Mobile Money Holds Promise

February 8, 2010

There are plenty of opportunities to bank the unbanked using mobile telephones, if a recent report on mobile money in the Philippines is any indication.

A brief highlighting results of the first in a series of studies suggests there are as many as 1 billion people throughout the world who have mobile telephones but who do not have bank accounts. That number is expected to grow to 1.7 billion by 2012, rendering mobile telephones an established conduit to nearly half of the world's unbanked.

Supporting data suggests as many as 364 million low-income, unbanked people, worldwide, could be using mobile phones as electronic wallets in three years time.

Window on the Unbanked: Mobile Money in the Philippines, authored by Mark Pickens and published by CGAP in December, provides a snap shot of mobile telephone-based payments in the Philippines.

It is the first of an expected series of reports on mobile payments in developing countries. The studies are being undertaken by CGAP in partnership with the GSM Association (the global trade group for mobile companies) and the global consulting firm McKinsey. The research brief is available from CGAP.

Unbanked in the Philippines

In the Philippines three out of four adults are unbanked. The archipelago is also home to two of the earliest mobile money schemes: Smart Money and GCash.

Data collected and analyzed by the CGAP team suggests half of those Filipinos with mobile money accounts are unbanked. Additionally, 26% live on less than $5 a day (the poverty line in the Philippines). On average, unbanked users of mobile money schemes spend more than non-users, according to the brief

Windows on the Unbanked also suggests that the closer someone is, geographically, to a mobile money agent the more likely they are to be active users of these so-called electronic wallets.  No surprises there.

Low-income Filipinos using electronic wallets do so primarily to send and receive remittances, the researchers determined. Buying telephone airtime is the second most popular use of mobile money. Electronic payments ties for third place with using the accounts to store money.

154 million people worldwide received micro-loans in 2007; Just 13,000 of these loans were made to Americans.

_{- Microcredit Summit Campaign}