According to Dr. Erwin Alampay of LIRNEasia who led this research component, this potential can be largely attributed to the innovations by telecom operators like Grameen Phone. While Grameen is better known for introducing banking through microfinancing to the poor, they have also redefined the mobile usage among poor through the ‘phone ladies’. Now by merging the banking and mobile technologies they are ready to offer mobile payment schemes which Bangladesh poor are certain to benefit from.
Bangladesh 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. Ninety-six percent of the BOP users do so, followed by Top-ups (41%). This familiarity with e-reload and top-up and e-load indicates their high-trust rating for this method (4.6 in a scale of 1-5, where 5 means high confidence/trust) 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 is considered the texting capital of the world and its extensive use has been credited by some for overthrowing a president. M-money is an area it is lesser known for, but ahead of many of its Asian neighbors.
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. In cases where transfers require cross border transactions, Central banks have become more involved in regulation.
In the Philippines, there are two forms of m-money used, SMART Money and GCash, which are exclusive to the leading telecommunication operators SMART and Globe respectively. 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. In particular, 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. The Philippines experience has shown that for a USD 20 remittance, as much as 6% in transactions costs can be saved.
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. According to LIRNEasia’s teleuse at the BoP survey, of these, only 2% said they were satisfied with their current mode of sending money and as such will not try an alternative service that can be done through mobile phones. At present, bank drafts and wire transfers are still the most preferred means of remittance transactions, since they are the two of the least expensive means.
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. The primary thing that prevents people at the BOP, however, from embracing this, has been the awareness and knowledge in using this service.
This study was a component of Mobile 2.0 study of LIRNEasia, which explored the ‘more than voice’ applications of the mobile handsets. LIRNEasia is a regional ICT policy and regulation think-tank, active across the Asia Pacific. Its mission is to “improve the lives of the people of the emerging Asia-Pacific by facilitating their use of ICTs and related infrastructures by catalyzing the reform of laws, policies and regulations to enable those uses through the conduct of policy-relevant research, training and advocacy with emphasis on building in-situ expertise.”