Mobile Money - Has its Moment Come?

Smart Phone Wallets Aren’t Such a New Discovery

The recent development of a new application that affords person to person cash transfers gives the appearance of the rolling on of the mobile money revolution. Does this newest development actually mean big strides in the mobile money revolution though? Many other countries have been using the smart phone as a cash system for some time now.

The Rise of Technological Breakthroughs

Since the rise of computers and smart phones there have been a number of “breakthroughs” in terms of making money more accessible. Where it began with money transferring services like PayPal the mobile money revolution has progressed to being able to access bank accounts through cellular phones. More recently in the United States and Europe however, a newer breakthrough has finally made its way in to the mobile money market – person to person money transfer applications.

What are Person to Person Money Transfer Applications?

Person to person money transfer applications are not a particularly new concept for some countries; however, for America and some European countries they mark a revolution that has been a long time coming. Person to person money transfer applications allow for individuals with cellular phone access to install applications that allow them to send money directly to another individual. While these applications used to require specific types of handsets to be able to work and likewise individuals who were receiving the money would also require a special handset, this is no longer the case. The most recent developments in mobile money allow for money to be sent directly to an individual’s bank account.

What Use Does a Person to Person Money Transfer Application Have?

There are many useful applications for a person to person money transfer application, particularly in countries that find money transfers to be particularly difficult. One such country is Kenya. It used to be that in order to transfer money from one person to another or to transfer money in to or out of the country, individuals would have to travel long distances sometimes spending days on busses. In 2007 the M-Pesa mobile money transfer service was introduced in to the area. Since its introduction this application has become a keystone of everyday life since just about every individual in the country has a cellular phone. While cellular phones may be a commonly found accessory in the life of every Kenyan, a bank account is not and as such mobile money services took the movement of money to a whole new level.

Some of the common uses of person to person money transfer applications include: sending money to countries such as Kenya that do not have prevalent bank accounts, settling debts with individuals who pick up tabs and paying for items directly through mobile transfers.

Newly Launched Mobile Money Applications

Over the past few years the mobile money revolution has stumbled a few times as various “answers” to the mobile money question have been proposed. One such revelation was the creation of a soda machine in Helsinki that accepted payment through SMS and dispensed. While these creations may seem unique and somewhat useful, none seem to come close to the Pingit service recently released by Barclay’s Bank in England. Currently Pingit allows for users to install a smart phone application and transfer up to £300 to accounts of other individuals. The only other stipulation on this service is that all users must have an account with Barclay’s Bank, but in March of 2012 all users with a bank in the United Kingdom can use the service. The application works by linking directly to the phone number on the smart phone on which it is installed.

The Appeal of Pingit

There are a couple of features that have people talking about how great the Pingit service could be for the mobile money market. One of the reasons that people expect Pingit to have such a significant impact with the broadening of their market is that it meets a real need. For individuals that know the scramble that comes when splitting a restaurant bill, that need will be met through the installation of the Pingit application. Additionally, the fact that Pingit runs through a smart phone application means that it is an easy to understand technology for everyone currently operating on a smart phone.

Is Linking Your Phone to Your Bank Account a Good Idea?

While there is certainly some appeal to the ease of mobile banking, there are those who ask whether linking a cellular phone directly to a bank account is a good idea. Certainly there is the benefit of not having to hand over personal banking details to people looking to pay you for services rendered or meals purchased but there are certain drawbacks as well. The biggest concern for potential users is that of security – just how safe is it to utilize a mobile phone as a payment method? What would it mean to lose one’s phone? Would it be akin to losing one’s wallet? Or perhaps mislaying your email account if it had an actual physical presence? The Payments Council – the trade body that regulates payments systems in the United Kingdom admits that there are certainly a number of kinks to work out in the system before it is ready to roll.

How Will this New Technology Affect Other Banks?

With Barclays Bank releasing the Pingit application there is also the question of just how other banks are going to react to this technological “advance.” According to other banks in the United Kingdom who are aware of the new Barclay’s application, they will not be left behind as the big bank steps in to what is potentially the future of mobile banking. That means that soon each bank expects to have their own answer to person to person mobile banking but one has to wonder just how much of an eye is being kept on security. Is the race to be the “best” provider of the future of mobile money too much of a distraction for competing banks? We will soon be sure to see.