Does Electronic Money Have a Future?

Conventional wisdom holds that mobile telephony and related gadgets will form the entry point for low income countries to enter into and expand the digital economy. It is true that usage of mobile telephony in developing countries has developed so phenomenally and surprised many business analysts. indeed, with the exception of radios, I consider mobile telephony as the second most ubiquitous piece of electronic gadgets in most households in developing countries. Mobile phone service providers are now on the frontiers of innovation in these countries as they try to leverage on the largest networks available in order to provide other services.

One of these services is the M-Pesa service featured in the BBC news item that is available in Kenya that pioneered the use of mobile telephone platforms for the transfer of money and completion of payments. Essentially, the service relies on text messaging to allow payments to be made by one subscriber to another and is convenient for traders and people who wish to transfer money. It is unlikely that electronic transfers will altogether replace cash transactions soon because mobile telephony is not yet universal in many low income countries. Despite it wide acceptance, it is highly likely that claims such as use of electronic wallets to pay dowry are anecdotal. However, it is clear that further inovation will follow because every mobile network operator is developing a competing device. Of interest to me would be what innovations follow from creating the ability to transfer funds across networks.