First instalment of LIRNEasia’s contribution to Lanka Central Bank’s policy making on mobile money

Posted on July 13, 2009  /  0 Comments

One of the greatest contributions that can be made to help people pull themselves out of poverty is to facilitate safe, secure, low-cost transactions. Mobile payments which are potentially accessible to almost the entire populations of emerging economies need to be encouraged in this regard. At the beginning of the year, the Central Bank of Sri Lanka indicated it will be making policies for mobile payments. Not having seen much activity on this front, we facilitated a contribution from Muhammed Aslam Hayat, a legal expert currently based in Bangladesh but with extensive regional experience. It was published in the Financial Times, 12 July 2009. LIRNEasia intends to make further contributions to the much-needed public discussion.

Mobile payments should not be seen as a turf war between the financial and telecommunication sectors but as a complement to existing financial services. Banks have a long history of managing money and enjoy the confidence of depositors and businesses. However, the mobile companies have in a very short span of time reached all parts of the countries they operate in, established strong nationwide distribution systems and excelled in handling micro-payments worth millions on a daily basis in the form of top-ups. Mobile operators act as payment agents for content providers so seamlessly that most of the time customers don’t even know that they are dealing with a third party. In mobile payments, the question is not who is keeping the money but who is dealing with the customer. If the customer is dealing with the bank, the mobile operator becomes a mere conduit. If mobile operators deal with the customer, banks still have the important role of managing money. So the choice is between taking the customer to the bank at high street or taking the bank counter to the customer, wherever he is.

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