, the application aims to make savings easier, so that expecting mothers can afford the services that will keep themselves and their babies healthy.

Mazanick: an application to provide support and advice to pregnant women via SMS, with the aim of helping motivate them to attend prenatal appointments.

PillCheck (Kifaa cha Tenbe): a mobile application to help people in Kibera find information on the availability and pricing of malaria drugs quickly.

PatientMap: a system to make the waiting process in clinics more transparent, and to increase patient trust in the medical system.

More info at:

http://dschool.typepad.com/news/2010/10/mobile-africa.html

http://liberationtechnology.stanford.edu/news/dschool_class_sees_stanford_students_develop_ict_solutions_to_healthcare_challenges_in_kenya_20100709/

M-PESA (M for mobile, pesa is Swahili for money) was launched in 2007 by Vodafone, and is aimed at mobile customers who do not have a bank account, typically because they do not have access to a bank or their income is insufficient to justify a bank account. The M-PESA system allows customers to:

// deposit and withdraw cash via local M-PESA agents
// transfer money to other users and non users anywhere in the country
// pay bills
// purchase airtime

After success in Kenya the service was also launched in Tanzania in 2008 where there were over 3 million users as of February 2010.

References:

http://en.wikipedia.org/wiki/M-Pesa
http://thecitizen.co.tz/magazines/31-business-week/3032-money-transfervodacom...
http://www.mitpressjournals.org/doi/pdf/10.1162/itgg.2009.4.2.77