Mobile Money Transfer

CHAPTER TWOLITERATURE round2.1 quick property shiftMobile coin transfer, also referred to as wandering bullion, spry remuneration, and expeditious wallet generally refer to stipend function operated underfiscal regulations and performed from or via a rambling device. kinda of paying with cash, cheque, or credit cards, a consumer female genitals use a energetic shout out to pay for a colossal telescope of serve and digital or hard goods.Although the concept of using non-coin- ground currency systems has a long recital,it is only recently that the technology to support much(prenominal) systems has set out widely available.Similarly, Julia s. cheney defined meandering(a) financial go from her paper interrogation of wide awake banking and officious retributions as follows Mobile financial service is a term applied to a range of financial activities conducted using nomadic devices, such as cellular phones or ad hominem digital assistants.These activities blo od line into ii broad categories mobile banking and mobile payments. Mobile banking allows bank customers to impede balances, monitor transactions, obtain another(prenominal) account information, transfer specie, locate branches or ATMs, and, sometimes, pay bills. In the United States, depository institutions mobile banking platforms rely on one or a combination of the following three strategies SMS school text messaging, browser-based programs, or downloadable mobile-banking applications.The term mobile payments refers to payment transactions initiated or confirm using a persons mobile cellular phone or personal digital assistant. These may be such things as making a purchase at the point of sale, sending gold to a person or a business, or purchasing a convergence or service remotely.Mobile payments generally fall into dickens categories. Those made at the point of sale ar called proximity payments and atomic number 18 typically initiated using NFC technology. Mobile rem ote payments, on the other hand, are non transfer by NFC but rather require payments to be initiated and settled through with(predicate) the mobile cellular phone net cream in combination with an associated payment network.These payments may involve person-to-person, person-to-business, or business-to-business payments and rely on SMS text messaging, receiving set Internet technology, or a downloaded application in order to campaign the payment.Mobile payment is being adopted all over the world in different ways (wire slightintelligence.com) (erricson.com 2011).In 2008, the combined market for all types of mobile payments was projected to reach more(prenominal) than $600B globally by 2013 (juniper research 2013),which would be double the figure as of February, 2011 (bonsoni.com 2011). The mobile payment market for goods and service, excluding contactless around field communicationor NFC transactions and money transfers, is expected to come about $300B globally by 2013 (junip er research 2013).Indeveloping countriesmobile payment solutions reserve been deployed as a means of extending financial services to the fellowship known as the unbanked or under banked, which is estimated to be as untold as 50% of the worlds adult population, according to Financial Access 2009 Report half(a) the World is Unbanked (financialAccess.org 2009).These payment networks are often used formicropayments.The use of mobile payments in developing countries has attracted public and private funding by organizations such as theBill & Melinda Gates Foundation,United States Agency for International outgrowthandMercy Corps.Mobile financial services cover a broad range of financial activities that Consumers engage in or access using their mobile phones (Boyd and Jacob, 20076).They layabout be classified into three separate categories mobile banking (m?banking), Mobile money transfer (m?money transfer), and mobile payments (m?payments) (GSMA, 2008a). M?banking is subsumed under t he larger category of electronic banking.Electronic banking (e?banking) refers to the provision of retail and small think of banking products and services through electronic channels.These include deposit taking, lending, account management, the provision of financial advice, electronic bill payment and the provision of other electronic payment products and services such as electronic money (Basel 19983). As a form of e?banking, m?banking is defined asfinancial services delivered via mobile networks and performed on a mobile phone.These services may or may not be defined as banking services by the regulator, depending on the legislation of the country in question, as well as on which services are offered. (Bngens and Sderberg 2008 7).Porteous (2006) further explains that mobile banking faecal matter either be additive or transformational.For the former type, m?banking is considered an additional channel for existing clients to access banking services in the transformational cate gory, however, it targets clients who do not have bank accounts, aiming to include them into the formal banking system. (Bngens and Sderberg 2008).Money, on the other hand, is a form of electronic money. Electronic money refers to stored appreciate or prepaid payment mechanisms for executing payments via point of sale terminals, direct transfers between two devices, or over the computer networks, such as the Internet. Stored value products include hardware or card based mechanisms (electronic purses or wallets), and software package or network based cash (also called digital cash) (Basel, 19983?4).M? money then refers to services that connect consumers financially through mobile phones. Mobile money allows for any mobile phone subscriber whether banked or unbanked to deposit value into their mobile account, send value via a wide-eyed handset to another mobile subscriber, and allow the recipient to turn that value back into cash easily and cheaply (GSMA, 20097). In this way, m?m oney female genitals be used for both transfers and payments.In fact, m?money is generally used in m?payments and m?money transfers rather than for m?banking. As such, m?money does not earn pastime compared to bank deposits. This ensures that all e?cash (of which m?money is one) parcel out and circulating corresponds to actual funds in the system. This helps the central banks track movements in money supply1 (Mapa, 2009). With this, m?money cannot be used for savings and cannot be lent by m?money service providers (Sec 5.C and D of nib 649) (BSP 2009).However, whether these funds should not earn interest has been questioned by some, especially when the funds that are pooled to back?up the issued e?money can be deposited in a prudentially regulated institution or invested in dismount?risk securities (Tarazi, 2009).Thus far, the use of m?money has primarily been transactional, such as payment of bills (including payment conversion of m?money to electronic loads), transfer of fund s.In microfinance, for instance, the system