2013-01-22 11:56:04
The use of pre-paid mobile-phone minutes as a currency
Jan 19th 2013 |From the print edition
MOBILE money in Africa comes in different flavours. The sophisticated sort,
exemplified by services such as M-Pesa in Kenya, allows account-holders to
transfer legal tender electronically to fellow account-holders by entering
commands on a mobile phone. Popular though such services are, they have not
stopped an older form of mobile money flourishing. This sort uses pre-paid
mobile-airtime minutes as a de facto currency that can be transferred between
phones, exchanged for cash with dealers who rent out phones, or bartered for
goods and services.
Pre-paid minutes can be swapped for cash or spent in shops most easily in C te
d Ivoire, Egypt, Ghana and Uganda, says Chris Chan of Tranglo, a Malaysian firm
that facilitates airtime remittances to mobile phones. Airtime is commonly
used as money in Nigeria, too. Hannes Van Rensburg, Visa s boss for sub-Saharan
Africa, says this is partly because regulators there have made it difficult for
banks to offer the newer form of mobile money.
But even in places like Kenya, airtime minutes are still being used as
currency. Unlike mobile money, airtime s value does not rely directly on a
government s stability or ability to hold down inflation by, say, showing
restraint printing money. Opening a mobile-money account typically requires
waiting for days after showing your ID. In contrast, airtime can often be
purchased and sent immediately and anonymously. Because many telecoms firms in
Africa and elsewhere transfer minutes nationwide free of charge, airtime is
especially useful for settling small debts.
In Zimbabwe, for example, American banknotes have largely replaced the
hyperinflation-ravaged Zimbabwean dollar. American coins are scarce, however,
so pretty much everybody in Zimbabwe transfers airtime in their place at least
occasionally, says Oswell Binha, president of the Zimbabwe National Chamber of
Commerce in Harare. Zimbabwean shoppers are tired of being given sweets in lieu
of change, so shopkeepers who give airtime rather than yet another $0.63-worth
of chocolates have a competitive advantage, Mr Binha says. Yo! Time, a
Harare-based start-up that simplifies these retailer-to-shopper airtime
payouts, processes more than 9,000 payouts a day for clients; six months ago
the figure was 2,000.
The use of airtime as currency is fuelled by the growing ease of sending
minutes abroad. A Dublin firm called ezetop, for example, sells airtime for 238
telecoms firms via the web, text messaging and about 450,000 shops in 20
countries. The value of international airtime transfers has doubled from $350m
in 2011 to $700m in 2012, estimates Berg Insight, a consultancy.
Some authorities are concerned about airtime s use as money. As one industry
executive puts it, network operators are, in effect, issuing their own
currency and setting its exchange rate; central banks tend to dislike such
things. Others worry that airtime could be used by criminal or extremist groups
to move money covertly. According to a senior official at the Financial Action
Task Force (FATF), an intergovernmental body in Paris, it appears that some
groups buy top-up scratch cards in one country and sell the airtime in another.
The FATF is studying over 50 instances of suspicious dealing in airtime from
the past two years and plans to issue new guidelines early this year. It is
likely that countries and firms will be asked to set rules to obtain more data
on buyers and sellers. Transfer caps may also end up lower. But such rules must
be set against the good that tradable airtime still does.