I had the opportunity to speak with Hannes van Rensburg, Fundamo's
founder and chief executive officer, earlier this year when he was
visiting the U.S. from South Africa. Van Rensburg is enthusiastic about
the potential of mobile money to promote economic growth and alleviate
poverty. "Cash economics are locked into poverty," he says. An open
electronic payments system can spur growth by enabling new types of
transactions, including person-to-person payments, e-commerce, and
transfer payments from government to its poorest citizens.
Van Rensburg well understands how transformative Visa's entry into
the market will be. "Opening closed-loop systems is not just about
plugging in," he explains. "It's about trust and rules, and managing
disputes." Visa, the world's biggest bank-card network, has the assets,
brand, experience, and systems to open Africa's myriad closed-loop
systems. Van Rensburg says they will start by connecting Fundamo's own
deployments to each other and then move on to other systems. One of
Visa's first big initiatives is in Rwanda,
where it has an agreement with the government to improve payment
infrastructure like ATMs and work on financial literacy issues. Visa, of
course, sees the potential for its own bottom line. Its CEO is gunning
over half the company's revenue from outside the U.S. by 2015. Emerging
markets like Africa are critical to Visa's global growth plans.
Give the size of the opportunity, it is not surprising that other big
financial services companies are looking to enter the mobile payments
market. Last month, the United States Agency for International
Development (USAID) announced
a partnership with Citi to expand mobile financial services to the
unbanked. USAID has committed $23 million to help set up these programs,
including training users and governments. Citi will also use its
experience and broad reach to enable its banking clients to sign on to
mobile money systems. As Citi's CEO Vikram Pandit puts it, Citi seeks to
close the "last mile"--the gap between a user and a bank or mobile
carrier in completing a financial transaction. Initially focused on
Colombia, Haiti, Indonesia, Kenya, and the Philippines, the USAID-Citi
partnership will reach nine countries.
With the spread and growing sophistication of mobile money systems in
the developing world, it is likely that some aspects of retail
banking--namely, widespread and easy use of mobile money--in many poor
countries will surpass that in the developed world. In some places, it
already has. Maybe someday mobile money will connect the approximately nine million unbanked American households to the financial system.
This article originally appeared at CFR.org, an Atlantic partner site.