Airtime to cash : unlocking the potential of Africa's mobile phones to bank the unbanked

Abstract

This paper discusses how mobile phones may be used to extend banking services to the ‘unbanked’. With on average many more people possessing mobile phones than bank accounts in Africa, and the current widespread use of airtime as a means of payment, there is the hope that mobile phones may be used to provide banking services to those without bank accounts. Mobile banking services are already offered as an addition to a bank account. Instead of adding a mobile phone as an additional channel to an existing bank account one should think of adding a bank account to an existing mobile phone. This would narrow the access gap considerably. Two models are discussed that may help to narrow the access gap: the first being airtime cash convertibility, already a de facto practice in many parts of Africa, and the second being the mobile wallet, which would allow full banking services to be performed on the basis of a virtual wallet linked to a SIM card. Results from Research ICT Africa’s 2007/8 e-Access & Usage household Survey are used to investigate the current usage of airtime as a means of payment as well as to investigate the potential demand for m-banking. Regulatory challenges to the adoption of m-banking as well as potential business models and possible models of cooperation between banks and mobile operators are also investigated.