Introduction to Mobile Money

Posted by Felix Okoli on Friday October 25, 2013 at 9:45:54:

Mobile money, which is also known as mobile wallet, is a system whereby payment of bills, services, airtime recharge, money transfers and other kinds of payments are carried out easily, using a mobile phone. It can also be defined as the exchange of money using a mobile device as the medium of exchange.

Mobile money can rightfully be said to be an alternative for cash handling. This means that instead of paying with credit cards, cash, cheque or going to the banking hall to make a transaction, a customer can easily pay for such goods and services using his or her mobile phone.

Around the world, the use of mobile money transfer system for payments has grown over the years. This is due to the evolution and increase in number of smart phone users around the world. There is a very big difference between the usage of mobile money in developed countries such as United States, United Kingdom and the use of mobile money in developing countries such as Nigeria.

In developed countries, mobile money can used to pay for variety of goods and products such a packing space, literature books and e-books, cinema tickets, food, clothing’s, machines etc. The customer pays for these goods and services with a mobile phone via a mobile money account. And the mobile money account has already been linked to the person’s original bank account. So when such payments are made, the amount is withdrawn from the person’s bank account. There are four models of mobile money payment in developed countries and they include:

- Direct Mobile Billing:

- Premium SMS based transactional payments

- Mobile web payments through a WAP site

- Contactless Near field communications

The most popular of all and the one this article would talk about is the Direct Mobile Billing, This system is an alternative to paying with credit cards. It is used mostly on e-commerce site when checking out after purchase has been made on the site. The customer has to go through a two step authentication and verification which includes putting in a correct (Personal Identification Number) PIN and a one time password. The customer’s mobile account is charged with the amount that should be paid for the goods and services and it is directly deducted from the customer’s account. It is a much secured means of paying for services online.

While in developing countries, the system used is called mobile money and this system is also used in the payment of goods and services. But the difference here is that the transfer of money is not directly linked to a normal bank account. Here a person’s mobile money account is quite different from the person’s bank account. The mobile account is funded differently any time a purchase is to be made.

When it comes to initiating mobile money requests, a popular method used is the USSD medium which allows the user communicates with the mobile operator via a preset code on any transaction the user wants to make. For instance, If the user wants to transfer money to a friend, He would first dial a USSD code to access the mobile money service. When he enters the service, he would then be able to issue commands by making use of numbers and then carry out a transaction.

Mobile money makes life easier for a subscriber as it allows one to do a lot of things such as buy airtime, pay cable and electric bills as well as transfer and receive money.

With mobile money, your bank becomes your mobile phone.