Wednesday, June 20, 2007

Cellular cash

Swaminathan Aiyar says India should embrace this new way of banking:

... [W]hen you give the shopkeeper cash, he loads it onto your telephone account by recharging your SIM card, so it’s like depositing cash in your e-account. You can withdraw cash from your e-account the same way — the shopkeeper will give you hard cash, and transfer the equivalent sum from your e-account to his own. If you want to pay an electricity bill, you can give the cash to the shopkeeper and he can transfer it to the account of the electricity company.

This is not science fiction or futurology. Many Mexican migrants to the US already send remittances home through the cellphone-cum-retailer network. This is faster and cheaper than using banks for money transfer. I suspect this will soon give hawala operators in the Gulf stiff competition for sending remittances to India.