It’s traditional to think of technology spreading from the developed world to the developing world, but mobile money is different. We’ve seen that the developing world has taken to schemes like mPesa, GCash and Zap far faster than the West has fallen in love with Beem, Mondex and SimPay.

Sometimes it just takes time. Business models have to be refined and consumers have to get used to an idea. Technology generally takes three to five years to become an ‘overnight’ success. Both text messaging and Bluetooth spent this long unused in handsets before they were really noticed.

There is certainly change afoot; both O2 with O2 Money and Belgacom with its Ping Ping service have been astonishingly successful but it’s obvious that the compelling need for mobile money in places where there is no alternative is the biggest driver making it work, while the banked can’t always see the advantages. It’s part of the innovators dilemma that something new has to be ten times better to change habits.

But there is another way that habits spread. While in the developed world mobile money spends more time in trials than Rumpole, mobile money in the developing world is established and successful. Millions of users send money home from the cities in their countries.

The next stage is just evolving: International Money Transfer, where users can send money home from cities outside their own country. Emigrants who travel abroad will want to use the same way of transferring money as they are used to at home. A Filipino living aboard can go into an overseas branch of the Bank of the Philippines and send money home, straight to a friend or relative’s mobile phone using GCash, but soon they will be able to have real mobile money. And that means sending money from their mobile.

This conforms well with GSMA research which shows that the four most important factors in a mobile money transfer are the convenience of sending money, the convenience of getting to somewhere to receive the money, security and cost.

A mobile money transfer ticks all these boxes. What could be more convenient than sending from one pocket to another?

As immigrants in the developed world start using mobiles to send money home they will start wanting to use mobile money between themselves. This will mean a demand for ‘cash out’ as well as ‘cash in’ for the countries which were originally seen as ‘sending’ territories. It will create a market for mobile money in the developed world.

It’s a normal thing for the tastes of immigrants to spread through the host nations; we usually see it with food but it’s just as applicable to mobile money. Shops that sell Polish beer to Polish immigrants will become agents for mPesa, GCash and Zap. Just as the native population might pop in for a bottle of Brok Export they might open a mobile money account to transfer money with their immigrant friends. This is the start of the building of the acceptance. Once 20 – 30 percent of the population (regardless of ethnic origin) have the service the hockey stick effect takes off and mobile money has a grip. It becomes a normal way to handle small change.

We’ve seen that mobile money in emerging markets has increased financial literacy and has significantly increased the number of bank accounts. It wouldn’t be unreasonable to think that the international effect will be similar.

Mobile phone technology might have spread from the developed world to the developing one, but it’s great to see that the ‘next big thing,’ mobile money, is coming the other way. That the Western markets are already discovering mobile money for themselves can only accelerate this trend.

 

Simon Rockman is head of the GSMA Mobile Money Exchange, the website for all aspects of mobile money.

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members