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Mobile Money - The Fusion of the Internet and Mobile with the Financial Sector Extends Access

By tapping the potential of three trends: continued global migration, growth in cross-border remittances and increasing mobile phone penetration, there is an unprecedented opportunity to draw many people, formerly excluded, into the formal fnancial services sector

As people are moving to new countries in search of opportunity, they are staying con-nected to the friends and loved ones they left behind by sending funds back home. As global migration continues to grow along with the global remittance market – estimated at $420 billion in 2009 1 – migrants will continue to rely on accessible, reliable remittance ser-vices. The United Nations estimates that there are currently nearly 214 million people living outside their country of origin. 2 That number is expected to grow to 280 million by 2050. 3

While cash is currently the preferred method for sending and receiving money in many countries, with the explosion of other tech-nologies around the world, that is changing.

> Mobile networks cover over 80% of the world’s population 4

> In a world of 7 billion people, there are 1 billion PC’s, but over 4.9 billion people have a mobile phone. 5 Nearly 90% of those who send or receive funds with Western Union have mobile phones 6

> Mobile phones are arguably one of few consumer technologies to be more prevalent in developing countries than developed

Eurogiro News 11

> In many developing countries, where family members are receiving remit- tances, the banking infrastructure is not as advanced as it is in developed coun- tries. While cash is universally accepted, many people in developing countries lack the opportunity to establish credit facilities or earn inter- est on their money

It’s an interesting fact that that mobile phone access far exceeds access to banks and postal institutions in many of these countries. For example, in South Africa, 48% of adults are unbanked or have difficulty accessing tra-ditional financial services. 7 But more than 90% of adults in the country own a mobile phone. 8

Khalid Fellahi, Senior Vice President, Africa & Global Head of Mobile Transaction Services at Western Union clarifies the company’s direc-tion in the mobile space:

“As far as the future for Western Union and mobile financial services – for our business

overall, really – we see an evolution in the ways people move money. We are expanding our relationships with banks, postal organisa-tions, mobile operators and businesses so that a sender can send or receive money in a variety of ways. He can send money from his online bank account, in person from a retail location, over the phone or from an account tied to his mobile phone. The receiver will have many options, too – she can pick up the funds in person, she can direct them to a bank account, a virtual account tied to her mobile phone, or she can direct them onto a prepaid debit card.”

The mobile phone “banking” phenomenon can be viewed as a threat or an opportunity. In-creasingly financial institutions are best served actively seeking ways to become integrated into this rapidly evolving web of financial ac-cess interfaces as transformative technology opens new doors to consumers.

Western Union is a global organisation, with more than 455,000 locations in over 200 countries and territories moving money across borders – more than 1 million transactions a day. With an unmatched global network, the company is in a unique position to see emer-ging trends worldwide. 3

1 Aite 2009

2 United Nations – Migration News Volume 17, No. 1 – January 2010

3 United Nations

4 GSMA – newsroom/press-releases/2102. htm?wwparam=1269970830

5 Wireless Intelligence 2009

6 Western Union Consumer Study

7 CGAP 2006 document-1.9.2953/mobilephonebanking. pdf

8 CIA World Factbook 2009

Mobile fnancial services are an evolu-tion in the ways people can move money

Mobile phones are an unprecedented opportunity to draw many people into the formal fnancial services sector

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