How mobile payment services could help low-income consumers

Internationally, mobile payment services appear to be flourishing, especially for a broader base of users who might not have previously had access to a bank account or those in traditionally cash-based economies. Several of the services – such as M-Pesa in Kenya, Flous in several Middle Eastern countries, and Alipay in China – were developed by existing mobile phone companies or technology providers, easing the transition for many users to doing common banking tasks and sending money to friends and family using a mobile device. Mobile payment services, observers say, have great potential to increase access to financial services for “unbanked” — people without access to a bank account — or “underbanked” consumers.

“We used to think of ‘underbanked’ as tied to geographical access points, in other words, of ATMs as a point of sale – now, geographic points are being replaced,” says Annette LoVoi, director of financial services and asset building at Appleseed, a network of public interest justice centers based in the US and Mexico. “In other words, the way I used to think of cashing a check at the grocery store when I began my financial life, it’s different now. The old geographically-based access points don’t hold up any more." The group has advocated for the advancement of mobile banking services to recent immigrants, underbanked consumers, and people with limited English proficiency, though they say the high cost of many mobile phone plans could be prohibitive. The argument has also been embraced by policymakers.