In Emerging Nations, mChek and M-PESA Enable Remote Banking via Cellphone

Mobile phones have the unique ability to leap past barriers. No highways? No landlines? No internet connections? No problem. Smartphones create instant links to modern civilization that can be carried around in subscribers’ pockets. Low-cost, easy to erect service towers solve the logistics problem instantly. State-of-the-art telecommunications equipment made by companies like China’s Huawei provides the network systems at relatively low cost. This is true even in the deepest, darkest corners of the world, from Nigeria to New Guinea, from Cambodia to the Congo. By mid-2023, according to Plunkett Research estimates, there were already more than 9.0 billion wireless service subscriptions on Planet Earth. Even people living the simplest lives imaginable, with no running water, dirt floors in their homes and cooking over wood fires, have smartphones. Soon enough, virtually every adult on Earth who wants one will have at least one smartphone, as will a vast number of their children.

In India, for example, innovative business practices have created the world’s most efficient smartphone companies, bringing the wireless world to subscribers at rock bottom prices. In rural India, a one-man, smartphone-based banking stand can take deposits from customers, who are now able to establish formal savings accounts for the first time in their lives. Their accounts are credited by the banker via a code sent to a main bank by secure text message. The account’s owner has a secure username and password to enter via smartphone, enabling the customer to identify herself and track account balances. Payments can be sent by the same methods to another bank customer’s account. These mobile bank customers are able to purchase and pay for goods or services via long distance. Next, using their smartphones for internet access, they can view and order online, purchasing, for example, a ticket on one of the developing world’s many new, ultra-cheap airlines.

Mobile consumers are suddenly enabled to view government information, health care assistance, news, entertainment and educational material online via their smartphones. They are connected to the modern world. They can save and spend money. They can engage in trade and commerce in order to boost their own incomes. With a little luck, they can climb up the first steps of the ladder to the middle class. Their children who have left the villages to go to the cities or distant lands in order to find work can use smartphones to stay in touch with family members back home via text and smartphone messages. Even more important from an economic point of view, they can send remittances back home to parents who now have mobile banking accounts.

Significant, sustained economic progress is not possible without widespread access to a stable, reliable consumer banking system. Consequently, the biggest single contribution that smartphones make to economic growth in the developing world may be mobile banking—enabling people in remote villages to have access to bank accounts for the first time in their lives, including the ability to safely build savings, make remote payments and send money transfers by wireless means.

Companies tapping this potential goldmine include M-PESA in Kenya, which is run by Safaricom, a mobile service provider partly owned by Vodaphone. East African company Airtel Nigeria (formerly Zain) offers the Airtel Money mobile money transfer service app, and South Africa’s MTN deployed Mobile Money accounts in several African countries. mChek is a very innovative company to watch in India. It has partnered with Airtel to create a mobile payment system that is rapidly gaining ground in rural India, where physical banks are hard to find, and is also providing mobile convenience to city dwellers. mChek is able to link a customer’s debit card, credit card or bank account to a mobile phone, enabling customers to make payments, as well as pay certain bills and make purchases such as airline tickets and movie tickets via smartphone. The firm uses state-of-the-art security technology.

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