April 3, 2010

Potential for mobile money in Bangladesh lies among the poor: Study

The true potential for mobile money in Bangladesh lies among the poor, reveals a research by LIRNEasia, an Asia Pacific think tank on telecom policy and regulation. LIRNEasia researcher Dr. Erwin Alampay, who led the research, said the potential of mobile money service could be largely attributed to the innovations by telecom operators like Grameen Phone.

Mobile money is essentially a form of electronic money. Real money is converted into e-money, and put into mobile wallets. This mobile currency can then be transferred from one mobile subscriber to another, thereby making funds transfer among individuals, even at a distance, easier, said a press release.

Now by merging the banking and mobile technologies they are ready to offer mobile payment schemes which Bangladesh poor are certain to benefit from.

Bangladeshi poor, like many developing countries,
have embraced mobile phones in mass scale within the last decade.

According to LIRNEasia's six country 'Teleuse at the Bottom of the Pyramid' study that surveys the teleusage patterns of the poor 43% participants reported having owned a prepaid mobile phones in their household.

Bangladesh mobile users at the Bottom of the Pyramid (BoP) mostly credit their prepaid accounts by electronic reloads.

This familiarity with e-reload and top-up and e-load indicates their high-trust rating for this method which can be exploited when the second wave of mobile applications such as mobile money is introduced in Bangladesh, says Dr. Alampay, who studied mobile money system in Philippines comprehensively.

According to him, Bangladesh can learn extensively from Philippines experience which is already over five years old. The Philippines is a leader in many mobile applications, beginning with SMS-use.

It can be used for retail, pay utilities and can be exchanged or transferred from subscriber-to-subscriber. It is this inter- subscriber transfers which makes m-money's applications for development exciting, the study said.

Besides, there is great interest in tapping the service for international remittances, which can emerge as one of the most popular and exciting uses of mobile money, it said.

The Philippines experience has shown that for a USD 20 remittance, as much as 6% in transactions costs can be saved.

According to the study, like the Philippines, Bangladesh has a large migrant population. In fact, as much as 10% of the BOP in Bangladesh has relatives who are international (external) migrant while another 10% has internal migrant relatives.

Eighty-six per cent of external migrants and 52% of internal Bangladeshi migrants remit back money. On average USD 185 is sent at a time, with 59% reporting migrant relatives sending money at least every month or even less.

Only 2 percent migrants have satisfaction with their current mode of sending money and as such will not try an alternative service that can be done through mobile phones, it says.

Given the size of the BOP in Bangladesh, and the large number of migrants and the amount and frequency of transactions every month, one can see the great potential of m-money as a value added service for the BOP.


Post a Comment