What started out as a mobile microfinance project has taken off phenomenally well as a mobile payments service. Nice one Vodafone.

Link: Cellphones may take banking to the rural poor in the third world - International Herald Tribune

When Vodafone began a pilot microfinance project in Kenya in 2003 using mobile phones, said Nick Hughes, head of international payment services for Vodafone, “the idea was to reduce the cost of loan disbursal and recovery.”

“But what we found was that customers were using it for person-to-person transfers” of money in addition to making loan payments.

As a result, three months ago, the company introduced a commercial program in Kenya to make payments possible by cellphone. Customer use has grown. “We’ve passed the 175,000 mark,” Hughes said, “and they’re signing up at about 2,500 a day.”

If it’s working well in Kenya, I’d imagine it would work really, really well in the UK too. I’d like to be able to do this along the lines of how Anam’s service works.

P2P fund transfers and mobile payments will generate transactions worth $22bn by 2011, predicts Juniper Research. In addition, they reckon 204m mobile phone users will be paying for services with their handsets by then. Interestingly this figure includes payments made using Near Field Communications (NFC) technology - already in daily use with London’s Oyster Card and the Octopus service in Hong Kong.

Greater availability of NFC devices, for physical mobile payments, coupled with secure and easy-to-use applications, backed by the large credit card organisations and financial institutions, will create the foundation for a healthy alternative to cash and other mainstream payment applications.

Report author Alan Goode said: “The technology is available now to enable secure and fast payments to be initiated on the mobile phone. The business model stills needs some work but there are positive signals emanating  from the industry  that will create considerable revenue for all parts of the ecosystem. I am cautiously optimistic for the future success of mPayments.”

In many developing countries, where bank branches and A.T.M.’s are few or nonexistent in rural areas, cellphones may finally make financial services practical such places, fitting in the palm of one’s hand. The New York Times reports.

"Mobile devices have the potential to take financial markets outside urban areas, allowing banks to provide services like loans and savings accounts in rural regions, according to a report by Vodafone and Nokia, published last week."