Mobile money movers

There was a time, not long ago, when a mobile phone was exactly that, a portable version of the telephone. Then they started sending text messages, taking photos, giving directions and connecting to the internet. Nokia is now the world's largest manufacturer of cameras, Vodafone is one of the world's biggest internet service providers, and the Apple iPhone is among the world's most popular new gaming consoles. Now, the industry hopes to see its customers swiping their phones to pay for dinner and sending money via text message. Not happy with displacing the wristwatch, digital camera, alarm clock and music player, today they are coming for your wallet and your credit cards. As is the case with so many other technologies, Japan is years ahead in mobile payments, with customers of the NTT DoCoMo network - the world's most advanced mobile operator - waving their handsets to pay for shopping and meals since the beginning of the decade. Some Japanese retailers now receive more than 25 per cent of all their payments via mobile phones, and this week NTT announced a new service that will let its customers wire money directly to bank accounts using nothing more than a phone number. The money is deposited in the bank of the recipient, and charged to the sender's mobile bill. It is not just in the hyper-advanced Japanese market that the potential of the mobile as a medium for money transfer is being realised. Across the developing world, where mobile penetration is booming, the ubiquitous devices are becoming a technological standard in a way that computers never were. With this ubiquity comes the kind of simple, grassroots inventiveness for which those at the bottom of the economic pyramid are famous. Across Africa, systems have emerged - completely independent of corporate planning or support - where mobile networks serve as a perfectly efficient method of wiring money. While banks charge large fees, rely on physical branches and have little interest in the low-margin business of serving the poor, mobile networks and their universally available recharge cards offer something better. The sender buys a recharge card, but instead of using the credit to boost his own account, he phones the owner of a local mobile phone kiosk in the neighbourhood of the receiver. He reads out the recharge code to the kiosk owner, who then resells the code to his customers, and gives the value of the card in cash to the recipient, minus a small fee. Unlike the banks, the system is cheap, practically instantaneous and penetrates deep into rural villages and slums, where banks fear to tread. This informal system has been turned into an official service by many mobile network operators, who cut out the kiosk owning middleman and let customers text cash directly - the receiver takes the phone to an ATM or mobile phone store and uses the code in the text message to withdraw the money. The Kenyan operator, Safaricom, launched such a system two years ago, and Kenyans have since used it to wire more than 24 billion Kenyan schillings (Dh1.13bn). The service is being rolled out across the continent by regional operators such as Kuwait's Zain and South Africa's MTN. Mobile money services are available in the UAE, but remain largely in trial mode. Both Etisalat and du are experimenting with near field communications (NFC) systems, which use a small radio chip placed inside a mobile to transmit payment information to retailers, whose cash registers or payment points must also be equipped to communicate with the chip. Each company has linked up with local banks and retailers, and is testing the service with groups of trial customers. The du trial, announced last week, is working with retail outlets at the popular Walk, at Jumeirah Beach Residence in Dubai, and works in partnership with credit cards issued by the Dubai First consumer finance company. NFC works by transmitting data at a range of four centimetres, meaning customers need to actively "swipe" their phones to make a payment. The limitation is intentional: to prevent the chips being accessed illegally by remote scanners. Technology analysts at Frost and Sullivan, a research group, expect one third of all mobile phones to come pre-equipped with NFC chips by 2012. At the Mecom telecommunications conference in Abu Dhabi this week, Etisalat executives from the UAE and Saudi Arabia said the company was working to expand its money transfer system, which was launched in trial mode in April last year. The system, currently working only between the UAE and India, allows expatriate workers to send money home via text message. Capturing just a fraction of more than US$20bn (Dh73.45bn) of yearly remittances by workers in the two countries would be a major boost for the company, which is quickly diversifying its services as its traditional revenue base of mobile calling is slowly eroded by competition and falling prices. Vodafone, the British operator, has its eyes on an even larger prize. The company announced earlier this month that it would open its global billing system, which reaches 300 million customers, for use by outside companies. Vodafone's application programing interface (API) will let companies connect their own payment systems to Vodafone's, meaning a website based in Australia could charge an Egyptian customer through his mobile account, rather than his HSBC account. -Vodafone takes a share of all revenues that pass through its system; the rest is passed on to the biller. Content-driven businesses such as newspapers, music studios and websites are searching for ways to charge small amounts of money to their millions of users. The concept, known as micropayments, has failed to take off, as consumers feel hesitant to provide their bank details for a transaction that may involve just a few cents. But the bread and butter of mobile billing systems is in processing such tiny amounts, and other global mobile operators are expected to quickly follow Vodafone into this lucrative new market. Handset makers such as Nokia and Apple hope to do similar things with their own online application stores, letting third-party software developers connect to their billing systems in return for a healthy cut of the revenues. So, too, are web platforms including Amazon and Facebook. The battle for our wallets is just beginning. tgara@thenational.ae