Business

McKinsey on Rural Mobile Payments

By Dweep Chanana ⋅ May 3, 2007 ⋅  Email this post ⋅ Post a comment

The McKinsey Quarterly is carrying an article on mobile SMS payments in China and how banks can use this as an excellent opportunity to bring the rural population into the financial mainstream:

Recognizing the need for a new rural payments system, in August 2006 the People’s Bank of China directed domestic banks to devise a solution. China views the development of a low-cost, noncash payment network in rural areas as critical to increasing rural spending and closing the wealth gap with urban areas.

An SMS-based payment system, aside from its lower cost, is versatile and ubiquitous. Users simply send an SMS message specifying the mobile-phone number of the payee and the amount to transfer, along with a personal identification number. Within seconds, the payee receives both a confirmation message by SMS and the money in the designated account. The payer receives a confirmation message.

Now if you’re in the finance, mobile, or development businesses, you already know that McKinsey is rather late to the party. See for instance posts at the FP Blog by Christine Bowers, the PSD Blog, infoDev, and NextBillion. Still, it is McKinsey talking so I guess we should listen - or in this case read.