Mastercard trial to tap $230b remittance market

A trial is underway of a mobile-based system for international financial transfers that will help operators tap into the massive $230 billion market for migrant worker remittances.

 

Eighteen operators are working with Mastercard to set up a global payments hub that will provide authorization and settlement for remittances of all sizes.

 

Led by the GSM Association, the plain is aimed at making the mobile phone a channel for financial transactions to service the two-thirds of the world's population who don't have a bank account.

 

GSMA chief executive Rob Conway said the hub was intended "to make transferring money as easy as making a mobile call."

 

The current system was unpredictable, non-transparent and extremely expensive, Conway said.

 

A transfer to India of 50 pounds from a London bank would typically cost 25% in commission fees, he said, adding that neither the sender nor recipient could be sure when the sum had been sent or would arrive.

 

Under the system now on trial, funds would be sent from one SIM card to another via the Mastercard global transactions network. Remittances would be received as soon as they are sent, with both parties receiving confirmation messages via SMS. 

 

Conway disclaimed any idea that cellcos would take over from banks. However, he believes that if successful the new system would quadruple the volume of international remittances to $1 trillion by 2012.

 

Bharti CEO Sunil Mittal said that  "after SMS, this is the next big one. This is something we must do."

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