Mobile money - Kenya, Turkey and Japan

Kenya, Turkey, Japan lead mobile money trend

The mobile banking business is growing in countries like Kenya, Turkey and Japan, while the combining of wallets with cell phones has been held back elsewhere by disagreements over sharing revenues.

In Kenya and Turkey, millions of people use phones to send money or access their bank accounts; in Japan, more than 50 million people, or about half of all cell phone users, already carry phones capable of serving as wallets.

The technology for paying with cell phones by flashing them near reading equipment in stores or on public transport is ready, and the initial feedback is good, said Mary Carol, head of mobile in Visa Europe (V.N).

"Trials show that consumers overwhelmingly like it," Carol said. "The biggest problem has been the business model."

It will also take at least until 2010 before phones equipped with such technology are widely available, and the financial industry and telecom operators need to agree on some kind of revenue and role split, industry executives say.

The meeting of the two industries will be one of the key topics next week at the Mobile World Congress trade show in Barcelona.

"Both -- the financial sector and telecom operators -- want to own the relationship with the client, this is one of the hottest issues," said Juha Murtopuro, chief executive of Valimo Wireless, which provides cell phone identification technologies.

Murtopuro and other industry players said they expect a compromise to be eventually found, with solutions to vary from market to market.

But the ingredients are already there, given the number of consumers already owning both a mobile phone and bank account.

"Consumers are customers of multiple parties. This is something very typical also in our core industry," said Art Kranzley, chief technology officer at Mastercard (MA.N).

EMERGING MARKET OPPORTUNITY

For many consumers in emerging markets, their first banking transactions will likely be done through cell phones.

"All the pieces are coming into place for mobile banking to transform the way some 1.5 billion people get banking services in emerging markets," said Elizabeth Littlefield, head of CGAP, a policy and research center seeking to improve financial access for the world's poor.

In Kenya, 5 million people have signed up in less than two years to use Safaricom's M-Pesa service, which enables people to send money to each other.

CGAP said M-Pesa is 45 percent cheaper than other transfer services, with 83 percent of users seeing a "large negative impact" on their lives if they did not have the service.

In Turkey, some 2 million transactions -- most of them cash withdrawals from ATMs -- were made last year using Turkcell's mobile service.