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The Feasibility of Using Mobile Phones to Make Remittance Payments (2009)

Feasibility of Mobile Banking

This research looked at whether mobile banking system is feasible in Georgia and if it is, if it could be used to facilitate the transfer of international remittances. Using mobile banking for international remittances requires two different elements and this research project was structured to investigate both. First, before it is possible to make international payments to mobile phones it is necessary to develop a national mobile banking system. Second, once the national system is in place it is necessary to attach it to an international remittance delivery system. This research projects assessed the feasibility, business logic and developmental impact of both of these stages.

Mobile banking, or ‘mbanking’ has been used in a number of countries to increase the number of people who have access to financial services by making the provision of those services cheaper. The system has two components. First, the mobile phone itself can hold credit-balances in an electronic ‘wallet’ and transfer that money between phones. This allows the phone to act like an in-country remittance system, a debit-card (for consumers) and a point-of-sale device (for retailers). Second, the system uses a network of (usually) retail ‘agents’ to collect or hand out cash from the system. Since the technology involves low operating costs and setting up an ‘agent’ is also fairly cheap, together this can allow the development of bank-like services in communities where it would never be profitable to open a bank-branch.

Georgia seems to be fairly well-suited for mobile banking in terms of mobile phone use, the levels of people who do not use bank services and the absence of major legislative hurdles. The country’s relatively small size also seems to make it more likely that the level of mobile banking acceptance could reach the critical mass necessary for some of the real benefits to emerge. In essence, if enough people could be persuaded to accept mobile-phone electronic payment for goods and services then mbanking could become a true ‘leap-frog’ technology, moving Georgia from a cash based society to one that has a lot of electronic account holdings. This would provide the currently unbanked with access to a wide range of useful financial services.

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