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

Abstract

This paper discusses how mobile phones may be used to extend banking services to the ‘unbanked’. Generally, many more people possess mobile phones than bank accounts across Africa. Mobile banking services are already offered as an addition to existing bank accounts. Instead of adding a mobile phone as a complementary channel, why not add a bank account to an existing mobile phone number? This would narrow the access gap considerably, allowing mobile phones to be used to provide financial services to those without bank accounts. Two models are discussed that may help narrow the access gap: first—airtime cash convertibility, already a defacto practice in many parts of Africa, and second—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 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 explored.