Nontraditional financial services providers just got another leg up on banks in the remittance market with a new mobile phone service. GSM Association (GSMA), a global trade association representing more than 700 GSM mobile phone operators, and Western Union Company announced late last month an agreement to facilitate the development of cross-border mobile money transfer servicesThe framework will allow mobile phone companies to offer their customers a service to send and receive low-denomination, high-frequency money transfers using their mobile phones. The first commercial services that make use of the framework could roll out beginning in the second quarter of 2008.
Users of the system will not need bank accounts, giving the unbanked another way around inclusion in the traditional financial system. However, this may spur faster adoption of mobile banking from existing bank customers.
Thirty-five GSMA operators with more than 800 million customers in more than 100 countries are participating in the GSMA Mobile Money Transfer program.
"Remittances are playing a vital role in the social and economic development of India and many other developing countries," said Mr. Mittal. "This initiative will bring down the cost of lower-value and high-frequency mobile remittances considerably and also enable smaller amounts to be transferred in a fast and secure fashion, thereby benefiting millions of people in the developing world." "Multichannel capabilities are the name of the game in money transfers. As the largest money transmitter in the world by number of agent locations, Western Union is entering the mobile remittance space in a strong position," says Aite Group research director Gwenn Bezard. "It has already proven there are big bucks in emerging channels, such as the Internet - a $100 million business for Western Union. Even if mobile remittance remains a niche offer for a long time, Western Union has enough scale in its business and enough brand recognition to make it pay off rapidly, certainly faster than any other would-be mobile remittance provider."GSM Association and Western Union Company announced late last month an agreement to facilitate the development of cross-border mobile money transfer services