When online payment services like PayPal were first launched over a decade ago, the sudden and disturbing ease with which regular people could electronically transfer money between each other online was nothing less than miraculous. Not only was it faster and easier than withdrawing cash from an ATM or even doing a wire transfer, an average Joe could accept credit card payments from other users without having to invest in any sort of equipment or processing system. That phenomenon is happening all over again in the form of cash transfers via text message. If you live in a country where there's a participating carrier and banking institution that supports it, all you have to do is send an SMS to your friend in order for money to virtually change hands.
One such carrier is Vodafone, which plans to announce a partnership with Western Union today that will allow users to make international money transfers just by using their cell phones. The companies, according to the Wall Street Journal, will initially launch a pilot program in parts of the UK that will allow them to send money to friends and family in Kenya. Assuming the service is as popular as many expect it to be, Vodafone plans to expand the service to other countries as an add-on service.
This will be the first time a company has gotten into the international money transfer business using text messages, but domestic money transfers via SMS have been around for a while. Users in the Philippines and India have been transferring money domestically via cell phones for some time, and Vodafone runs a domestic money transfer service in Kenya, Tanzania, and Afghanistan called M-Pesa that now has some 4 million users.
The Chicago Tribune outlines the story of a Kenyan mother of two who normally has to travel an hour by bus to get to a money-wiring office to receive cash from her husband, but can now get the money easily by text message. "It saves time, it saves money and it is safer," she told the newspaper. Other Kenyans now depend upon M-Pesa to get paid by their employers, who no longer need to take the dangerous risk of carrying around bags of cash on payday (banks are few and far between in many rural areas).
But you don't have to live on the other side of the world in order to being playing around with mobile money transfers. Obopay, a US-based company, offers a PayPal-like service that allows users to send and receive money. However, Obopay also allows users to text message each other with virtual cash, something that PayPal doesn't offer quite yet (Update: it appears as if PayPal does offer SMS payments after all). The cool part about Obopay is that you don't need to sign up for an account in order to retrieve cash that someone has sent you—just enter your personal information and bank details for wherever you want the money transferred, and it will show up there.
