Last week the Central Bank of Egypt (CBE) issued preliminary approval for Egyptian banks to partner with telecoms in conducting mobile money transfers. Khaled Hegazy, director of external affairs for Vodafone Egypt, clarified the implications of the approval. "Mobile money transfers do not require that clients have a bank account. The service would allow someone to transfer LE 100 from mobile to mobile, or smaller amounts, or to receive cash from their mobile-based account at any of the thousands of outlets, he explained, "The service should launch within a few months. Hegazy clarified, "Although customers will have no interface with the banks, the mobile providers cooperate with the bank for the operation itself. Thus the permission of the CBE is of seminal importance to introducing a service that looks to revolutionize Egypt's financial landscape in which only 10 percent of 80 million citizens possess a bank account, yet 70 percent own a mobile. It has been estimated that there are a billion people around the world who lack a bank account but own a mobile, according to a BBC report. Vodafone's subsidiary, Safaricom, pioneered mobile money transfers through the M-Pesa service in Kenya. Launched in March 2007, M-Pesa faced conditions similar to Egypt's, with only 19 percent of the population banked and 71 percent with mobile subscriptions. At a mobile banking conference held in May 2009 in Kenya, Michael Joseph of Safaricom said, "It's surprising how fast [M-Pesa] has grown. At the time of the conference, M-Pesa attracted 11,000 new subscribers daily. Joseph called it "the McDonald's effect - whenever you are hungry there is a McDonald's. For us, whenever you turn around, there is an agent. Joseph highlighted the importance of "having a regulator that is willing to work with you. "This is what worries the banks, that we're moving all this money around and they're not getting any fees. We're not a competitor to banks, because they couldn't operate on these [small sized transactions], he explained. In the Egyptian context, mobile money transfers will maintain contact with banks, following the stipulation of the CBE, yet transferring money from mobile to mobile or back and forth to cash will be done much more cheaply than through the intermediary of a bank. M-Pesa has also been launched in Tanzania through Vodacom, another Vodafone subsidiary, and in Afghanistan as M-Paisa. According to their website, M-Pesa has plans to launch in partnership with Vodafone subsidiaries in India, South Africa and Egypt. Hegazy of Vodafone Egypt confirmed plans for the service, and laughed that the trade name for the service has yet to be decided. As Kenya's M-Pesa service refers to "mobile combined with the Swahili word for money, the Egyptian service might be known as "M-Fulus for the word for money in Arabic, or "M-Guinay , for the colloquial word for the Egyptian pound. Hegazy distinguished mobile money transfer from mobile banking, another increasingly popular function that allows clients to interact with their bank accounts through a mobile device. Such services offer account balance checking, money transfer and sometimes payment of credit card fees, mobile bills and other payments. Various partnerships between banks and telecom operators crop up weekly; the latest manifestation comes in the form of cooperation between French bank BNP Paribas and Mobinil to provide the M-Wallet service. On Tuesday BNP Paribas received a license from the CBE to initiate mobile money transfers from clients' bank accounts through telecom Mobinil. As M-Wallet develops, BNP Paribas hopes to extend additional financial services including mobile bill-pay. Philippe Joannier, BNP Paribas' head in Egypt, commented on the license; "We have received the preliminary agreement from the Central Bank of Egypt for our project with Mobinil. We are working on the legal and technical aspects of this ambitious and complex project and we will launch this service in the next months. Mobinil refused to comment on the approval. Most banks in Egypt, including Misr International Bank, National Société Générale Bank, Commercial International Bank and Arab Bank offer mobile banking services to all clients through partnerships with Egypt's three telecom providers: Vodafone, Etisalat and Mobinil. Other manifestations of mobile financial services include Vodafone Cash, which Hegazy clarifies is a pre-paid bank card offered in partnership with HSBC, and 123 Mobile Banking, launched in 2007 as a partnership between Etisalat and the Abu Dhabi Islamic Bank. In June 2001 Arab Bank initiated the first mobile banking service in Egypt in cooperation with Euronet Worldwide and a subsidiary of Vodafone, Click GSM. Known as SMS Express, the service allows cash deposit and withdrawal, credit card and bill payments, and salary credit to be given via mobile. Yet the dizzying array of services relies on clients possessing a bank account. While mobile banking was initially hailed as transformational for populations with minimal access to a traditional branch network, the service that mimics M-Pesa has the greatest potential to impact the 70 million Egyptians without a bank account and with little hope of obtaining the LE 1,000 typically needed to establish one. At the first international mobile banking conference, held in Cairo in May 2008, Mohsen Khalil, director for Global Information and Communication Technologies for the International Finance Corporation (IFC), lauded mobile banking. Access to financial services is a key instrument for enabling full participation in the formal economy. Mobile banking is one of the most promising areas for extending these services to underserved populations, particularly given the increasing reach and penetration of mobile services in developing markets, he said.
