Cashless Mobile Payments - Cash Is Key

There is growing interest within the financial and mobile communications communities in what some see as the next big application: Mobile Payments and Money Transfer (MMT). In the developing world mobile phones present a low cost opportunity for financial service providers; the devices are ubiquitous, inexpensive and free of costly maintenance. Compared to competing delivery channels such as EMV cards and ATMs, the mobile phone exacts the least cost on service providers.

However, while the mobile phone is in everyone's pocket (well, almost), the most important commodity in any payment system which targets the under-banked is cash. As noted by Telco 2.0, cash is the crucial application in these cashless payment systems. Unlike mobile devices, cash redemption points are not ubiquitous. It is all very well to transfer funds from one mobile phone to another but the recipient must reserve the right to expunge real money from the system.

To tackle this wicked problem network operators have turned to their airtime distribution agents while banks are grappling with setting up new, inexpensive distribution channels. The mobile money transfer and payments business is a numbers business. Institutions that succeed in building large numbers of trusted cash-in and cash-out nodes will dominate this segment.

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