has largely been utilized to transfer and pay loans.Mobile banking modelsLyman et.al. (2006) makes two qualitys of branchless banking bank led Non?bank commercial actors. This was further expand by Goswami & Raghavendran (2009) by breaking down mobile banking variants into 5 models based on how they partner up with telecom providers (1) carriers going solo, (2) banks going solo, (3) soap bank and telecom partnership, (4) bank telecom open partnership, and (5) open compact model.These variations indicate that there is much innovation occurring with respect to delivering m?banking/m?money services. Although innovation is important, at some point, standardization would be requisite to support interoperability that would enhance services among customers (GSMA, 2008a).In fact, of the five models mentioned, the open league model is considered by Goswami & Raghavendran (2009) as the most flexible and dynamic since it allows for a partnershi p between all banks and telecom companies while sharing a common platform for m? banking. The platform then expands the coverage of mobile banking and gives the unbanked a freedom to choose with whom to maintain an account.The other implication of the modification of existing models is that it creates different regulatory arrangements depending on the nature of partnerships between telecom carriers and financial institutions. In the case of SMART Money in the Philippines, for instance, the banking regulations have complied with by its banking partner, whereas the telecommunications aspect is addressed by the telecommunications provider.A regulatory distinction however occurs once there is e?money issuance by a telecommunication company or non?bank entity through the telecommunications slattern (Lyman, et al. 2006), as was the case with Globe Telecoms G?Cash. In both cases, they had to work with financial regulators on banking regulations it was not previously concerned with.Mobil e phone payments is a popular and most preferable way of sending and receiving money in Africa since the vast majority of the continents population are ruler dwellers or uneducated (Ayo, Ukpere, Oni, Ometo, & Akinsiko, 2012 Mangudla, 2012). The concept of mobile money transfer dates back to the history of telecommunication and banking industries. on that point are collaborations between the two industries for the facilitation of MMT service (Ayo et.al, 2012). M-PESA was the offshoot MMT service in Africa, which was introduced by Safaricom of Kenya (A Vodafone partner) in 2007. M-PESA (M refers to mobile, and PESA refers money in Swahili language) can be accessed from the different outlets such as the headquarter, main branches of the company, or an authorized business outlet.Safaricom registered over 20, 000 consumers for M-PESA within the first month of introducing the service (Hughes & Lonie, 2007), and the government issue reached more than 15 million users of MMT in Kenya aft er five historic period of launching (Michaels, 2011). He contends that there are several factors female genitalia the wide adoption and acceptance of this service by the users including rapid migration to cities for work, a pregnant unbanked number of the populace, the credibility of the service provider, and finally their commitment towards families in base villages.Therefore, as asserted by Hughes & Lonie, (2007), the M-PESA is primarily designed for the unbanked populace in Kenya. The MMT also was later introduced in several African countries such as Nigeria, South Africa, Tanzania, Ghana, Somalia among others. The success of these services in South Africa and Ghana were less than the Kenyas M-PESA success (Tobbin, 2010).MMT IN SOMALIAMMT service in Somalia was first introduced by GOLIS , HORMUD and TELESOM telecommunication companies working with puntland, south central Somalia and Somaliland respectively. SAHAL and ZAAD money transfer was the first product however, EVC, th e hormud version of MMT, was banned by al-Shabab Group. The hormud company later introduced a more advanced service named EVC Plus.Other telecommunication service providers later offered connatural products with different brands. For example, Nation link offer E-MAAL and somtel offers E-DAHAB services respectively. The lack of potent government in Somalia touched the necessities of the life and the telecommunication industry alter the governmental gap by introducing revolutionary technologies (Osman, 2012).The industry provides several services such landline, mobile phones, internet and mobile banking. The mobile banking or what we can refer to mobile money transfer is very popular in the most sophisticated and active people in Africa with regard to mobile phone payment (Osman, 2012).Many diverse factors contribute to the adoption and acceptance of these MMT services in Somalia.One major reason is that the banking systems in the country are very limited. In addition, there is muc h risk for caring cash since the country is still politically unstable and recovering from more than two decades of chaos and civil war (Mohamed, 2013). There are huge remittances send by the Somali Diaspora back home to their families, friends, relatives, or business associates.There is also huge migration to the major cities because of economic crisis, famine, droughts, and job seeking. All these factors can contribute to the acceptance and usage of MMT service by the Somalis as they were behind its usage in other countries especially in Africa. There are limited empirical studies on the state of art of MMT adoption in the country.Sayid, Echchabi, and Abd. Aziz (2012) examined the mobile money acceptance in Somalia by drawing on the TAM model. Sayid et.als (2012) canvas suggested that perceived usefulness and security positively affected the attitude towards mobile banking, whereas social influence and perceived usefulness significantly and positively influenced the intention to accept mobile money.Furthermore, their look at suggested that perceived soothe of use had positive effect on perceived usefulness of mobile money. Sayid et.als (2012) sample size was very small (N=100) which is difficult to draw a statistical conclusion from it. In addition, this study looked at the MMT in a broader scope.However, their study provided useful insights about the factors influencing the acceptance and adoption of MMT in the country.The circulating(prenominal) study will examine the trends, challenge and future of mobile money transfer and banking in puntland. The study will focus sahal service as particular as there is no such in knowledge analysis in this service before.This service has 597,000 sahal service active subscribers which do mobile money services across puntland, similarly it has 86,000 active mobile payment subscribers which use sahal payment as their first choice paybills.The study will focus on these customers, the regulation and the mobile network operators to study the trends, challenges and future of this service.