Mobile phones become pocket banks in poor countries

An Afghan police officer gets his salary in a text message on his mobile phone. A Kenyan worker dials a few numbers to send money to his family.

The rise of banking transactions through mobile phones is giving a whole new meaning to pocket money in parts of the developing world that lack banks or cash machines.

Mobile money applications are emerging as potent financial tools in rural and remote areas of the globe, allowing people with no bank accounts to get paid, send remittances or settle their bills.

"One billion consumers in the world have a mobile phone but no access to a bank account," said Gavin Krugel, the director of mobile banking strategy at GSM Association, an industry group of 800 wireless operators.

"We see it as very big opportunity," he said this week at the Mobile World Congress in Barcelona, Spain, the industry's annual four-day event that ended on Thursday.

Mobile banking began to emerge six years ago in the Philippines and South Africa, where 8.5 million and 4.5 million people, respectively, use such services.

Today, 40 million people worldwide use mobile money, and the industry is growing, according to the GSMA.

"Africa and Asia are the most active regions right now," Krugel said. "We expect Latin America pick up this year."

There are 18,000 new mobile banking users per day in Uganda, 15,000 in Tanzania and 11,000 in Kenya, he said.

Mobile phones can offer a wide range of banking solutions, from sending transfers to a relative to buying goods in a store or putting money aside for a rainy day -- all by dialing a few numbers on one's handset.

Mobile banking can also make life easier for people in parts of Africa where paying a simple bill can be time-consuming, said Reg Swart, regional executive of Fundamo, a company that makes banking applications.

"It takes one day to pay one bill. You have to physically go to the bank, then you must queue, a long queue," he said.

In Afghanistan, the national police has been testing a service from mobile operator Roshan to pay its officers -- a system that helps to limit corruption, the company said.

"We are currently moving from a trial to a full launch in paying the Afghan national police," said Roshan's head of mobile commerce, Zahir Jhoja.

Every month, police officers receive a text message in the language they prefer informing them they have received their salaries, Jhoja said.

A voice message is also left on the phone "because a lot of them are illiterate and cannot read," he said.

The officer can then go get his money from an authorised Roshan agent.

"The benefit is that police and police officers don't have to carry cash anymore: from their post they are able to send their money home, buy items, and take whatever cash they want from an agent, or to store for future," he said.

The system has helped officers who were not receiving their full salaries due to "corruption and skimming.

"The police officers who received the money electronically were very surprised to learn that they earn so much money. When they were getting cash they were receiving 25 to 30 percent less," Johja said.